Should the 'Outs' Join the Banking Union?

The Single Market stimulates cross-border banking throughout the European Union. This paper documents the banking linkages between the 9 ‘outs’ and 19 ‘ins’ of the Banking Union. We find that some of the major banks, based in Sweden and Denmark, have substantial banking claims across the Nordic and Baltic region. We also find large banking claims from banks based in the Banking Union to Central Eastern Europe. These findings indicate that these ‘out’ countries could profit from joining the Banking Union, because it would provide a stable arrangement for managing financial stability. From a political perspective, member states’ opinion on joining the Banking Union ranges from an outright “no” towards considering Banking Union membership.