Nordic Economic Policy Review 2020

Financial Regulation and Macroeconomic Stability in the Nordics

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How well designed are the financial regulations that have been imposed after the global financial crisis in 2008–09 and the subsequent euro crisis? Will the new bail-in rules work in a systemic crisis, or do we risk further costly bail-outs by governments? How does monetary policy influence household debt? Have macroprudential tools been well-calibrated? Answers to these questions are crucial for judging the risks that the current corona crisis might also trigger a new financial crisis. The 2020 issue of the Nordic Economic Policy Review consists of six papers, including an introduction by editors Lars Calmfors and Peter Englund.



Pros and Cons of Participating in the Banking Union

This paper discusses pros and cons of participating in the banking union from the perspective of non-euro countries. Expanding the banking union with home and host countries of European banks is likely to bring overall benefits in terms of more efficient bank resolution. But net benefits of participating seem smaller for countries outside than inside the euro area. At the same time, strong safeguards for non-euro countries suggest that costs of participating are low. Ultimately, the assessment of net benefits depends on the value put on closer cooperation with euro area members in matters related to financial integration and stability.


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