The country’s influential banking lobby has been getting cold feet over the move and their fears were heightened over the recent rescue of some of Italy’s banks and the integrity of the rules.

Head of Finans Denmark Ulrik Nodgaard said Italy's bailouts "leave a certain sense of ambivalence: what exactly are the rules here?"

Mr Nodgaard acted as Director-General of the Danish Financial Supervisory Authority during the financial crisis.

The Danish Government set up a committee in July last year to investigate the question of whether or not it should join the banking union and the committee is expected to report back in the later half of 2019.

However criticism of the move is steadily growing.

Mr Nodgaard said Europe did not seem to be making any progress to prevent government bailouts, similar to Italy’s financial support for Banca Monte dei Paschi, in the future.

Denmark has taken a strong line in the past over bank bailouts and was the first European country to 

Mr Nodgaard said the expectation was European state aid rules - which allowed Italy's bailouts - would be tightened and aligned with the Bank Recovery and Resolution Directive (BRRD), designed to prevent such state interference.

So far that does not seem to be the case.

He said: ”We hear that BRRD is weakening.”

In particular, one element is considered to be "too ambitious", namely the requirement that shareholders and creditors bear losses equal to eight percent of the total liabilities before a resolution fund is allowed to intervene.

However, the Danish banks believe that this regulation is indispensable.

According to Mr Nodgaard, Danish banks have two key demands that need to be met before they can join the banking union: maintaining the country's mortgage lending system and real evidence that European banks are sorting out their balance sheets.

The rules would have to be made clearer, Nodgaard said, and there had to be “solutions to non-performing loans, for example”.

While Denmark’s concerns continue to grow, EU leaders moved to increase greater banking integration before Christmas.

Donald Tusk, President of the European Council, told the EU27 summit: “In the next six months, the work of our finance ministers should concentrate on areas where the convergence of views is the biggest.

“Progressing step-by-step on… the completion of the banking union and the transformation of the ESM into the so-called European Monetary Fund should significantly strengthen the resilience of the Economic and Monetary Union.”

Additional reporting by Monika Pallenberg