A collapse of the euro system would be very tough for Sweden, too, says Erik Berglöf, chief economist for the European Development Bank. Photo: Henrik Montgomery/Scanpix.
Euro crisis

Economists say bank union could save the EU

As the euro crisis deepens a growing number of politicians and economists from euro countries are calling for a joint banking system and sharing of the debt burden, Swedish Radio News reports.

In the past few weeks chief economists from the French Central Bank, the International Monetary Fund and the European Central Bank have indicated that a bank union could be a good solution.

This autumn the EU Commission will present a proposal for a common banking system, shared control mechanisms and a deposit guarantee that would be financed by all of the EU countries.

A common banking system would also benefit Sweden, according to Erik Berglöf, chief economist of the European Development Bank.

"We are affected by the same problems, and a collapse of the euro system would hit Sweden very hard," Berglöf told Swedish Radio News.

But Mats Persson, a professor of international economics at Stockholm University disagrees.

"Sweden doesn't need a bank union. Sweden is stable with a well-functioning financial inspectorate. Countries that do not manage their financial affairs want a common banking system, so they can get money from the countries that do manage well," Persson said.

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