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Italy Turmoil Could Hamper Sealing Banking Union, Finland Warns

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The uncertain political situation in Italy could further complicate the European Union’s efforts toward completing the bloc’s banking union, the prime minister of Finland warned.

Speaking in an interview at a Nordic prime ministers summit in Ornskoldsvik, Sweden, Juha Sipila said the situation is very unclear and that euro-skepticism in Italy could impact discussion at the next big summit in June.

“We have to finish the banking union,” he said in an interview Tuesday after a joint press conference with other Nordic leaders. “If there’s a worry about Italian banks and the attitude of the government, of course, it will affect our discussions because we are worried about the steps and the road map to finishing the banking union.”

Read more: Economist urging euro-exit tipped as Italy finance chief

The northernmost euro member is keen to wrap up the final steps on Europe’s banking union after this year welcoming Nordea Bank moving its headquarters from Stockholm to Helsinki. The move places the Nordic region’s only global systemically in the Finnish capital, adding to oversight duties for Finnish regulators.

Part of the outstanding issues for Finland is to wrap up a joint European deposit-insurance scheme. It’s sharp turnaround in attitude for Finland, which used to be a staunch opponent of having euro members share the burden of government bailouts.

The banking-union project, which dates back to 2012, is an attempt to integrate financial markets in the bloc and avert future crises. It consists of the EU rule book, centralized supervision by the European Central Bank and a bank-failure authority, the Single Resolution Board. The common deposit insurance system remains on paper.

Read more: EU seen unlikely to seal banking union in June

Sipila said he’s now “very eager” to know exactly what the Italians are going to do.

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