the vicious circle between sovereigns and banks, the manifestations of which are much more acute and disruptive in a monetary union. that is why we need the banking union in the single currency area. but one thing must be clear : putting the eurozone on a stronger footing will also benefit the countries that are not in the eurozone. the crisis has clearly shown that in europe a receding tide lowers all the boats, not just the ones which are in trouble. b. sørensen and o. yosha ( 1996 ), “ channels of interstate risk sharing : united states ( 1963 – 1990 ) ”, the quarterly journal of economics, november, pp. 1081 – 1111. y. demyanyk, c. ostergaard and b. sørensen ( 2008 ), “ risk sharing and portfolio allocation in emu ”, dg ecfin economic papers 334. bis central bankers ’ speeches my second remark is that the banking union – whilst critical for the ins – is also desirable for the outs. the so - called financial trilemma. 3 – in other words the impossible trinity of financial integration, financial stability, and national responsibility for crisis prevention and management – holds for the entire region, and not just for the euro area. for example, the swedish and danish banking system are not only large in proportion to your gdp, but they are also very closely integrated with the rest of europe. let me focus on the case of the danish banking sector. danish banks ’ consolidated assets are almost four times denmark ’ s gdp. the biggest banks have considerable cross - border activities. for these reasons, it would make perfect sense for denmark to join a banking union that is composed not only of a single supervision mechanism, but also a single resolution mechanism with a resolution fund that can serve as an insurance scheme in relation to systemic banks. whilst participating in the banking union therefore appears desirable, the terms of that participation should also be right. indeed, we at the ecb consider it of the utmost importance to ensure that the participation of the outs occurs on equal terms as the euro area countries. on resolution, we need to find creative solutions to ensure a level - playing field between ins and outs. this holds also true for the backstop for the single resolution fund which is currently the subject of much discussion. taking part in the banking union from the beginning would bring many benefits. having a chair at the table now allows participants to steer the practical implementation of the ssm

jorg asmussen : the public and the private banking union speech by mr jorg asmussen, member of the executive board of the european central bank, at the joint conference “ the single resolution mechanism and the limits of bankregulation ”, humboldt universitat / financial risk and stability net - work in berlin, berlin, 8 november 2013. * * * dear mr aehling [ veranstalter ], dear colleagues, ladies and gentlemen, intro the timing of today ’ s conference on “ the single resolution mechanism and the limits of bank - regulation ” could not have been better chosen as the srm is the dominating theme in all european fora at the moment. thank you for inviting me and i am happy to share a view on banking union from the european central bank with you. banking union looking back with the experience of the crisis, i think that many here today share the assessment that the key problem in the past was that there was too little cooperation and too much diversity – we lacked a coherent european approach to financial sector policies. but there is clearly scope for more cooperation today as, particularly after the experience of the crisis, preferences are more aligned in europe. we all want banks that are well supervised and that can be resolved at minimum cost to the taxpayer. to achieve this, i think we need not reinvent the wheel. there are elements of the us approach that have worked and that we can usefully borrow in europe. saying this, one has to acknowledge, of course, that the us is a fully integrated federal state whereas the european union will remain a construction sui generis for the foreseeable future. therefore, the us approach cannot serve as a blueprint for europe, but its direction may prove right for europe as well. the elements of the us approach fall into two basic categories : first, what i call the us ’ s “ public banking union ” – its federal institutions for dealing with banking crises. second, what i dub its “ private banking union ” – its integrated financial market that dissipates the costs of crises. public banking union clearly, the key difference between europe and the us is that banking problems in the us have been mainly taken care of at the federal level, whereas in europe responsibility for troubled banking has thus far remained national. during the crisis in the us, it was federal institutions that stepped into the breach. the federal deposit insurance corporation ( fdic ) resolved 490 unviable banks, using resources from its deposit