Contents

Recent Economic and Monetary Trends

Two New Euro Area Member States: Cyprus and Malta

Longevity Bonds – a Financial Market Instrument to Manage Longevity Risk
Governor Jens Thomsen and Jens Verner Andersen, Financial Markets
The article discusses the perspectives for issuance of financial instruments that are indexed to the development in life expectancy (longevity bonds). Longevity bonds can transfer the risk in connection with higher life expectancy to investors in the financial markets. However, neither issuers nor investors have so far fully embraced the instrument. Against that background, the article outlines the challenges in relation to developing a market for longevity bonds, including why there is no basis for government longevity bonds.

Flexicurity – the Danish Labour-Market Model
Erik Haller Pedersen and Johanne Dinesen Riishøj, Economics
Over the last 15 years, unemployment in Denmark has gradually decreased to one of the lowest levels in the OECD. The decrease should be viewed against the background of the string of extensive labour-market reforms that were initiated in the mid-1990s. They have contributed to the special Danish labour-market model, flexicurity. The article provides a review and assessment of flexicurity.

Development in Productivity in Denmark
Per Flink Iversen and Johanne Dinesen Riishøj, Economics
Productivity growth in Denmark has been modest in recent years compared to previously and to other countries. This article describes recent productivity trends in Denmark and makes comparison with other countries by means of harmonised data.

Economic Development in the Baltic States: Success and New Challenges
Karsten Stæhr, Tallinn University of Technology and Eesti Pank
The Baltic States have seen very strong economic growth and rapidly increasing standards of living. This has been accompanied by very large current-account deficits and rising inflation. It is not clear whether the result will be a hard or a soft landing.

Hedge Funds and the Financial System
Jesper Ulriksen Thuesen, Financial Markets
Hedge funds can contribute to strengthening financial stability e.g. by enhancing price formation and supporting the development of new securities markets. At the same time, they can increase the risk of systemic crises. The most important means of protection against financial instability is competent risk management in the financial enterprises that are hedge-fund counterparties.

Foreign-Exchange and Derivatives Markets in 2007
Rune Egstrup and Birgitte Damm Fischer, Statistics
Average daily turnover in the Danish foreign-exchange market has more than doubled since 2004. Growth in the global foreign-exchange markets has also been significant. The higher turnover in the foreign-exchange markets reflects factors such as a sustained overall upswing and increasing internationalisation. In Denmark the increase is also to a large extent related to liquidity management by banks.

Speech by Governor Nils Bernstein at the Annual Meeting of the Danish Bankers Association on 5 December 2007

Press Releases

Tables and Graphs Section

Vol. XLVI, No. 4