Carl B Hamilton is, like myself, a great friend of the EU. We differ, however, fundamentally in terms of the analysis of the Swedish membership in the EU’s banking union. In his article he writes that we, through strengthened cooperation within the EU would get better control of the money flowing ”…from Russia and the former soviet republics…” in our banking system and thus we would reduce the risks in our banking system.
However, it is concluded that membership of the EU banking union would lead to a reduction in Russian capital flows to our banks a little difficult to understand. You can already see where a large part of the Russian capital flows ports by looking at the statistics from the Bank of International Settlement (BIS), the IMF, and the countries ‘ own producers. The picture is clear, the countries that today are part of the EU’s banking union tops the charts of where the Russian money ends up – see the policy brief I just posted here.
From the BIS static, we see that the French banks are leading the league on the Russian deposits and that Belgium, Germany, and Austria, also the ports of the top-ten list of countries that receive Russian money. In line with the article it ends up in Denmark on the list, but it is difficult to draw the conclusion that it would change the day they decide to be in the EU’s banking union.
we Lift up our eyes and look beyond the deposits in the banks, we see that in the case of direct investment, it is Cyprus that is superior to the one destination for Russian money. There are, according to the statistics of 187 billion dollars in Russian investments, which is almost eight times Cyprus’s own GDP. We look instead to the portfolio investment, it is Ireland and Luxembourg, which is by far the first in the list of Russian investments. All these countries are the euro area countries and therefore also in the EU’s banking union fully.
. The problem with large-scale international capital flows in our banks, however, suggest that we need to provide our own financial services authority greatly expanded the resources to monitor that the banks follow the English and international legal frameworks that already exist, including those we have received as a member of the EU.
From my point of view is also the issue of the Russian capital flows in completely the wrong starting point for an analysis of our membership of the EU banking union. The crucial question is how the banking union should be able to handle a major banking crisis in Europe without a common fiscal policy. All banking crises worthy of the name has so far demanded that the state or the international community has put a lot of money to save a country’s banking system. In many cases, it is about states national debt has increased by double-digit amounts in connection with a banking system has been rescued.
IN the EU’s banking union is the plan (which is not yet in function, because it is so difficult to agree on) to put aside the amount which is a fraction of this and hope that it still shall resolve itself the day the EU has to deal with her the next banking crisis. Given how good it was possible to clean up in Greece after the financial crisis, should the EU leaders be a bit more careful in thoughts of solidarity between richer and poorer EU countries when it break down.
Unfortunately, the risk of an incomplete banking union to do just that. Therefore, Sweden should not join the banking union and it has nothing to do with the Russian money in our banks. It is rather about to save it the EU that stands for something good.