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European Banking Union is envisaged to lessen over time the role that national interest plays in the supervision of banks but, in the short term, might exacerbate the conflict faced by national supervisors in their traditional dual role of promoting financial stability and the interests of the national financial industry, Bank of Finland deputy governor Pentti Hakkarainen said in a speech.
Hakkarainen said Banking Union had got off to a "flying start" and that it was "fair to ask" whether Sweden would someday join the Single Supervisory Mechanism (SSM), at least in the form of "close co-operation".
"Within the Banking Union, while macro-prudential policy responsibilities lie in the first place with the national authorities, the SSM regulation assigns some macro-prudential tasks also to the European Central Bank", he said. "The ECB may decide on stricter measures than national authorities, using the counter-cyclical buffer or other macro-prudential tools provided for by the EU legislation. The role of the ECB in making macro-prudential decisions within the banking union can be seen as a useful complement to our framework so as to avoid the so-called inaction bias in macro-prudential policy."
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