Thanks to European meddling as part of their efforts to ‘harmonise’ regulation across the 28 State bloc, 40 percent of the Danish mortgage market may disappear. Bloomberg is reporting that the Danish one year note method of providing 2 in 5 mortgages is in danger of falling foul of the EU’s new financial stability regulations that begin in 2016 and become mandatory in 2018.
Kristian Vie Madsen, deputy general of the Danish Financial Supervisory Agency is quoted as saying that Denmark’s “position in the future EU development of the Net Stable Funding ratio is that the new one-year mortgage bonds should be considered as stable”. In other words, Denmark’s 200 year old mortgage system, which is 5 times the size of the Danish sovereign debt, is quite able to look after itself. New European financial regulations are not appropriate.
In trying to stamp out financial fires in the periphery, the EU is endangering secure and stable systems. Yet another example of how harmonisation in a heterogeneous world does not work.