Explanation of Symbols

– Magnitude nil

0 Less than one half of unit employed

• Category not applicable

... Data not available

* Provisional or estimated figures

_ Break in series

In tables including the banks the figures do not include Faroese and Greenlandic banks, but branches in Denmark of foreign banks are included.

With the exception of tables which are based on Danmarks Nationalbank's balance sheets, the figures for the banks are based on reports from banks and savings banks - as from April 1997 with a so-called employed capital exceeding kr. 250 million (primarily liable capital and deposits), until March 1997 banks and savings banks with an employed capital exceeding kr. 100 million.

With effect from June 1, 1991 the National Post Giro has been restructured as a commercial bank which is included in the tables under "The banks" as from July 1991.

Details may not add because of rounding.

Tables

Charts

Appendix of Tables

In many respects the Danish economy has performed well in recent years. In a European context the positive development is remarkable. Employment is rising, inflation is stable and government finances show a surplus. Nonetheless, the danger signals are becoming more apparent: capacity utilization is high, wage growth is still excessive and the balance of payments is weakened. This imposes more stringent requirements on economic policy.

In 1997 wages increased at the same rate of 4 per cent as in previous years. However, the unchanged rate of increase has diminished competitiveness in relation to the core countries of the EU, where wage increases have fallen to 2 per cent. Unemployment has declined strongly to 71/2 per cent of the labour force and is low compared to the other EU member states. Despite the structural-policy-related improvements the labour market has become tighter in 1997.

The current-account surplus is estimated at kr. 6 billion in 1997, which is one third of the surplus in 1996. The strong decline is especially a consequence of stronger growth in domestic demand in Denmark than in the most important trading-partner countries. In particular, private consumption has risen strongly, which is related to the increase in the value of the housing stock. Since 1993 prices for owner-occupied homes have risen by 50 per cent.

The decline in the current-account surplus reflects that in 1997 the Danish economy has drawn closer to full capacity utilization. A further upswing in domestic demand and an expansion of market opportunities abroad are expected in 1998, in view of the continuing favourable prospects for the international economy, although the problems faced by the economies in Southeast Asia give rise to uncertainty concerning growth. Capacity pressure on the labour market and capital stock may therefore increase at an untenable rate and the risk of a current-account deficit is considerable.

In 1997 the general-government budget showed a surplus for the first time since 1988. This improvement is due particularly to the positive economic development. In a situation with a prolonged economic upswing and low unemployment a small surplus is not sufficient to stabilize the development. It is important to use the favourable cyclical position to further consolidate public finances.

During the period since mid-1995 the financial conditions have had an expansive impact on the Danish economy, without being offset by an equivalently tight fiscal policy. Monetary policy is designed to maintain a stable krone rate, and it is therefore up to other elements of economic policy, primarily fiscal policy, to stabilize the general development in the economy. In recent years fiscal-policy tightenings have tended to fade out during the year in relation to the Finance Act. Some of the measures adopted to tighten fiscal policy in 1998 are temporary and it is therefore necessary that a tight fiscal stance is realized in 1998 and continued in 1999.

Denmark's substantial foreign debt means that a considerable proportion of output is devoted to interest payments. This also makes Denmark vulnerable in the event of unrest on the capital markets. The shift in the age composition of the population means that there will be relatively more consumers and relatively fewer producers in the future. For this reason it is desirable to eliminate the debt within the foreseeable future. Achieving this will require higher private savings.

After a period of one and a half years with a discount rate at the lowest level since the 1930s the Nationalbank, like the central banks of the other core countries in the EU, raised the official interest rates on October 9, 1997. The discount rate was raised by 1/4 per cent to 31/2 per cent. The Danish/German interest-rate differential narrowed to 0.4 per cent during the year.

Long-term interest rates decreased in both the USA and Germany and the yield differentials to Germany of most European countries narrowed to below 1/2 per cent. In Denmark the yield differential fell to 0.3 per cent at the beginning of 1998. Long-term bond yields are at their lowest level since around 1960. This indicates that expectations of continuing low inflation are becoming firmer. Inflation was 2.2 per cent for 1997, approximately the same rate as the year before. Inflation was slightly higher in Denmark than in most other EU member states.

The Nationalbank has purchased and sold foreign exchange in order to dampen the day-to-day fluctuations in the krone rate and to stabilize the krone close to the central rate against the D-mark. Net foreign-exchange purchases entailed an increase in the foreign-exchange reserve of kr. 45 billion to kr. 130 billion at the close of the year.

The objective of the foreign-exchange policy is to maintain a stable krone rate against the core EMS currencies. In 1997 the krone was close to the central rate against the D-mark and was more stable than ever before within the EU exchange-rate system. The fixed-exchange-rate policy is the framework for the stability-oriented policy pursued in Denmark. The other EMS currencies were also very stable and close to the central rates. The dollar and pound sterling strengthened against both the D-mark and the yen in 1997. The development in exchange rates entailed a weakening of the effective krone rate by 2 per cent, although the weakening was offset by the depreciation of the Asian currencies, which are not included in the calculation.

In 1997 and at the beginning of 1998 a number of the currencies of Southeast Asia weakened very considerably. The foreign-exchange unrest spread to the share markets and led to a very strong downturn in the economies of the region. In order to solve the countries' acute international financing problem several major loan packages were agreed under the auspices of the IMF. This support is designed to curtail the effects of the turbulence in Asia, to prevent it from spreading to the rest of the world.

The banks' overall result for the year was kr. 13 billion, the same level as the previous year. Provisions and losses on debtors fell for the fifth consecutive year. The overall result for the year of the mortgage-credit institutes was kr. 71/2 billion. Provisions carried back by the mortgage-credit institutes exceeded their new losses and provisions.

The preparations for the third stage of Economic and Monetary Union, EMU, are approaching completion. The selection of participants in the monetary union will take place at the beginning of May 1998, after which the European Monetary Institute, EMI, will be restructured as the European Central Bank, ECB.

The introduction of the single currency - the euro - in most EU member states on January 1, 1999 will not in reality lead to any change in Denmark's exchange-rate policy. As a natural continuation of the present policy the objective will be to maintain a stable krone rate against the euro, within the framework of the new exchange-rate mechanism, ERM2.

In 1997 the Nationalbank issued the first two banknotes in the new note series, the 200-krone note on March 10 and the 500-krone note on September 12. New developments in reproduction technology have made it necessary to improve the security features to protect the notes against counterfeiting.

In cooperation with the Crime Prevention Council the Nationalbank in September 1997 conducted a campaign directed at children and young people in order to warn them against experimenting with counterfeit money.

As from 1998 the financial statistics have been expanded. The Nationalbank's publications in the "Nyt" ("News") series, published approximately 130 times per year, and the "Monthly Financial Statistics" may be received on a subscription basis.

As from spring 1998 the Nationalbank's Internet home page will be launched at the address: http://www.nationalbanken.dk.

The Nationalbank's accounts for 1997 show a profit of kr. 5.6 billion, which is slightly less than in 1996. An amount of kr. 1.0 billion - corresponding to the value adjustments - is allocated to the Value Adjustment Reserve, and kr. 1.4 billion - equivalent to 30 per cent of the profit before value adjustments - to the General Reserves. The remainder of kr. 3.2 billion is payable to the central government.

Denmark entered 1997 with favourable economic fundamentals, although wage development was relatively strong compared to abroad.

More serious prospects thus loom at the start of 1998, since the economy is now close to full capacity utilization. In this situation it is difficult to maintain a current-account surplus and to dampen wage growth. A particular factor of uncertainty is whether the unrest on the financial markets in Southeast Asia will affect the industrialized countries, and thus have an impact on the Danish economy.

Development in 1997

Since the autumn of 1993 Denmark has experienced a prolonged cyclical upswing. After dampening temporarily in 1995 output regained momentum in 1996, and this strong growth continued in 1997, cf. Chart 1.

The international cyclical development reflects that the upswing has spread only slowly among the industrialized countries. Considering these countries as one, growth is gradually rising, but with variations in the cyclical positions of the individual countries. At one end of the range is a group of countries such as the USA, the UK, the Netherlands, Norway and Denmark. They have experienced strong growth and declining unemployment for a number of years. At the other end is Japan where the upswing has not yet begun. Between them lie several continental European countries, including Germany and France, where as yet the upswing is moderate.

In Japan growth declined in 1997 after making good progress in 1996, which was attributable primarily to domestic demand. Both private consumption and investments fell as a consequence of a tightening of fiscal policy which took effect in 1997. Output measured as growth in the gross domestic product, GDP, rose by 1/2 per cent in 1997, stimulated by net exports

up to the 3rd quarter. Japan is the industrialized country most severely affected by the crisis which began with foreign-exchange unrest in Thailand in July 1997. This turbulence spread to other countries in Southeast Asia and in the autumn to the share markets, causing prices to plummet, cf. p. 46ff. on the economic development in the region and p. 85ff. on assistance programmes initiated by the International Monetary Fund, IMF.

Despite the unrest on the financial markets the real economic development in the USA does not yet appear to be particularly affected. In 1997 growth in GDP was 33/4 per cent. The sustained cyclical upswing, with falling unemployment and continued low inflation, is driven particularly by private consumption and investments. Unemployment is now below the level normally considered compatible with stable inflation. The absence of any inflationary pressure can be viewed against the background of a flexible US labour market with rising employment in the service sectors especially. In view of the sustained favourable growth the Federal Reserve in March 1997 raised the benchmark official interest rate. Since then monetary policy has remained unchanged as a result of the stable development in prices. The dollar's strengthening against the European currencies and the Japanese yen has helped to keep import prices down, but may reduce export opportunities in the long term.

In Germany growth has so far stabilized at just over 2 per cent after the economic revival in 1996. The primary growth factor is exports, which have increased as a consequence of the weakening of the D-mark against the dollar and the slowdown in German wage growth. The latter fell to below 2 per cent on an annual basis during 1997. Unemployment averaging 111/2 per cent of the labour force in 1997 was the highest in decades and contributed to dampening the development in private consumption. Investments also showed weak development, and domestic demand is thus not strong enough for the upswing to be self-sustained. An inflationary tendency due to rising import prices was the background to the Bundesbank's raising of the repo rate in October.

In France too exports were the principal contributor to growth in 1997. There were no clear indications of greater domestic demand, despite slightly higher wage increases than in Germany.

In the UK the upswing entered its fifth year in 1997 and GDP rose by 31/2  per cent. Growth was stimulated by domestic demand, as rising property prices and declining unemployment caused private consumption to increase. Indications that the economy was overheating led the Bank of England to raise its central official interest rate on several occasions in 1997.

In Italy GDP rose by around 1 per cent in 1997, primarily driven by growth in domestic demand.

In recent years both Norway and Finland have enjoyed strong growth, with GDP increases of between 4 and 5 per cent. In Finland the upswing is broadly based, whereas in Norway it is related primarily to rising domestic demand based on the substantial North Sea oil revenues.

In contrast to the other Nordic countries the economic upswing has not yet gained a firm hold in Sweden. Exports increased, but the moderate growth was related particularly to private consumption. Wages increased by almost 5 per cent in 1997.

Growth in the overall EU area is estimated at just over 21/2 per cent in 1997. Efforts to comply with the convergence criteria of the Maastricht Treaty resulted in further movement towards low inflation and low long-term interest rates. This stimulates economic activity and tends to offset any adverse impact of fiscal-policy tightenings in the EU member states. Furthermore, the low interest rates contribute to achieving budget improvements, making the convergence process self-sustaining, cf. p. 32f. on the development in interest rates and p. 76f. on the convergence situation within the EU.

Table 1 Key figures for the Danish economy

Preliminary statistics indicate growth in Danish GDP of 3 per cent in 1997. The important trading partners, Sweden, Germany and France, have now drawn closer to Denmark's growth rate. However, Denmark still stands out among these countries with stronger growth which is based on exports and private consumption as well as investments, cf. Table 1.

Total domestic demand rose by 5 per cent, compared to just over 2 per cent in Denmark's trading-partner countries.

The savings ratio fell by approximately 2 percentage points in 1997, while private consumption rose by 31/2 per cent. In the light of the development in private consumption the Folketing (Parliament) in May and October adopted extraordinary measures to tighten fiscal policy. In May these were adjustments of tariffs and taxes in the areas of transport and the environment, and land registration fees were raised. In October the measures were supplemented with a number of temporary steps. With effect from October 1997 the stamp duty on supplementary mortgage loans was raised from 1.5 per cent to 5 per cent, excluding for supplementary mortgage loans for new buildings, conversions or extensions and in connection with

change of ownership. In 1998 an extraordinary contribution to the Labour Market Supplementary Pension Fund (ATP) amounting to 1 per cent of gross salaries is being levied.

The increase in consumption must be viewed in conjunction with the strongly rising prices for owner-occupied homes, which has increased the value of the housing stock, cf. Chart 2. Since mid-1993 prices have risen by 50 per cent, and by 12 per cent in 1997 alone. The rise in property prices is both attributable to growth in disposable incomes and to general confidence in the economic situation and declining long-term interest rates.

The rising property prices have also stimulated residential investments which continued to increase in 1997. Growth in business investments was higher in 1997 than in 1996. The expansion of the capital stock in recent years reflects adjustment to the higher demand.

In 1997 total government demand increased by 3 per cent, which was primarily related to rising employment in the public sector. According to Ministry of Finance estimates from December 1997 fiscal policy was moderately contractive in 1997, but not as tight as planned when the Finance Act for 1997 was adopted. In 1996 the end-result of a planned tightening was an expansion.

In Denmark fiscal policy is the most important instrument used to manage economic activity. Monetary policy is based on the sole objective of maintaining a stable krone rate vis-à-vis the other core currencies. Therefore the impact on economic activity of financial conditions, viz. the development in interest rates and the effective exchange rate of the krone, is to a high degree determined by the development abroad.

Model computations of the effects of respectively financial conditions and fiscal policy on GDP are shown in Chart 3. The financial index is described in more detail in the Monetary Review - May 1997, while the effects of fiscal policy on GDP are described in the Budget Review of December 1997 from the Ministry of Finance. An increase in either the financial index or the fiscal-policy index indicates a relaxation, whereas a decrease corresponds to a tightening. A decline in the fiscal-policy index thus represents a contractive fiscal policy.

In the period from mid-1995 financial conditions, measured by the financial index, have had an expansive effect on the Danish economy with no counteracting contractive effect from fiscal policy.

In 1997 the effective krone rate continued to weaken in both nominal and real terms, cf. Chart 4. The nominal depreciation was a good 2 per cent

and is related particularly to the strengthening of the dollar and the pound sterling. One consequence of the weakening was rising import prices throughout the year. The Southeast Asian currencies, which depreciated substantially in 1997, are not included in the calculation of the effective krone rate. Taking this into account, at end-1997 the effective krone rate was by and large unchanged from one year previously.

Total exports of goods and services increased by 31/2 per cent in 1997. Export growth in the other European countries was generally stronger than in Denmark. Manufactured exports appear to have lost market shares in 1997. The growth in exports was more than offset by the increase in imports, which was three times the rate of GDP growth. The far stronger growth in imports than in exports is related to relatively high capacity utilization in the manufacturing industry.

During the last four years unemployment has declined sharply. The background is the strong upswing in the economy and the development in leave schemes and transitional allowance schemes, as well as a series of measures designed to improve structures in the labour market. Despite the

Table 2 The Danish labour market

structural-policy-related improvements reports from the labour-market councils show that the labour market has become tighter in 1997.

In 1997 total employment increased by approximately 60,000, cf. Table 2. Around 35 per cent were employed in the public sector, primarily local government. In step with rising turnover in the manufacturing sector the employment level also increased and is now back at the 1993-94 level.

Recorded unemployment is now down to the same level as in 1980. Compared to other EU member states Denmark's unemployment is low.

Savings and Credit Expansion

The strong economic activity is reflected in the financial balances in the economy.

On the basis of the available statistics the current-account surplus is estimated at kr. 6 billion in 1997. This is a considerable deterioration from a surplus of almost kr. 18 billion in 1996, cf. Chart 5. One particular underlying factor is the trade balance. Exports showed stable growth, while imports accelerated strongly. The balance of services, including the travel item, also deteriorated considerably. Transfers, mainly consisting of development aid and EU payments, continued the trend of a growing deficit. A small part of the deterioration in the balance of goods and services was offset by a decline in interest payments to abroad.

In 1997 the general-government budget showed a surplus for the first time since 1988. The surplus of kr. 7 billion, or approximately 3/4 per cent of GDP, was an improvement of kr. 14 billion on 1996, and is attributable especially to the strong economic development. The budget balance was also improved by the adjustment of the definition of the public sector in connection with the transition to a new method of compiling the national accounts, whereby capital transfers to public enterprises, e.g. DSB (the Danish State Railways), are no longer recorded as expenditure.

In a prolonged economic upswing with low unemployment a small budget surplus is not sufficient to stabilize the development. It is important to use the favourable cyclical position to consolidate public finances. This is particularly important in the light of the substantial foreign debt and the risk of a decrease in private savings as a consequence of a rise in the consumption ratio in coming decades. The average age of the population will increase and state pensions will be supplemented with private pension income to a greater extent than before.

The decline in the current-account surplus and the improvement in government finances were offset by a strong deterioration in the private sector's savings balance from a surplus to a small deficit in 1997, cf. Chart 6.

The deterioration in the savings balance was divided almost equally between households and the business sector. Despite ample increases in disposable incomes in both sectors they were still insufficient to cover the increase in consumption and investments for the year.

When evaluating the development in private savings it must be noted that despite the reductions as part of the tax reforms in both 1987 and 1993 the taxation value of the interest deduction in Denmark still significantly exceeds levels in many other countries.

By definition a savings balance is offset by a financial net placement. The decrease in the private sector's savings balance in 1997 was thus accompanied by an increase in lending by banks and mortgage-credit institutes.

Lending by the mortgage-credit institutes, accounting for approximately 70 per cent of total krone-denominated domestic lending, rose by 7 per cent in 1997, against 6 per cent in 1996. The increase in property prices and the low level of interest rates have entailed strong growth in non-business lending by the mortgage-credit institutes whose lending for owner-occupied homes and summer cottages rose by 10 per cent. Lending to households by the banks increased by 9 per cent.

In step with the upswing business lending rose strongly in 1997. Business lending by the mortgage-credit institutes grew by 4 per cent, while the banks' business lending increased by 11 per cent. More lending was provided for financing activities (e.g. credit card companies and financial leasing) and trading, both related closely to private consumption, rather than to the more export- and investment-oriented sectors.

The money stock, which mainly consists of deposits with the banks, but also includes notes and coins, rose throughout 1997 by just over 5 per cent. Even though the differential between deposit interest rates and bond yields narrowed during 1997 the increase in the money stock was slightly lower than growth in the transaction requirement measured by the value of domestic demand, which increased by almost 7 per cent.

Wage and Price Trends

According to the wage statistics compiled by the Danish Employers' Confederation the rate of wage growth in 1997 was 4 per cent per annum, which was around the same level as in the two previous years. Overall, blue-collar workers have achieved higher wage increases than white-collar workers. The highest wage increases were seen in the building and construction sector and in the service sector. The employment ratio has been rising strongly, cf. Chart 7. In the mid-1980s a strong increase in employment led to overheating of the economy and a shortage of labour, resulting in excessive wage increases on the private and the public-sector labour markets.

During 1996 the wage increases in the core European countries fell from approximately 4 per cent to 2 per cent per annum, cf. Chart 8. The rate of increase in Danish wages did not follow this downward trend and in 1997 the competitiveness of Danish business enterprises weakened in relation to the core countries.

Consumer prices also rose more slowly in the core countries than in Denmark, although the difference is smaller than for wages. Danish real wages have thus risen more strongly than in the core countries and generally also more strongly than productivity. The increase over and above productivity entails a small increase in the wage ratio, while gross business earnings have dampened slightly, but are still at a high level. Reduced profits may have contributed to the reduction in underlying inflation in 1997 and its present low level.

Inflation measured as the year-on-year rate of increase in consumer prices was 2.2 per cent for 1997 as a whole, which is slightly higher than

Image: Chart 7 Wage increase and employment.

Image: Chart 8 Wage increases in Denmark and abroad.

for 1996. 1997 was characterized by rising import prices and fluctuating prices for energy and certain foodstuffs, including pork, which in some periods pushed up the overall rate of inflation. At the end of 1997 inflation was 2.1 per cent and slightly lower if energy and certain foodstuffs subject to considerable price fluctuations are excluded.

Denmark's Foreign Debt

In 1997 Denmark's foreign debt rose by kr. 15 billion to kr. 268 billion, cf. Table 3. The current-account surplus is estimated at kr. 6 billion, and value adjustment of the debt has been calculated at net kr. 21 billion. The value adjustment particularly concerns non-residents' substantial holdings of krone-denominated bonds and higher capital gains on non-residents' holdings of Danish shares than on residents' holdings of foreign shares. At the end of 1997 the foreign debt was equivalent to 24 per cent of GDP.

The foreign debt was estimated at kr. 261 billion at the end of 1996. In 1997 the Nationalbank conducted a questionnaire survey concerning residents' debt to and claims on non-residents at end-1996. As a result of the survey, the revision of the current-account surplus in 1996 and data from supplementary sources, Denmark's foreign debt at end-1996 has now been compiled at kr. 253 billion, or kr. 8 billion lower than the preliminary statistics show.

The compilation of the foreign debt at the end of 1997 is based on the  balance at end-1996, from which the current-account surplus is deducted, and adjustment is made for recorded and calculated value adjustments of the assets and liabilities which make up Denmark's total external balance.

The central government's net foreign debt at the end of 1997 has been compiled at kr. 385 billion, which is kr. 30 billion more than at the end of

Table 3 Denmark's foreign debt

1996. The debt comprises non-residents' holdings of government bonds issued in Denmark and bonds, etc. issued abroad. In addition to non-residents' purchase of government securities issued in Denmark, the increase in the central government's foreign debt is due to the appreciation of non-residents' holdings by kr. 14 billion in 1997 as a consequence of the decline in interest rates. The net assets of the rest of the government sector, including the Labour Market Supplementary Pension Fund (ATP), rose by kr. 9 billion.

The Nationalbank's foreign-exchange reserve increased by kr. 45 billion, of which value adjustments accounted for kr. 1.5 billion.

During the last two years residents' holdings of foreign shares and non-residents' holdings of Danish shares have increased two to three times, cf. Table 35 of the Appendix of Tables. Insurance companies, pension funds and ATP own approximately half of residents' total holdings of foreign shares, amounting to kr. 150 billion at end-1997. The holdings of private individuals accounted for the largest increase, albeit from a low level. The appreciation due to capital gains is estimated at kr. 33 billion in 1997.

At the end of 1997 non-residents' holdings of Danish shares amounted to kr. 130 billion. Capital gains on non-residents' holdings of Danish shares are estimated at kr. 44 billion. The value adjustments on shares thus represent a net increase of kr. 11 billion in the foreign debt, cf. Table 4.

The banks' net assets decreased by kr. 49 billion in 1997, of which value adjustments accounted for kr. 9 billion net. They comprise non-residents' gains of kr. 13 billion on shares issued by the banks and the banks' gains,

Table 4 Changes in securities portfolios

etc. of kr. 4 billion. The remaining kr. 40 billion can be attributed to non-residents' net purchases of shares in Danish banks and a decrease in the banks' external position by kr. 31 billion.

The rest of the private sector reduced the net debt by kr. 10 billion in 1997. This is related to substantial purchases of foreign securities, primarily shares, and to Danish direct investment abroad in excess of foreign direct investment in Denmark.

Economic Prospects

The decline in unemployment seen in recent years continued in 1997. Unemployment is low, while employment is high and still rising. This positive development has also brought Denmark closer to full capacity utilization during 1997. The external balance has deteriorated significantly in 1997 and the current-account surplus is now very small. This has imposed more stringent demands on economic policy.

Turning to 1998, the effects of the crisis in Southeast Asia are uncertain. The greatest elements of risk relate to the weakening of the Japanese economy, the extent of related loan losses in the financial sector of the OECD area and the risk of the foreign-exchange unrest spreading to countries outside Southeast Asia. The OECD estimates that via foreign trade, including less favourable market opportunities, the crisis in Southeast Asia will entail a reduction in GDP growth for the EU of approximately 1/2 per cent in 1998. However, the drop in long-term interest rates as a consequence of greater demand for bonds rather than shares can be expected to curtail the reduction in growth significantly. In the light of the crisis in Southeast Asia market expectations of monetary-policy tightenings in the OECD countries have also been reduced. Like several other European countries Denmark's direct trade with Southeast Asia is moderate, but the Danish economy is also influenced indirectly via the impact on the other trading-partner countries.

Both the OECD and the European Commission expect domestic demand in the EU to increase by just under 3 per cent in 1998, against just over 2 per cent in 1997, as the international economic upswing gains ground in continental Europe.

For some years domestic demand in Denmark has increased more strongly than abroad, cf. Chart 9. In 1998 the consumption ratio is expected to continue to increase, against the background of high and rising property prices and the decline in long-term interest rates, which can also make it advantageous to remortgage properties at lower interest rates. However, the increase in domestic demand will probably be lower than in

1997. This brings Denmark more in line with abroad and reduces the pressure on the balance of payments. However, the capacity pressure on the labour market and the capital stock may increase at an untenable rate as a consequence of increased demand from abroad and the continuing upturn in domestic demand. Increasing capacity utilization stimulates the propensity to import, while the propensity to export subsides. This causes prospects for the balance of payments to deteriorate, while the high capacity utilization entails a risk of further deterioration in competitiveness. So there is a considerable risk of a current-account deficit.

For a number of years the foreign debt has been so substantial that Denmark has had to devote a considerable proportion of output to interest payments on the foreign debt and has also been vulnerable in the event of unrest on the capital markets. In recent years the debt has been reduced, but still accounts for around 25 per cent of GDP. The shift in the age composition of the population means that there will be relatively more consumers and relatively fewer producers in the future. For this reason especially it is desirable to eliminate the debt within the foreseeable future. Achieving this will probably require higher private savings. However, the private sector is expected to show a savings deficit again in 1998, and it can be difficult to reverse this development in a situation where the high rate of capacity utilization requires more investment.

In view of the favourable economic development a good surplus on general-government finances is expected in 1998. The fiscal policy adopted for 1998 provides for a tightening in relation to 1997. However, there has been a tendency in previous years for the effects of a tightening to fade out during the year, and especially in the present situation it is important to avoid this. Some of the fiscal-policy measures are temporary and apply only to 1998. In view of the balance of payments and the foreign debt it is important that a tight fiscal stance is realized in 1998 and continued in 1999.

In 1997 the EU's foreign-exchange and capital markets were characterized by greater convergence. The ERM currencies drew closer to the central rates against the D-mark and both the short-term and long-term interest-rate differentials between the countries narrowed.

After more than one year of unchanged interest rates the Nationalbank in October raised the official interest rates by 1/4 per cent as a consequence of the Bundesbank's raising of the repo rate. The other core countries also raised their official interest rates.

The Objective of the Monetary and Exchange-Rate Policy

The objective of the monetary and exchange-rate policy is to maintain a stable krone rate against the other core currencies: the D-mark, the Dutch guilder, the Belgian franc, the French franc and the Austrian schilling. The basis for the fixed-exchange-rate policy is the central rates of these currencies, which have been unchanged for more than 10 years.¹⁾ Pursuing a fixed-exchange-rate policy against a group of countries with traditionally low inflation creates a framework for low inflation in Denmark.

The fixed-exchange-rate policy entails a clear division of labour between monetary and fiscal policy. Monetary policy is designed to maintain a stable krone rate based on the central rate. It is therefore up to the other elements of economic policy, primarily fiscal policy, to stabilize the economic development.

The introduction of the single currency, the euro, in a number of EU member states on January 1, 1999 will not in reality lead to any change in Denmark's exchange-rate policy. As a natural continuation of the present policy the objective will be to maintain a stable krone rate against the euro. The framework for this will be the new exchange-rate mechanism, ERM2, cf p. 80ff.

The European Monetary System

In 1997 the EU foreign-exchange and capital markets were characterized by greater convergence. At the beginning of 1998 virtually all currencies in the EU exchange-rate mechanism, ERM, were very close to the central rates against the D-mark. In 1997 the krone was more stable against the D-mark than ever before within the EU exchange-rate system. This brought the krone in line with the Dutch guilder, the Austrian schilling and the Belgian franc, which have all for a long time followed the D-mark very closely, cf. Chart 10. From the middle of the year the French franc strengthened against the D-mark and at the end of 1997 was stronger than the central rate for the first time in seven years.

From mid-1997 the fluctuations in the Italian lira and the Spanish peseta vis-à-vis the D-mark diminished gradually, and at the same time these currencies drew closer to the central rate. However, the currencies continued to fluctuate more against the D-mark than the core currencies, and the deviation from the central rate was also slightly higher.

In 1996 and for extended periods of 1997 the Irish pound rose strongly against the D-mark as a consequence of the strengthening of the pound sterling, which is very important to Ireland's foreign trade. At the end of 1997 this development was reversed and the Irish pound weakened

Image: Chart 10 The core currencies vis-à-vis the D-mark.

Image: Chart 11 Short-term interest-rate differential to Germany.

Image: Chart 12 Long-term yield differential to Germany.

significantly. At the beginning of 1998 the Irish pound was just under 3 per cent stronger than its central rate against the D-mark, compared to just under 12 per cent in mid-1997.

At the informal meeting of the Council of Ministers of Economic Affairs and Finance, the ECOFIN Council, in September 1997 it was decided that the conversion rates to apply between the currencies of the euro countries as from January 1999 would be announced in May 1998 when the participating countries are nominated, cf. p. 78. The expectation in the foreign-exchange market is that the central rates will be the basis for the conversion rates between the currencies of the euro countries. This has stimulated the convergence towards the central rates.

The interest-rate differentials between the EU member states narrowed further during 1997. The short-term market interest rates in Italy and Spain gradually drew closer to the German level and throughout 1997 differentials between the short-term market rates in the core countries were only moderate, cf. Chart 11.

A stronger conviction that the third stage of EMU will commence with a broad group of participating countries led to a continued narrowing of the differentials between long-term interest rates to below 50 basis points (1/2 per cent) for most EU member states at the beginning of 1998, cf. Chart 12. Concurrently, the long-term German interest rates dropped further, cf. p. 44. There was a considerable narrowing of the yield differentials to Germany of Italy and Spain, while interest-rate differentials narrowed less in the member states, including Denmark, which have declared their non- participation in EMU on its commencement in 1999.²⁾

The Development in Interest Rates in Denmark

On October 9, after a period of one and a half years with the lowest discount rate since the 1930s, the Nationalbank raised the official interest rates, cf. Chart 13. The discount rate and the rate of interest on the banks' current-account deposits with the Nationalbank were raised by 1/4 per cent to 31/2 per cent. The interest rates on the Nationalbank's certificates of deposit and repurchase agreements (the repo rate) were raised equivalently to 33/4 per cent.

This increase in interest rates was a consequence of the Bundesbank's raising of the repo rate from 3.0 to 3.3 per cent. The grounds for raising the repo rate from a historically low level were stated to be the greater inflationary pressure arising from inter alia the weakening of the D-mark against the dollar, cf. p. 41. Timely measures would help prevent the build-up of inflationary pressure in the period up to the start of the third stage of EMU. Immediately after the announcement of the German raising of interest rates the Banque de France put up its repo rate to 3.3 per cent and the other core countries also raised their official interest rates.

As a consequence of the interest-rate adjustments the differential between the Danish and German repo rates narrowed by 5 basis points. The differential between Danish and German 3-month inter-bank rates dropped from approximately 50 basis points in mid-year to 40 basis points at the beginning of 1998.

Inter-bank interest rates in both Germany and Denmark rose after the augmentation of interest rates as a consequence of market expectations of further increases. At the beginning of 1998 the inter-bank interest rates fell again when expectations of an imminent raising subsided. One particular reason was a dampening of growth prospects in the industrialized countries as a consequence of the problems faced by the economies of Southeast Asia.

Image: Chart 14 Yield on mortgage-credit bonds and increase in consumer prices.

Image: Cahrt 15 Term structure on the bond market, zero-coupon yields.

The banks' average deposit and lending rates declined from 1995 to mid-1997, cf. Table 23 of the Appendix of Tables. Since lending rates fell most the banks' interest margin was reduced. The drop in interest rates ceased in October when most banks increased their deposit and lending rates by 1/4 per cent as a consequence of the Nationalbank's raising of its interest rates.

The yield on 10-year government bonds fell from 6.6 per cent at the beginning of 1997 to 5.2 per cent at the beginning of 1998, while the yield on 30-year mortgage-credit bonds decreased from 8.0 per cent to 7.1 per cent.³⁾ In 1997 the decline in the long-term mortgage-credit-bond yield brought it down to the level of the beginning of the 1960s, cf. Chart 14. This indicates that the expectations that Denmark and the other industrialized countries can maintain the low inflation of recent years - equivalent to the price increases of the 1950s - are becoming firmer.

The yield on short-term bonds, e.g. 2-year Treasury notes, rose from the middle to the end of the year, but at the beginning of 1998 dropped back almost to the level at the beginning of 1997.

The relatively strong decline in the long-term yields resulted in a flatter term structure on the bond market, cf. Chart 15 which shows the zero- coupon-yield structure for government bonds with a maturity exceeding 2 years. The same development in the term structure was seen for yields in Germany.

Denmark's long-term yield differential to Germany narrowed slightly throughout 1997 from 70 basis points at the beginning of 1997 to 30 basis points at the beginning of 1998, which is the smallest differential since the beginning of 1994. The narrow yield differential in 1994 was shortlived, whereas the differential to Germany was low for the whole of 1997.

Capital Flows and the Foreign-Exchange Reserve

The surplus on the current account of the balance of payments is estimated to be kr. 6 billion in 1997 and private capital imports kr. 38 billion. The foreign-exchange reserve increased by kr. 43 billion excluding value adjustments since the central government's repayments on foreign loans were kr. 1 billion, cf. Table 5. Portfolio investments were characterized by substantial securities transactions to and from abroad. Non-residents' net purchases of government and mortgage-credit bonds amounted to kr. 45 billion in 1997, against kr. 30 billion in 1996. However, at the same time

Table 5 Capital flows

residents' net purchases of foreign securities amounted to kr. 25 billion in 1997, compared to kr. 11 billion in 1996. Portfolio investments are specified in Table 31 of the Appendix of Tables.

At the beginning of the 1990s non-residents hedged part of the exchange-rate risk on purchase of krone-denominated bonds by e.g. raising loans in Danish kroner to finance their bond purchases. The foreignexchange market was therefore not affected by the entire net purchase. In recent years non-residents have also purchased krone-denominated bonds for considerable amounts, but without an equivalent increase in hedging activity, cf. Chart 16. As a result the net purchases have increased non-residents' demand for kroner, which is offset by a narrowing of the interestrate differential to abroad, a strengthening of the krone and net purchases of foreign exchange by the Nationalbank.

In recent years the Nationalbank has purchased and sold foreign exchange in order to dampen the day-to-day fluctuations in the krone rate, cf. Chart 17. In 1997 the Nationalbank's purchases and sales of foreign exchange were also designed to stabilize the krone very close to its central rate against the D-mark. The Nationalbank's foreign-exchange market operations entailed an increase in the foreign-exchange reserve in 1997 by kr. 45 billion including value adjustments to kr. 130 billion, cf. Chart 18.

Image: Chart 16 Development in non-residents' holding of krone-denominated bonds and krone position since the beginning of 1995.

In the autumn of 1997 the foreign-exchange reserve increased temporarily when the central government raised short-term foreign loans to ensure a positive balance on the central government's account with the Nationalbank. From time to time the strong fluctuations in the central government's payments make such borrowing necessary.

In January 1998 the foreign-exchange reserve increased as a consequence of the central government's sale of shares in Tele Danmark to abroad for kr. 21 billion. This increase is temporary, since during 1998 the proceeds from the sale will be used to reduce the central government's foreign debt. From this point the requirement of a positive balance on the central government's account with the Nationalbank will leave no scope to further reduce the foreign-exchange reserve via an isolated reduction of the central government's foreign debt.

When the Nationalbank purchases foreign exchange the banks' net position with the Nationalbank improves. The Nationalbank's foreign-exchange purchases over the last few years have gradually improved the banks' net position and since the spring of 1997 the banks' account with the Nationalbank has constantly shown a positive net balance, cf. Chart 19. The substantial day-to-day fluctuations in the banks' net position are related to the central government's receipts and disbursements. For the year as a whole the central government does not affect the overall liquidity, since the

Image: Chart 17 Fluctuation in the krone against the D-mark.

central-government deficit (the gross financing requirement excluding redemption of foreign loans) is financed in full by the issue of kronedenominated government bonds.

The monetary-policy instruments are independent of the banks' net position with the Nationalbank. The monetary-policy instruments comprise the

Image: Chart 18 The foreign-exchange reserve.

Image: Chart 19 The banks' accounts with the Nationalbank.

following: overnight current-account deposits and weekly market operations whereby the banks can borrow via repurchase agreements or place funds by purchasing certificates of deposit.

Via the weekly repurchase agreements the banks are supplied with liquidity in return for government securities as collateral. These loans are repaid after 14 days and the collateral is returned to the banks. Simultaneously, the Nationalbank absorbs liquidity on a weekly basis by selling certificates of deposit to the banks. The maturity of the certificates of deposit is 14 days. In the weekly market operations the banks normally borrow/place funds to ensure that their current-account balances are large enough to cover fluctuations in the liquidity requirement during the following week. If large liquidity deficits or surpluses in the coming week are predicted due to very large central-government receipts or disbursements the Nationalbank will in its fine-tuning operations extraordinarily repurchase/sell certificates of deposit during the week.

With effect from May 1, 1997 the limits to the accrual of interest to the banks' current-account deposits were abolished so that the total deposit on each bank's current account accrues interest at the current-account rate. Under the previous system no interest was accrued on deposits which exceeded the limits. The limits were introduced in 1992 in order to stimulate the banks' interest in creating an effective money market. Today the market operates smoothly and the limits are no longer necessary.

In 1997 the foreign-exchange markets were characterized by the strengthening of the dollar against the D-mark and the yen and by the strengthening of the pound sterling. Falling bond yields generally prevailed on the international bond markets.

The severe crisis in Southeast Asia began as a foreign-exchange crisis, but spread to the capital markets and economies of the countries affected. At the end of the year the crisis triggered a price drop on international share markets. However, this was of a temporary nature and the share markets showed considerable increases for the year as a whole.

Exchange-Rate Conditions

Exchange-rate and interest-rate conditions in the ERM countries are described in the section on the European Monetary system.

In 1997 the dollar strengthened against the other principal currencies, by 15 per cent against the D-mark and by 12 per cent against the yen, cf. Chart 20. The rising trend from 1996 thus continued. The background to

Image: Chart 20 The dollor vis-à-vis the D-mark and the yen.

Image: Chart 21 Pound sterling, Swedish krona and Norwegian krone vis-à-vis the D-mark.

the dollar's strengthening is the ongoing cyclical upswing in the USA.

The yen strengthened temporarily in the spring of 1997 on the basis of expectations of a forthcoming raising of Japanese interest rates, which did not take place, however. The weakening of the yen continued at the end of the year against the background of the weak growth in the economy, the crisis in Southeast Asia and the difficulties faced by the Japanese banking system.

The pound sterling generally followed the dollar. In 1997 sterling strengthened by 12 per cent against the D-mark, cf. Chart 21, and has rallied by 33 per cent in total since the beginning of 1996.

The Swedish krona was relatively stable in 1997. The Norwegian krone strengthened considerably at the end of 1996 and beginning of 1997. Norges Bank reacted with large foreign-exchange purchases, but in connection with a lowering of interest rates on January 10, 1997 Norges Bank declared that for a period it would not intervene in the foreign-exchange market to any significant extent. The Norwegian krone subsequently stabilized and the exchange rate at the end of the year was almost at the level at end-1996.

Development in Interest Rates

On March 25, 1997 the Federal Reserve signalled a raising of the key official interest rate - the fed funds rate - by 0.25 per cent to 5.5 per cent in order to offset inflationary trends as a consequence of persistent high growth. Long-term interest rates rose concurrently, cf. Chart 22. Despite favourable development in employment and a drop in unemployment inflation declined throughout the year to a relatively low level. This contributed to the drop in bond yields in the second half-year. The crisis in Southeast Asia also contributed to the falling interest rates in the last months of the year. The crisis has generally dampened expectations of global growth in 1998, thereby contributing to reducing fears of inflation. At the same time the greater volatility of the share markets caused some investors to prefer to shift funds to the bond market. For the year as a whole the long-term bond yields fell by 0.7 per cent.

In Japan long-term interest rates continued the receding trend from the second half of 1996, interrupted only by a temporary increase in the spring. This temporary rise was due to widespread market expectations that the central bank would raise interest rates. However, these expectations were not fulfilled since the discount rate remained at 0.5 per cent while long-term interest rates fell by 0.9 per cent for the year as a whole. The record-low level of interest rates of below 2 per cent can be attributed to the weak

economy. Growth prospects deteriorated further as a consequence of Japan's close links with the crisis-torn countries of Southeast Asia.

In Germany long-term interest rates declined by 0.5 per cent during the year as a whole. The Bundesbank's raising of the repo rate in October had no permanent impact on long-term interest rates. At the close of the year the 10-year bond yield had fallen to a historically low level of 5.30 per cent. The drop in German interest rates reflected the declining interest rates in the USA and Germany's weak cyclical position. The differential between 10-year bond yields in the USA and Germany widened at the beginning of 1997, but narrowed again at the end of the year.

After rising temporarily during February and March long-term interest rates in the UK fell by 1.3 per cent in 1997, cf. Chart 23. At the same time the differential between 10-year bond yields in the UK and Germany narrowed by 0.8 per cent to 1.1 per cent at year-end. The Bank of England raised the repo rate from 6 per cent to 7.25 per cent in five stages during 1997 in order to counter the inflationary pressure. The Bank of England's repeated raising of interest rates contributed to the considerable decline in long-term bond yields. At the end of the year the term structure of interest rates was inverse, indicating market confidence in the Bank of England's ability to meet the inflation target of 2.5 per cent. At the beginning of May the government transferred the authority to fix the official interest rates to the Bank of England. The greater independence of the central bank may also have contributed to the drop in interest rates.

Long-term interest rates also fell in Sweden and the 10-year yield differential to Germany narrowed to 0.65 per cent at the end of 1997. In December Sveriges Riksbank raised the repo rate by 0.25 per cent to offset expected inflationary pressure.

In Norway the 10-year yield differential to Germany also narrowed and was 0.2 per cent at the end of the year.

The Share Markets

The share markets have been subject to considerable price increases for several years. Prices continued to rise in the USA and Europe in 1997, but towards the end of the year share prices became subject to considerable uncertainty due to the development in Southeast Asia.

In the USA the Dow Jones index rose by 23 per cent in 1997, but the index also showed some volatility, cf. Chart 24. US share prices appear to be high in relation to the current level of earnings and the favourable share market may reflect market expectations of sustained high growth and low inflation in the USA.

In October a sudden drop in share prices in Hong Kong caused prices to plummet all over the world. Share markets in the USA and Europe soon rallied, however, and came out of the year at a level close to the situation immediately before prices fell in October.

In Japan the benchmark Nikkei index fell by 21 per cent in 1997. The decline can be attributed to the stagnating Japanese economy, difficulties in the banking sector and the crisis in Southeast Asia. The latter has had a strong impact on Japan due to its considerable economic ties to the countries affected by the crisis.

For several years Japanese banks have held large portfolios of non-performing loans and at the end of 1997 several financial institutions were forced into liquidation. Since their share portfolios are considerable the banks' capital was also undermined by the price drops on the share market. In the course of the autumn of 1997 the Japanese government introduced measures to stimulate the ailing economy and to curtail the adverse impacts of the crisis in the financial institutions. One element of the assistance package is the transfer of public funds to Japan's deposit insurance corporation.

The Crisis in Southeast Asia

In 1997 most countries in Southeast Asia were affected by a far-reaching economic crisis which had a decisive impact on the development of global capital markets. The crisis began as a currency crisis, but soon spread to the affected countries' financial markets and institutions, and to output and employment.

In recent years there has been a considerable influx of capital to the Southeast Asian economies - primarily Thailand, Malaysia, Indonesia, the Philippines and Singapore - against the background of strong economic growth and substantial fixed investments. In several of the countries the strong growth has given rise to inflationary pressure and external disequilibria. All of these countries, with the exception of Singapore, thus had current-account deficits of between 31/2 per cent and 8 per cent of GDP in 1996.

Before the crisis the general objective of the exchange-rate policies of these countries was to stabilize their currencies vis-à-vis a basket of currencies in which the dollar carried most weight. The strengthening of the dollar vis-à-vis the yen and the European currencies throughout 1996 and in the first half of 1997 weakened these countries' competitiveness considerably. In addition, competition from e.g. India and China intensified.

To a great extent the current-account deficits were financed on a short-term basis via the foreign borrowing of private business enterprises and banks. Confidence in the countries' fixed-exchange-rate policies meant that loans at low interest rates were unhedged.

The far-reaching crisis began in Thailand. In the spring of 1997 the sustainability of the fixed exchange rate came into doubt and a risk emerged of higher expenditure to service the foreign debt. Domestic demand for foreign exchange therefore increased and the exchange rate came under pressure. There are no indications that the foreign-exchange crisis was provoked by foreign market participants taking speculative positions.

In the first half of 1997 Thailand's central bank undertook massive intervention in the foreign-exchange market, but as a consequence of increasing pressure on the baht Thailand on July 2 allowed its currency to float. The baht immediately weakened considerably against the dollar, cf. Chart 25. Soon afterwards Indonesia, Malaysia and the Philippines abandoned their fixed-exchange-rate policy and their currencies subsequently weakened significantly against the dollar.

After the collapse of the fixed-exchange-rate policy a chain reaction started on the increase - measured in domestic currency - in the private non-financial sector's foreign debt. A large proportion of this debt

comprised short-term loans denominated in dollars and it became increasingly difficult to refinance the short-term foreign debt. Liquidity conditions thus became very tight and as a consequence many business enterprises had difficulty in meeting their obligations to the financial sector. The banks' solvency and credit standing generally deteriorated as a result of the non- performing loans as well as higher expenditure on the banks' own foreign loans. The currency crisis soon spread to the share markets of the affected countries, cf. Chart 26. The drop in share prices in the East Asian countries reflects the outflow of capital as the currencies weakened. To offset this weakening the central banks allowed short-term interest rates to rise. The rising interest rates also contributed to the drop in share prices.

In August an IMF loan to support Thailand's ailing economy was approved, followed by a loan to Indonesia in November.

In mid-October the currency unrest spread to Hong Kong and South Korea. The Hong Kong dollar came under pressure, but the authorities successfully defended the currency by allowing interest rates to rise. On the other hand, share prices plummeted. During October the benchmark share index dropped by approximately 30 per cent. The falling share prices in Hong Kong caused stock markets in the USA and Europe to drop as well.

The South Korean currency also came under pressure at the end of October. In mid-November the government had to abandon its exchange-rate policy and the day-to-day fluctuation band was widened from 21/4 per cent to 10 per cent. In mid-December the fluctuation band was abandoned entirely in accordance with the terms of the agreement with the IMF. At the beginning of December the IMF and South Korea concluded a loan agreement. The agreement is described on p. 85ff. As a consequence of the foreign-exchange crisis and the problems it entailed for the business enterprises and the banks share prices on the South Korean stock exchange fell by just over 45 per cent from October to the end of the year.

A particular problem faced by the economies of the crisis-torn countries has been the combination of substantial potential for growth and relatively underdeveloped financial sectors. Factors characterizing the financial institutions include inadequate internal control and management of risk exposures. In addition, external supervision of financial institutions is relatively inefficient. The result is haphazard management of both domestic savings and foreign capital inflows.

It is very likely that the crisis in the financial sectors will affect future credit granting. The combination of substantial non-performing loans and reduced capital adequacy will probably cause the banks to pursue a more restrictive credit-granting policy. In the short term this may amplify the economic slowdown in these countries. In the longer term the strong depreciation of the currencies and the efforts in some of the countries to liberalize and reconstruct the economies may contribute to a revival of growth in the region.

In 1997 the minimum coupon rate was maintained at 4 per cent and 4-per-cent bonds for large amounts were issued.

The total profit for the year of the mortgage-credit institutes was kr. 7.6 billion. Provisions on debtors carried back exceeded new losses and provisions.

The Bond Market

The development in interest rates on the Danish bond market is described on p. 33ff.

The outstanding volume of krone-denominated bonds listed on the Copenhagen Stock Exchange rose in 1997 from a nominal amount of kr. 1,712 billion to kr. 1,793 billion, cf. Table 17 of the Appendix of Tables. This is the result of a gross supply of bonds of kr. 452 billion and gross redemptions of kr. 375 billion, cf. Table 15 of the Appendix of Tables. The net supply of new bonds is attributable exclusively to mortgage-credit bonds and other bonds, while the volume of domestic government securities in circulation declined by kr. 3 billion.

The minimum coupon rate was maintained at 4 per cent in 1997 after being lowered extraordinarily on October 22, 1996. The minimum coupon rate for the first half of 1998 has again been fixed at 4 per cent. As from the adjustment of the minimum coupon rate until the end of 1997 issues of 4-per-cent bonds totalled approximately kr. 80 billion, in addition to central-government borrowing. The large gross supply of new bonds is due to the fact that after tax these bonds are attractive to private investors, and that both resident and non-resident borrowers have found it advantageous to use this market. The mortgage-credit institutes constitute the largest group of issuers, accounting for 35 per cent, while non-resident borrowers and entities subject to state guarantees account for respectively 25 per cent and just under 20 per cent. Non-resident borrowers operate extensively in the euro-krone market, but this is the first time that they are significant participants in the domestic Danish capital market.

Issues of 4-per-cent bonds were particularly significant in the first half of 1997, but were less important in the second half-year. This development is probably the result of a "hoarding effect" due to expectations at the beginning of 1997 that the low minimum coupon rate was only temporary. In addition, demand has gradually become more moderate in step with the expansion of the market.

The borrowing terms offered in the 4-per-cent-bond market have been utilized by a number of borrowers in combination with the swap market. In connection with the issue of bonds these issuers, who have preferred financing at floating interest rates, have swapped from fixed to floating interest rates. Activity in the Danish swap market has tended to increase.

Chart 27 shows the ownership distribution of bonds with a nominal interest rate of 4 per cent. The Chart shows that private investors are the principal investor group.

In 1997 there were 59 issues of krone-denominated bonds listed outside Denmark - euro-krone bonds - for a total nominal amount of kr. 25 billion, cf. Table 18 of the Appendix of Tables. This represents an increase of kr. 4 billion in relation to 1996. The greater interest is probably related to the fact that particularly private non-resident investors find such bonds to be of interest in view of the stable krone and the yield differential to Danish government securities.

Throughout 1997 demand for mortgage-credit loans at variable interest rates has continued, against the background of the relatively low short-term interest rates. Such loans are granted on the basis of uncallable bullet bonds at varying maturities. At the turn of the year 1997-98 a relatively large volume of loans required refinancing. One mortgage-credit institute chose to refinance a proportion of the amount by auction, rather than by tap issue as usual. Auctions have never before been used for mortgage-credit bonds.

The proportion of Danish krone-denominated bonds held by non-resident investors increased slightly in 1997, to just over 18 per cent. Government securities continue to be the principal element of non-resident investors' holdings of krone-denominated bonds. Their share of government securities in circulation rose from 37 per cent at end-1996 to 41 per cent at end-1997, whereas the share for mortgage-credit bonds was approximately 5 per cent. A likely explanation for the relatively low share of mortgage-credit bonds is that non-resident investors prefer to invest in simple bond types. Mortgage-credit bonds are typically callable annuity bonds, which are more complex than the uncallable bullet government issues. Finally, the greater liquidity of the government securities market may also be a contributing factor, since only few mortgage-credit-bond series have a circulating volume exceeding kr. 20 billion.

For many non-resident investors an international rating of the bonds is a condition for investment. Most of the Danish mortgage-credit institutes have now obtained a rating of their most frequently traded bonds. Moody's Investor Service has given issues by the mortgage-credit institutes the rating Aa2 or Aa3, i.e. one to two steps below the Kingdom of Denmark's foreign loans (Aa1) and two to three steps below domestic government loans (Aaa). Both Aa2 and Aa3 are good ratings. Bond series without joint and several debtor liability have been given the same rating as bond series with joint and several debtor liability issued by the same mortgage-credit institute. A rating does not necessarily entail a price difference between rated and non-rated mortgage-credit bonds, although usually non-resident investors have preferred rated bonds. In this respect they differ from resident investors who do not attach much importance to the rating. On this basis no price differences have arisen in the bond market between bonds which apart from their rating are identical.

Nordic Stock-Exchange Cooperation

In June 1997 the Copenhagen Stock Exchange and the Stockholm Stock Exchange signed a declaration of intent on far-reaching cooperation to establish a joint Nordic securities market, Nordic Exchanges - NOREX. In the first instance a joint company is established to market the services of the stock exchanges. This company was established at the beginning of 1998. As an element of this cooperation the Copenhagen Stock Exchange will acquire the Swedish trading system SAX 2000 for share trading. In the longer view the cooperation is envisaged to create a joint Nordic securities market where all types of securities are traded using the same technical platform.

In December 1997 the Danish Securities Centre, VP, and the Swedish Securities Centre, VPC, declared their intention to enter into close cooperation. Initially the purpose is to support the cooperation between the Swedish and Danish stock exchanges. However, in the future this co-operation will also give the two securities depositories a stronger position from which to face the intensified competition in Europe in this area too.

The Banks

In 1997 the banks achieved a favourable financial result for the third consecutive year. The profit before tax was kr. 13 billion, which is equivalent to the level in 1996.

Again in 1997 part of the profit was attributable to positive value adjustments of bond and share portfolios. The rise in Danish share prices by 43 per cent (total index) contributed to the result. However, just under 60 per cent of the share portfolio originates from pooled pension funds where depositors' savings accrue interest at the yield on an underlying portfolio of securities owned by the bank. This part of the capital gains thus does not affect the banks' financial result. Adjusted for the yield on pooled pension funds, included in the banks' balance sheets, the value adjustments of securities and foreign exchange in 1997 totalled kr. 2 billion, compared to kr. 4.6 billion in 1996.

Total losses and provisions on debtors fell again in 1997, to kr. 2.3 billion, which is equivalent to 0.3 per cent of loans and guarantees. This is the lowest ratio since 1976 and 1977 when the provisions ratios were 0.2 and 0.3 per cent. In the period from 1975 up to and including 1997 the average provisions ratio was 1.2.

In 1997 net income from interest and fees totalled kr. 36 billion, which is equivalent to the level of the two preceding years. In 1997 income from interest accounted for 76 per cent of total income from interest and fees, compared to 78 per cent in 1996 and 81 per cent in 1995. It thus appears that a gradual shift is taking place from income from interest towards income from fees.

In the same period income from interest may be "inflated" due to high nominal interest rates on the banks' bond portfolios. Bonds at high nominal interest rates are traded above par, but on the other hand entail a negative value adjustment as the price moves towards par in connection with a reduction of remaining maturity.

In 1997 the growth in lending was 17 per cent, against 12 per cent in 1996. The growth rate for lending is stronger than the increase in net income from interest and fees because the interest margin has narrowed.

Staff and administration costs amounted to kr. 20 billion in 1997 and are almost unchanged in relation to the last few years. Since the extensive staff reductions at the beginning of the 1990s the banks have overall not reduced the nominal costs significantly.

Total net extraordinary expenditure fell from around kr. 2 billion in both 1995 and 1996 to kr. 0.5 billion in 1997.

The solvency ratio of the banks taken as one at end-1997 was 11.7 per cent, equivalent to a decrease by 0.4 percentage points from 1996. The risk-weighted assets and market risks have thus risen more than the capital base, despite the consolidation of the year (profit after tax and dividend) and raising of subordinate capital totalling kr. 5 billion net. However, the solvency ratio is still well above the statutory minimum requirement of 8 per cent. At end-1997 the Tier-I ratio was 9.3.

Recent years' development towards a single Nordic banking market continued in 1997, when the first major cross-border Nordic merger took place, i.e. the merger of Swedish Nordbanken with Merita Bank of Finland. The major Danish banks also intensified their Nordic activities during the year via acquisitions or new establishments. At the same time the Swedish banks in particular increased their activities in Denmark. Previously, competition between the Nordic banks was concentrated on corporate customers, e.g. including the raising of international loans, underwriting and mergers and acquisitions, as well as asset management. The structural adjustments in 1997 have created the basis for more intense competition and there are signs that the competition will spread to all traditional banking services, including those offered to retail customers.

The maintenance and upgrading of existing computer systems have developed into a permanent activity for the banks. Prior to the introduction of the single European currency, the euro, computer systems must be adjusted to handle a new currency, even though the requirements are less extensive in Denmark than in the euro countries. Systems must also be restructured to handle the correct date and year when the new millennium begins - the year-2000 problem. More and more computer skills are required of the banks' staff and many have accepted their employers' offer to provide a PC for home use on condition of training in computer skills.

Another factor is the development of new products and distribution channels which the development of new technology has made it possible to offer and market. This creates new sources of income and potential cost savings. Particularly the PC-based self-service systems continue to gain ground. These systems save time for both parties, and usually the customer will pay a lower fee for the services. The Internet is also used more extensively, e.g. for marketing and issue of new publications. In some cases the banks and customers communicate directly via the Internet, e.g. in connection with loan applications.

The branch network is still important to Denmark's financial infrastructure, but the distance to the nearest branch is no longer the only parameter of competition for customers. The technological development has changed this, and the banks are continuously adjusting to a situation where customers can access prices and product descriptions from their desks at home, from where they can also establish contact with foreign banks. The erosion of sectoral barriers within the banking sector is expected to continue, among other factors in step with the technological development.

The Mortgage-Credit Institutes

The financial result of the mortgage-credit sector was extremely favourable in 1997. The profit before tax rose to kr. 7.6 billion, compared to kr. 6.4 billion in 1996, thus exceeding the previous record of kr. 6.8 billion in 1995.

The profit for the year was primarily achieved from net reversal of loan-loss provisions amounting to kr. 0.2 billion. The fact that the reversal of previous provisions exceeded new provisions is related to the high level of activity in the property market and rising property prices, reflecting the low interest rates, the general improvement in customers' finances, and thereby a low number of enforced property sales.

Capital gains on the securities portfolio rose to just under kr. 2 billion.

Income from interest, fees and contributions amounted to kr. 8.4 billion. This is a stabilization of the 1996 level.

In recent years the mortgage-credit sector's expenditure on staff and administration has risen. The reason is the strong activity in the property

market and the efforts to promote more direct customer contact, which requires additional staff, as well as continuing relatively large investments in computer systems and system development.

In 1997 lending by the mortgage-credit institutes rose by 7 per cent, cf. Table 13 of the Appendix of Tables.

Chart 28 shows the distribution of net new lending on respectively "old" and "new" mortgage-credit institutes. Net new lending is compiled as gross new lending less early redemptions, thus excluding remortgaging transactions. Should early redemptions exceed new lending, this figure may be negative.

In 1994 the "new" mortgage-credit institutes accounted for 94 per cent of net new lending. Net new lending by the "old" mortgage-credit institutes was kr. 2 billion in 1994, whereas total net new lending amounted to kr. 26 billion. A high number of remortgaging transactions was seen in 1994. The bank-owned mortgage-credit institutes, which in 1994 had just entered the market, thus used the banks' traditional contact with customers to take over customers' mortgage-credit loans in connection with remortgaging.

The market stabilized in 1995, 1996 and 1997. Remortgaging declined to a lower level, while the "new" mortgage-credit institutes' share of net new lending fell to around 50 per cent. Total net new lending amounted to kr. 81 billion in 1997.

In the period 1994-97, as a consequence of their large share of net new lending, the "new" mortgage-credit institutes increased their share of total mortgage-credit bonds in circulation, but the three "old" mortgage-credit institutes still dominate the market with 84 per cent of bonds in circulation at end-1997, cf. Chart 29. The "old" institutes receive larger ordinary instalments since a greater proportion of their loans were granted a long time ago, so that their share of the volume of bonds in circulation declined in 1997, even though they accounted for more than 50 per cent of net new lending.

The ability to offer loans at variable interest rates was a parameter of competition for the mortgage-credit institutes in 1997. Efforts to reduce the development costs for this product among other things induced two otherwise independent mortgage-credit institutes to initiate cooperation.

Other structural changes included the establishment of a new mortgage-credit company owned by a bank and a mortgage-credit institute, and the acquisition by a mortgage-credit group of a "telebank" from a bank. The background to these two constellations appears to be the opportunity for optimum utilization of the expertise held by the respective personnel groups and of the existing computer systems. This reduces the traditional establishment phase involving training of employees and the development of new computer systems and provides for a competitive edge in the competition for customers.

The development in the mortgage-credit sector also shows that the banks are no longer the sole cause of the erosion of sectoral barriers. The mortgage-credit sector now competes actively with variable-interest loans which have similarities to bank loans, or even more directly by offering a full programme of banking services.

Investment Associations

The first Danish investment associations were established in the 1920s, although the present structure of the sector emerged in the 1960s. In recent years investment associations have become an important part of the Danish market for savings and investments, and the number of sections specializing in certain securities has increased. At the end of 1991 the various investment associations had a total of 128 sections, while at end-1997 the number had increased to 223. The assets of the investment associations have trebled to kr. 89 billion in the same period.

In 1997 the assets increased by kr. 34 billion, of which kr. 24 billion is attributable to sales of new investment certificates, while the remainder of kr. 10 billion was due to value adjustments on securities, etc. held by the associations.

Price increases on bond and share markets are thus part of the reason for the growth in the assets held by investment associations in recent years. At the same time the low level of interest rates has induced savers to seek other investment opportunities than e.g. deposits with banks.

The associations' spreading of their investments on various securities contributes to reducing the investors' risks, but the associations cannot eliminate all of the risks such as general share-price drops on all markets. A case in point is the autumn of 1997 when the price drops were a consequence of the crisis in Southeast Asia.

Most of the investment associations were initiated by Danish banks and the two largest investment associations are closely linked to the two largest Danish banks. At the end of 1997 these investment associations accounted for just under 60 per cent of the total assets held by the investment associations. Investment associations established by foreign banks made up 3 per cent of the Danish market at end-1997.

VB Finans and Himmerlandsbanken

At the end of 1993 the Nationalbank made available a government-guaranteed overdraft of maximum kr. 4.4 billion to VB Finans, the company responsible for the winding-up of Varde Bank. As described in the 1996 Annual Report, p. 54f., bankruptcy proceedings were instigated against VB Finans at the beginning of 1996, at the request of its Board of Directors. In 1997 VB Finans af 1996, which took over all assets and certain liabilities from VB Finans in connection with the bankruptcy, continued the work of winding up the activities of the previous Varde Bank.

During 1997 the company was able to pay kr. 0.7 billion to the Nationalbank as a result of the winding-up of exposures, sale of properties and share portfolios. The company's total debt to the Nationalbank was thus reduced from kr. 1.1 billion at the beginning of the year to kr. 0.4 billion at year-end.

The company still holds considerable assets to be wound up, and a number of legal actions have been filed against the winding-up estate. It is therefore not possible to calculate the final costs of the collapse of Varde Bank.

In 1997 no amounts were paid under the guarantee furnished by the Nationalbank and a number of banks to the winding-up estate of Himmerlandsbanken, cf. the 1993 Annual Report, p. 48ff. Final calculation of the costs of the winding-up of Himmerlandsbanken cannot be made until the rulings in the court cases filed against the estate have been passed down.

In the course of the next two years the Nationalbank is issuing new 50-krone, 100-krone and 1,000-krone banknotes. The 1,000-krone banknote will be issued in the autumn of 1998.

The cash supply system is being revised. This has e.g. resulted in the establishment of cash depots in the Copenhagen area.

The New Banknote Series

On September 12, 1997 the Nationalbank issued a new 500-krone banknote as the second note in the new series. The first, the 200-krone note, was issued on March 10, 1997, cf. the 1996 Annual Report. The face of the 500-krone note features a portrait of the nuclear physicist Niels Bohr, one of the most distinguished Danish scientists of this century. He received the Nobel Prize in 1922. The motif on the reverse is inspired by a stone relief on the font of Lihme Church in Salling, Denmark. The motif shows a man and a dragon fighting.

The other three notes in the new series will be issued over the next two years; the 1,000-krone note in the autumn of 1998, and the 50-krone and 100-krone notes in 1999.

The old note series is being replaced because new developments in graphic technology have created the need for better protection of banknotes against counterfeiting. The new note series has a number of new security features, while well-known security features have been improved. The new features include a security thread which changes colour, strong colours, a hidden image and microprinted text. The traditional security features are a watermark and a hidden security thread. The portrait, the rosette and the shadowprinted text, as well as the paper used for the notes, all contribute to making a note recognizable as a document of value.

When the 200-krone and 500-krone notes were issued press conferences were held and folders distributed to all households in order to give information about the new banknotes. TV and radio advertising spots were also used. So far, the costs of this information have totalled approximately kr. 10 million. Further information will be given when the next banknotes in the new series are issued.

The new 200-krone and 500-krone notes have shown a tendency to curl, which disappears after they have been used for a while. This is inconvenient in the general handling of banknotes and in cash dispensing machines. The Nationalbank is seeking to solve this problem by changing the properties of the paper used for the notes and by adjusting the production process.

Counterfeiting of Banknotes and Coins

There is no real history of counterfeiting in Denmark. From 1993 to 1996 only around 100 counterfeit Danish banknotes per year were found to be in circulation. In 1997 this number almost quadrupled. The increase is attributable to a small number of cases where a large number of 1,000-krone notes were put into circulation. At the end of 1997 several counterfeit 20-krone coins were confiscated.

Counterfeiting or attempted counterfeiting is a serious crime which can incur a penalty under Sections 166-170 of the Danish Penal Code. In particularly serious cases counterfeiters can receive prison sentences of up to 12 years. This is one of the most severe maximum penalties stipulated in the Danish Penal Code. The courts will normally impose unmitigated prison sentences for manufacturing and issuing counterfeit money or for being an accessory thereto.

Today many schools and after-school institutions have equipment which can be used to copy banknotes and there have been cases where children and young people have tried to copy money "for fun". A few of these counterfeit coins and banknotes have entered into circulation. These cases involving children and young people are very unfortunate, because the perpetrators do not become aware of the seriousness of their actions until it is too late. Even though the money has been counterfeited for fun, or without thought of the consequences, counterfeiting still constitutes a serious violation of the Danish Penal Code.

For this reason the Nationalbank, in cooperation with the Crime Prevention Council, has issued a poster which in September 1997 was sent to all Danish elementary and secondary schools, technical colleges, commercial colleges, etc. The Nationalbank hopes that this information campaign will contribute to reducing the number of children and young people facing serious criminal charges.

Use of Banknotes for Illustration Purposes

The Nationalbank holds the copyright to the Danish banknotes and finds it very important that copies of banknotes do not risk being mistaken for real banknotes.

The guidelines for use of banknotes for illustration purposes were tightened in 1992. It was no longer permitted to reproduce banknotes, or parts thereof, in advertisements, printed matter or advertising material. This measure was introduced as the result of a communication from Interpol to the central banks requesting the latter to reduce the risk of counterfeiting in connection with reproduction of banknotes.

This practice has been tried at the Supreme Court, which stated in a ruling in the spring of 1997 that reproduction of banknotes should be viewed against the background that the Nationalbank holds the copyright to the banknotes, but at the same time it must be taken into account that the banknotes are a symbol of financial value, and it has to be possible to use banknotes to illustrate this.

The Nationalbank has adjusted its practice in accordance with the Supreme Court decision. In order for reproductions of banknotes for illustration purposes to be easily distinguishable from real banknotes the Nationalbank recommends that banknotes be reproduced in dimensions of maximum half size or at least double the size measured as the area of the banknote, or that maximum one third of the entire banknote be shown. For reproductions intended to provide information on banknotes these guidelines may be deviated from as agreed with the Nationalbank.

The Nationalbank has issued a brochure (available only in Danish) on the rules for the use of banknotes for illustration purposes. This brochure has been sent to a number of trade organizations and other parties whose activities involve printed matter, commercials, advertisements, etc.

Banknotes and Coins in Circulation

In 1997 notes in circulation increased by kr. 1.9 billion to kr. 34.7 billion⁴⁾ or by 5.7 per cent from 1996. This rate of increase corresponds to that of previous years. The number of banknotes rose by 2.2 million, or 2.0 per cent, cf. Table 6.

As in the preceding years the increase in notes in circulation corresponds to the growth in private consumption, which can be used as an indicator of growth in demand for cash for transaction purposes.

The development in the circulation of the different note denominations reflects the introduction of the 200-krone note. Quite naturally, the 200-krone note accounts for the greatest increase in notes in circulation, and at the end of 1997 200-krone notes for kr. 1.6 billion were in circulation.

Table 6 Note circulation and note consumption

The introduction of the 200-krone note has led to a considerable decrease in the circulation of 100-krone notes. A growing number of cash dispensing machines now pay out 200-krone notes instead of 100-krone notes. In quantitative terms the 100-krone note still dominates with a share of 52 per cent, while the value of 100-krone notes in circulation is only 18 per cent. 61 million 100-krone banknotes are in circulation.

The lifetime of banknotes normally increases with the note's denomination because the turnover rate for lower note denominations exceeds that for the higher denominations. The lifetime of a 50-krone note is normally around one year, whereas the lifetime of a 1,000-krone note is approximately three years. The lifetime of the banknotes is affected by the introduction of the new note series, however. In the period up to the issue of a  new series of banknotes the issue of new banknotes is reduced. Instead, old banknotes of a slightly poorer quality than normal are put into circulation. After the issue of the new series the notes in the old series are withdrawn on being returned to the Nationalbank, regardless of whether they are in good condition at that time. So first the banknotes' lifetime is extended and then it is shortened, without reflecting the actual wear and tear of the notes.

Pursuant to the Danmarks Nationalbank Act of 1936 the circulation of notes must be covered (funded) by the Nationalbank's reserves of gold and other assets, according to certain specific rules. However, since 1939 an exemption has been made from the gold-coverage provision under Section 13 of the Danmarks Nationalbank Act. Again in 1997 the Nationalbank's Board of Directors renewed the exemption, with the consent of the Royal Bank Commissioner.

In 1997 coin circulation increased by 6.0 per cent to kr. 3,631 million. As in the preceding years the 20-krone coin accounted for the greatest increase by value, whereas the 25-øre coin showed the largest increase in quantitative terms.

Table 7 shows the distribution of the coin circulation and coin production on the various coin denominations.

Queen Margrethe's silver jubilee on January 14, 1997 was marked with the issue of a commemorative coin, cf. the 1996 Annual Report.

Table 7 Circulation, production and withdrawal of coins in 1997

The Cash Supply

In 1990 the first cash depots were established with the purpose of supplying the local banks and post offices with cash or taking back their surplus cash holdings. Cash was supplied from 18 depots all over Denmark, except Zealand where the Nationalbank has administered the cash supply directly.

Under this scheme the depots were operated by the banks. Since the cash at the depots is not owned by the Nationalbank, but by the banks operating the depots, the Nationalbank grants an interest-free loan to each depot equivalent to its cash holdings. The depots' costs have been covered by the customers as handling charges for all deposits and withdrawals, and by the Nationalbank, which has paid an annual amount calculated on the basis of the insurance cover of the depot.

In 1997 the Nationalbank reviewed the cash supply system. This revision revealed some weaknesses, including that the depots have not exchanged cash supplies among themselves, that a number of banks have ordered cash from the Nationalbank rather than from the nearest cash depot and that cash transports on Zealand and the associated risk can be reduced if cash supplies to a greater extent are handled on a local basis.

After consultation with the banks the Nationalbank therefore decided to make a number of adjustments to the cash supply system, including the

establishment of cash depots on Zealand and a reduction of the Nationalbank's cash handling. The Nationalbank's servicing of the depots will be limited to issuing new banknotes and coins and receiving rejected banknotes and coins. The depots will service the banks in the local area, including cash dispatched by mail. Since in future a larger proportion of cash flows will not involve the Nationalbank the banks will to a greater extent also handle the note-sorting previously carried out by the Nationalbank.

The Nationalbank will continue to grant interest-free loans to the depots, but under the new system collateral must be furnished for the loans. The costs of the depots will be financed by charges for deposits and with- drawals.

The adjustment of the cash depot system commenced in the spring of 1998 with the establishment of four depots in the Copenhagen area. The system is expected to be expanded with a further 1-2 depots on Zealand. The need for new cash depots will be evaluated on an ongoing basis.

Cash supply in Greenland is handled via a cash depot in Nuuk. Cash supply on the Faroe Islands, which uses its own banknotes, but Danish coins, is handled via "Rigsombudet", the representative on the Faroe Islands of the Danish Prime Minister's Office.

In 1997 and at the beginning of 1998 major changes took place in the infrastructure on which Danish payment systems are based. The clearing of retail transactions has been restructured and the access to furnish collateral in the securities clearing system has been expanded considerably as a consequence of the introduction of automatic pledging.

At the European level an intensive effort is being made to complete the common European payment systems in time for the launch of EMU. This will affect payment systems in Denmark, even though Denmark will not participate in the third stage of EMU. The international work on electronic money and a reduction of settlement risks in connection with foreign-exchange trading has continued.

The Development in the Danish Payment Systems

Table 8 shows turnover in the three large payment systems which are settled via the banks' accounts with the Nationalbank.

The average daily turnover of the securities clearing system of the Danish Securities Centre, VP, rose to kr. 93 billion in 1997. An increasing proportion of Danish securities are settled in the international clearing centre Euroclear. In 1997 Euroclear handled almost half of all settlement of Danish securities.

In Denmark and abroad more and more financial institutions require collateral for any type of lending or credit to other financial institutions.

Table 8 Various payment systems, daily averages

An example is the Nationalbank's requirement of collateral in connection with overdraft facilities at the Nationalbank, cf. the 1995 Annual Report, p. 52f. The more rigorous collateral requirements have given rise to a strong wish in the financial sector to make the use of the collateral more flexible. For this purpose a new function in the VP clearing system has been developed, i.e. automatic pledging. The automatic pledging system gives banks and stockbroking companies the opportunity to furnish securities as collateral at the clearing when the securities are purchased. This reduces the need for other collateral. The new function was to have been introduced in the autumn of 1997, but the development of the new system involved more work than expected by VP. Instead, VP has announced that automatic pledging will be available as from March 9, 1998.

In 1997 the average daily turnover in the retail clearing system, where a large number of retail payments such as payroll transfers and purchases by cheque or Dankort payment card are settled, amounted to kr. 16 billion, cf. Table 8. In January 1998 the retail clearing system was restructured so that most payments are booked after it has been checked that the parties to the settlement transactions are able to meet their commitments, cf. Box 1. Under the previous system the retail payments were booked before the banks had covered their obligations. As an element of the restructuring the Danish Bankers Association took over the operational responsibility for the retail clearing system from the Nationalbank. As in the VP clearing system the Nationalbank's role is now solely to act as settlement bank.

Under both the VP clearing system and the retail clearing system the Nationalbank announces prior to each clearing the limit for each participant in

Box 1: The stages of payment settlement

the subsequent settlement, cf. Chart 31. The parties to the clearing inform the Nationalbank of their drawing requirement by transferring amounts from their current accounts with the Nationalbank to their settlement accounts. If the current accounts do not hold sufficient funds the participants have access to overdrafts. As from June 1998 collateralized securities will be a condition for overdrafts. In the event of a party's failure to repay an overdraft by the close of the day the Nationalbank may realize the furnished collateral and thereby avoid losses. The Nationalbank has postponed some stages of the gradual introduction of full collateralization, cf. also the 1996 Annual Report, p. 64.

The average daily turnover of the Nationalbank's payment system, the DN Inquiry and Transfer System, where the banks settle major inter-bank payments in kroner, e.g. inter-bank loans, amounted to kr. 72 billion in 1997. The DN Inquiry and Transfer System is a real-time gross settlement system (RTGS). On the introduction of the European payment system, TARGET, cf. below, the Nationalbank will modernize the DN Inquiry and Transfer System to match the standard of TARGET.

International Work on Payment Systems

In 1997 the European central banks and the EMI (the precursor of the European Central Bank) continued their work on several major payment-system projects. These projects are motivated by the need for an infrastructure to support the single monetary policy under EMU. The principal project is the future European payment system, TARGET, which is designed to ensure rapid and secure transfer of large euro-denominated amounts within the euro area. One effect of TARGET will be to equalize any interest-rate differentials between the euro markets of the various countries, since the system will enable rapid transfer of liquidity from one  market to another. Like the DN Inquiry and Transfer System TARGET is an RTGS system and is intended primarily for major inter-bank transfers. TARGET is described in more detail in the 1995 Annual Report, p.  56.

The preparation of TARGET is progressing according to plan and the system is expected to be ready by January 1, 1999 on the commencement of the third stage of EMU, cf. the EMI's Second Progress Report on the TARGET Project, described in Box 2. Both the EU member states which participate in EMU and the non-participating member states may be connected to TARGET. However, more restrictive terms will probably apply to the non-participating countries than to the euro countries. The terms for non-participating countries will not be adopted until after the establishment of the European Central Bank, ECB, in the summer of 1998. The draft models are described in more detail in the 1996 Annual Report, p. 65.

The EMI is also working on the structure of a system for cross-border provision of collateral. This is necessary because the ECB will not provide any type of credit without collateral. The central banks will act as each other's correspondent banks for this provision of cross-border collateral. If a German bank wishes to use securities deposited in the Netherlands as collateral for a credit facility from the German central bank the securities must be held in custody with the Dutch central bank. The latter will acknowledge receipt of the securities to the German central bank, which will then grant the credit facility to the German bank. Since Denmark has opted out of EMU Danish securities will probably not be eligible as collateral

Box 2: EMI reports on payment systems in 1997

vis-à-vis the future European System of Central Banks, ESCB, so the Nationalbank will thus have no reason to develop the system.

At the request of the central banks the European securities depositories have established the European Central Securities Depositories' Association, ECSDA. Its principal long-term objective is to develop an alternative to the central banks acting as each other's correspondent banks. The securities depositories will establish mutual links like those today existing between VP and Euroclear. VP is participating in this work.

Work on payment systems is also taking place under the auspices of the  European Commission. The most important initiative in this area is the  work on the directive on settlement finality in payment and securities settlement systems which among other things will enable TARGET to function as intended. One of the purposes of RTGS systems such as TARGET is that a payment be immediate and final as soon as it is released by the party making the payment. However, this is not the case if bankruptcy rules in the country of the party making the payment make it possible to revoke effected payments within a certain period. Bankruptcy provisions vary considerably from country to country. In step with the increase in the number of cross-border payments it has become a growing concern that in the worst case the payment system, the pledged collateral, the payer and the payee may be subject to four different sets of bankruptcy legislation.

In 1997 the European Commission also worked on a directive on electronic money, e.g. prepaid cards and network money. This work has not yet reached its final phase. A central issue has been whether other parties than credit institutions should be allowed to issue electronic money. The Commission has taken a liberal standpoint and focused on issuer supervision and the need for consumer protection. This corresponds to Denmark's position in this area. The Danmønt Card is not issued by a credit institution, but by a subsidiary of PBS (Danish Payment Systems Ltd.).

In April 1997 the central banks of the G10 countries - the major industrialized countries - published a report on electronic money. In many areas the groups under G10 auspices discuss overall problems in the financial sector and make recommendations which later become de facto standards all over the world. This was the case for capital-adequacy requirements of credit institutions and with regard to many recommendations in the area of payment systems. The G10 report on electronic money is broad-based and embraces consumer protection, legislation, supervision, money laundering and problems related to cross-border use of electronic money. The report is first and foremost descriptive. This reflects the very different standpoints of the central banks of the various countries on these issues. The report also presents an overview of systems, providers, products and supervision within this area in the G10 countries.

In March 1997 G10 issued a report on settlement of financial derivatives which focuses on the many different sources of risk and puts forward recommendations on the minimization of such risks. Furthermore, the report

Box 3: PvP to reduce settlement risks in foreign-exchange transactions

describes institutions, practice and regulation in the G10 countries in this field.

In 1996 G10 published a report on settlement risks in foreign-exchange transactions in which banks in the private sector were encouraged to establish systems to reduce such risks, cf. the 1996 Annual Report, p. 70f. The largest banks have taken up this challenge and an international system is already beginning to emerge, cf. Box 3.

Settlement of Euro-Denominated Payments in Denmark after the Commencement of EMU

Although Denmark will not participate in the third stage of EMU the introduction of the euro will affect the Danish financial sector, not least the payment system.

Today, the D-mark and other future EMU currencies are used by the Danish business community and the euro will probably be used to at least the same extent after January 1, 1999. As Denmark will be connected to TARGET the basic infrastructure for euro-denominated inter-bank payments will be in place. The financial sector will among other things establish a euro retail clearing system and a VP clearing system for euro. The Nationalbank will make settlement accounts in euro available along the lines of the current system of settlement accounts in kroner for the retail clearing system and the VP clearing system, and in certain foreign currencies for the VP clearing system. Unless intra-day euro-denominated liquidity is made available to the Nationalbank by the ESCB the Nationalbank will be unable - even against collateral - to provide credit in euro. As a consequence the Danish banks will have to raise the necessary euro-denominated liquidity by e.g. furnishing their portfolios of foreign securities as collateral to the ESCB when they raise liquidity via branches and subsidiary banks within the euro area. Since the Nationalbank's foreign-exchange reserve must be available to stabilize the krone it may not also be used to create euro-denominated liquidity in the payment systems. The parties to a settlement must ensure advance cover of their drawings. Euro-denominated deposits to accounts with the Nationalbank will not accrue interest since this would correspond to conducting monetary policy in euro.

Since no interest is accrued to euro-denominated deposits the banks will seek to avoid overnight euro-denominated deposits with the Nationalbank. So there is every indication that in Denmark euro-denominated settlements will take place during daytime hours when the parties can draw liquidity into the country, use it in settlement transactions and return it to the euro countries, without losing interest days. Under the present system settlement in Danish kroner primarily takes place overnight while trading systems and other systems are closed.

The third stage of Economic and Monetary Union, EMU, is expected to commence on schedule on January 1, 1999. The participating countries will be selected in May 1998 with simultaneous announcement of the bilateral conversion rates between the national currencies of the participating countries to apply on the transition to the euro. Denmark has opted out of the third stage and as from January 1, 1999 will participate in the new exchange-rate mechanism, ERM2. Its purpose is to support exchange-rate stability between the euro area and the non-participating EU member states. The European Central Bank, ECB, will be established soon after the selection of the participating countries, at which time the European Monetary Institute, EMI, will be dismantled.

In 1997 the work of the International Monetary Fund, IMF, was concerned with the financial crisis in Asia in particular.

The European Union

The preparation of the third stage of Economic and Monetary Union progressed according to plan in 1997. Many important details of both the technical and the political preparations are now in place so that the third stage can commence on January 1, 1999 as planned.

At the beginning of May 1998 it will be decided which countries are to participate in the euro area from the outset, cf. the timetable set out in Box 4. All 15 EU member states will take part in making these decisions.

The euro countries will be selected on the basis of an evaluation of their convergence situation in 1997. According to a forecast in October 1997 by the European Commission, cf. Table 9, all EU member states except Greece will fulfil the interest and inflation criteria and be below or very close to the government-budget-deficit limit of 3 per cent of GDP. In February 1998 the EU member states published their reported budget statistics for 1997 which for 14 countries showed a government-budget deficit of 3.0 per cent or less of GDP.

According to the Maastricht Treaty a budget deficit exceeding the 3-per-cent limit can be tolerated, provided that as a percentage of GDP the deficit has declined substantially and has come close to the 3-per-cent limit, or if the excess is of an exceptional and temporary nature. A government debt in excess of the 60-per-cent limit is acceptable if the government debt as a percentage of GDP is deemed to have diminished sufficiently. The convergence achieved must be sustainable.

Table 9 EU member states' compliance with EMU criteria

In view of the considerably improved convergence situation in a number of member states it is generally expected that 11 of the 15 EU member states will be selected to participate in the third stage as from January 1, 1999. The other member states are Denmark, the UK and Sweden which

Box 4: Timetable for EMU decisions in the spring of 1998

do not wish to participate, as well as Greece which does not comply with the convergence criteria.

According to the Edinburgh Agreement of 1992 Denmark will not participate in the third stage of EMU. In this respect Denmark made use of its Treaty-bound right to opt out of participation in the third stage, even though the country fulfils the criteria for participation. As a consequence Denmark will have the same rights and obligations as the countries not complying with the criteria for participation in the third stage, the derogation countries.

In October 1997 the British government announced that the UK wishes to use its Treaty-bound right to opt out of participation in the third stage from the beginning. However, the British government will be prepared to propose UK participation at a later date should EMU be considered of economic benefit to the UK. The government has stated that in such case participation must be approved by a referendum which is estimated to take place around the year 2002 at the earliest.

In December 1997 the Riksdag (Parliament) approved the Swedish government's recommendation that Sweden does not participate in the third stage from the beginning, but that participation from a later date is possible if approved by referendum or general election.

In conjunction with the selection of the member states participating in the third stage the bilateral conversion rates between the national currencies of the participating member states, e.g. the rate of the D-mark against the French franc, will be announced. The conversion rates between the national currencies and the euro cannot be fixed until December 31, 1998.

Immediately after the selection of the participating member states and the announcement of the bilateral conversion rates the establishment of the European Central Bank, ECB, and the procedure to appoint the ECB's Executive Board will commence. Up to the commencement of the third stage on January 1, 1999 the monetary policies of the participating member states will continue to be an area of national competence.

It will not be possible to replace the national banknotes and coins of the participating member states with euro notes and coins from the outset due to the production time required. A gradual transition has therefore been planned whereby the national currencies will still be used for a transition period. This period can be divided into three sub-periods:

• Sub-period 1 runs from the selection of the participating member states in May 1998 until January 1, 1999. During this period the ECB will be established and the production of the banknotes and coins denominated in the single currency will commence.

• Sub-period 2 will start with the irrevocable locking of the exchange rates on January 1, 1999. During this sub-period the national currencies will exist side by side with the single currency, although in principle there will be only one currency, the euro, which will merely be expressed as different denominations, e.g. D-mark and French franc. In this period the euro will exist only as a currency of account.

• The third and final sub-period will begin on January 1, 2002 with the introduction of physical euro-denominated banknotes and coins. Within a period of six months as a maximum, i.e. until July 1, 2002, the national banknotes and coins must be withdrawn and replaced by the euro.

During the preparations for the third stage in 1997 many important elements were finalized. The meeting of the European Council in Amsterdam in June (the Amsterdam Summit) thus led to clarification of the new exchange-rate mechanism, ERM2, the Stability and Growth Pact and the legal framework for the euro. All three areas had been under preparation for an extended period.

On the commencement of the third stage a new voluntary exchange-rate mechanism, ERM2, will be introduced with the purpose of supporting exchange-rate stability between the euro area and the other EU member states. ERM2 will be based on central rates fixed for each participating non-euro currency vis-à-vis the euro. A fluctuation band of +/-15 per cent around the central rate, equivalent to the band of the existing exchange-rate mechanism, will be defined.⁵⁾ ERM2 entails a mutual obligation for the national central banks of the participating non-euro countries and the ECB to intervene should the exchange rate reach the limits of the fluctuation band. However, the ECB will have access to suspend the interventions, should it deem the price stability of the euro area to be at risk.

If the group of EU member states outside the euro area comprises Denmark, the UK, Sweden and Greece, Denmark could become the only member of the new exchange-rate mechanism. Denmark considers a formal exchange-rate mechanism for the Danish krone vis-à-vis the euro to be of great significance to the continuation of the present fixed-exchange-rate policy. The positions of the UK and Sweden are affected by the fact that in 1992 these countries had to abandon their fixed-exchange-rate policies.

The legal framework for ERM2 comprises a resolution by the Amsterdam Summit and a central-bank agreement to be signed on the establishment of the ECB. The text of the resolution provides for a country with favourable convergence results to achieve a narrower fluctuation band than +/-15 per cent. Denmark has expressed interest in such an agreement, but actual negotiations await the establishment of the ECB. An agreement on a narrower fluctuation band will enable Denmark to achieve close exchange-rate ties, in many ways resembling the situation prior to the collapse of the ERM in 1993.

The principal objective of the Stability and Growth Pact is to ensure budgetary discipline in the third stage. The Pact imposes the medium-term objective on all EU member states of a government budgetary position close to balance or in surplus. The euro countries shall prepare and publish stability programmes specifying their medium-term objectives and stating how these are intended to be achieved. The Pact provides for the imposition of sanctions on the euro countries, in the first instance a requirement for a non-interest-bearing deposit⁶⁾, should such countries fail to take adequate measures to redress an excessive budget deficit. The deposit will be converted into a fine after two years if the budget situation has not improved sufficiently. However, in special cases a budget deficit exceeding 3 per cent of GDP can be considered exceptional and temporary, and the country may thus avoid sanctions. This will be the case if the deficit is the result of an unusual event outside the control of the country concerned or is due to a severe economic downturn whereby GDP in constant prices has fallen by at least 2 per cent.

The countries outside the euro area, including Denmark, are subject to the objectives and requirements of the Stability and Growth Pact on an equal footing with the participating countries, but will not be liable for sanctions in the event of non-compliance.

At the meeting of the European Council in Luxembourg in December 1997 the Heads of State or Government discussed the possibility of a further general strengthening of the coordination of economic policy in the third stage of EMU beyond the Stability and Growth Pact. It was decided that at informal meetings the ministers of the euro countries would have the opportunity to discuss topics of relevance to the euro countries. The Commission, and occasionally also the ECB, would have access to participate in these informal meetings. Countries which have not introduced the euro will only be able to participate in the meetings when the agenda includes subjects of common interest to the entire EU. The Luxembourg Summit did not clarify how and by whom issues of common interest would be defined. Formal decisions will still be taken by the ECOFIN Council. The conclusions from the Luxembourg Summit also state that the ECOFIN Council only in exceptional cases will issue general orientations for the exchange-rate policy, which will otherwise be managed by the ECB.

The legal framework for the introduction of the euro will consist of two Council regulations based on respectively Article 235 and Article 109 l, paragraph 4 of the Treaty. The first regulation, adopted in June 1997, contains provisions of significance to the single market and applies to all EU member states. According to the regulation the name of the single currency will be the euro and from the start of the third stage the ECU will be replaced by the euro at a rate of 1:1. Furthermore, the regulation stipulates the rules for rounding off on conversion and on the continuity of contracts on the transition from the national currencies to the euro. The second regulation applies only to the euro countries and therefore cannot be adopted finally until the participating countries are selected. The regulation includes provisions stipulating that as from the start of the third stage the currency of the participating countries shall be the euro and that during a transitional period the national currencies of those countries will be regarded as subdivisions of the euro. The regulation furthermore contains provisions for the redenomination as euro of outstanding contracts in the national currencies of the participating countries, e.g. conversion of a D-mark-denominated bond to a euro-denominated bond.

In July 1997 the EMI published the design of the euro banknotes. The winning design was selected after a design contest and was then further adjusted in order to incorporate security features. As a consequence of the Edinburgh Agreement Denmark did not participate in the contest. The general theme of the design was "Eras and Styles in Europe" which depicts important architectural periods of European history.

The euro banknotes are the responsibility of the EMI while the design of the euro coins is subject to the authority of the ECOFIN Council since in most countries the minting of coins is a government responsibility. The design of the euro coins was published at the Amsterdam Summit in June 1997 and the technical characteristics were determined at the subsequent meeting of the ECOFIN Council in July. However, final adoption awaits the selection of the euro countries. The design contest was for one side of the coins only, since already in 1996 it was agreed that national symbols would take up a large part of the reverse sides. Germany, France, Belgium and Austria have published their designs for the national sides of the coins and Ireland has announced that it will use its national coin symbol, the "harp", on the euro coins.

Preparation of the European Central Bank

The principal task of the EMI is to prepare for the European Central Bank, ECB, and the single monetary policy in the third stage. This work will be completed during the first half of 1998. The ECB is expected to be established soon after the decision on which countries are to be part of the euro area is taken. The EMI will then be dismantled.

The decision-making bodies of the ECB will be the Governing Council and the Executive Board. The Executive Board will be elected by the Heads of State or Government of the euro countries and will consist of a President and Vice President and up to four other members. The Governing Council will comprise the members of the Executive Board and the central-bank governors of the euro countries. The Executive Board will be responsible for the day-to-day operations of the ECB and will implement monetary policy in accordance with the decisions laid down by the Governing Council. The third decision-making body of the ECB will be the General Council consisting of the central-bank governors of all EU member states, as well as the President and Vice President of the Executive Board of the ECB.

Since Denmark has opted out from the third stage the Nationalbank will not be represented in the Governing Council and pursuant to the Treaty no Danes may be appointed to the Executive Board of the ECB. On the other hand, there is nothing to prevent the employment of Danes by the ECB. The Nationalbank will be a member of the General Council which will in the third stage take over the role of the EMI as the forum for cooperation between all EU central banks.

The preparation of the ECB has now reached a technical stage involving the preparation of accounting methods, statistics reporting requirements, etc. In the areas related to monetary policy and payment systems only very few issues await final clarification. Among other things it remains to be determined which financial institutions shall be subject to minimum reserve requirements if such are imposed by the ECB, and what rights the derogation countries will hold within the common payment system, TARGET, cf. p. 71.

Together with the national central banks the ECB will form the European System of Central Banks, ESCB. The primary objective of the ESCB is to maintain price stability in the euro area, which is interpreted as an annual inflation rate of between 0 and 2 per cent. The monetary-policy strategy to achieve this objective is not expected to be decided finally until the establishment of the ECB. However, there is consensus on limiting the options to monetary targeting or direct inflation targeting or possibly a combination of the two strategies.⁷⁾

The overall framework for the achievement of the monetary policy of the ESCB has already been determined. The monetary-policy instruments will be equivalent to those applied today in by far the most EU member states.⁸⁾ These are a standing marginal lending and deposit facility for the banks at interest rates respectively above and below the money-market rate. The ECB will steer the short-term interest rates within this interest-rate corridor by means of market operations. The most important instrument for market operations will be regular weekly repurchase agreements with a maturity of 14 days, while a minor part of the liquidity will be supplied via regular monthly repurchase agreements with a maturity of three months. In addition, fine-tuning operations, where liquidity is injected or absorbed, may be needed in case of unforeseen changes in the liquidity requirement. The ESCB will be able to inject liquidity by using such instruments as repurchase agreements, foreign-exchange swaps and direct purchase of securities. The instruments available to absorb liquidity include time deposits, reverse repurchase agreements, foreign-exchange swaps and direct sale of securities. Finally, the ESCB may influence the banks' total net liquidity position with the central bank in a more structural way, e.g. by issuing certificates of deposit. The purpose of this array of instruments is to keep the banks taken as one in a net debt position vis-à-vis the central bank, thereby ensuring a constant liquidity requirement in the regular monetary-policy operations.

The ESCB's lending operations must always be based on "adequate" collateral. In the EMI agreement has been reached on which categories of securities may be eligible as collateral in monetary-policy operations. These securities are divided into two different groups - tier 1 and tier 2 securities. Tier 1 consists primarily of bonds, Treasury bills, certificates of deposit and other marketable assets. These securities must have a high credit rating, be issued in the EEA⁹⁾, be denominated in euro and be held in a securities depository in the euro area. Tier 2 comprises assets on national lists compiled by the individual national central banks according to the ECB's guidelines.

The regular market operations are based on an auction principle with either a fixed or variable interest rate. At an auction with a fixed interest rate the ECB will publish the rate of interest in advance and the participating banks will then state the amounts they wish to trade at that interest rate. At an auction with a variable interest rate the banks will state the interest rate at which they wish to trade and the size of the amounts required at that interest rate. On the basis of these bids the ECB will set a cut-off interest rate, so that all banks submitting bids at or above this rate of interest will receive liquidity at either the cut-off interest rate or their bid rate.

With regard to the ESCB's management of the foreign-exchange reserves and interventions, foreign-exchange options have been prepared to conduct foreign-exchange transactions centrally from the ECB as well as decentrally from the national central banks following instructions given by the ECB. The main part of the transactions is expected to be carried out on a decentralized basis. It has been decided to apply a limit-based system to the management of counterparty risks in foreign-exchange transactions, whereby an upper limit for the ECB's exposure will be fixed for each counterparty.

The EMI has drawn up a number of harmonization requirements for the area of statistics so that usable and internationally comparable statistics can be achieved. The core element is the compilation of statistics for the assets and liabilities of financial institutions subject to statistical reporting requirements, i.e. central banks, banks and mortgage-credit institutes, money-market funds, etc. Moreover, the national central banks are required to collect and report statistics on domestic interest rates, the balance of payments, etc. The statistical authorities in Denmark have chosen to implement parts of the statistics package in order to increase the international comparability of Danish financial statistics.

The International Monetary Fund

The activities of the International Monetary Fund, IMF, in 1997 were concerned with the unrest on the foreign-exchange and capital markets in Southeast Asia, cf. p. 46ff.

In an attempt to curb the crisis the IMF within a short period granted three exceptionally large loans to Thailand, Indonesia and South Korea and extended and increased an existing loan to the Philippines. These loans were granted against the background of major economic and political stabilization programmes to redress imbalances and ensure sustainable economic development. The large IMF loans were an element of more extensive international financial assistance packages which in 1997 amounted to a total of USD 108 billion, of which USD 35 billion from the IMF, cf. Box 5.

In February 1998 there were indications of a degree of stabilization in the region. As was the case when the IMF granted a loan to Mexico in 1994-95, cf. Chart 32, after an IMF assistance package had been agreed and approved by the IMF's Executive Board the decline in the Korean exchange rate dampened to some extent, while the development in exchange rates in Indonesia and Thailand was still affected by political uncertainty. However, it should be taken into account that the Asian currencies had not fallen as much as the Mexican peso prior to the IMF agreement.

Restructuring the financial sector has been one of the principal elements of the countries' economic and political programmes in conjunction with

Box 5: The large IMF loans and the financial crisis packages 1995-97

the IMF. Many banks have been closed and compliance with BIS standards concerning the capital adequacy of financial institutions is now required. In the case of Korea special requirements have been added with regard to legislation on central-bank independence, financial supervision, accounting and auditing. In Thailand, Indonesia and Korea financing institutions have been set up for containment of the non-performing loans of financial institutions. The financing is provided via government budgets and by government borrowing on the international capital markets. In Indonesia and Korea government-owned banks will be privatized.

The IMF programmes have also been introduced to ensure that official interest rates are raised, that the authorities intervene as little as possible in the foreign-exchange markets (a flexible exchange-rate policy) and that existing restrictions on inward capital flows are relaxed. The purpose is to restore favourable conditions for inward capital flows to these countries. Moreover, fiscal-policy tightenings are required as a consequence of the effects on the budgets of the crisis-stricken countries of the economic downturn and the costs of restructuring the financial sector. In addition, trade liberalization measures play an important role in Indonesia.

The substantial loans to Thailand, Indonesia and Korea have burdened the IMF's liquidity. The situation is expected to be brought back to normal on the completion of the augmentation of the IMF's capital base, the quotas, adopted in September 1997. In addition, the IMF's access to borrowing will be increased by the New Arrangements to Borrow, NAB, which are described in the 1996 Annual Report, p. 80. Denmark has ratified the quota increase and NAB, although the entry into force of the latter awaits ratification by several large members. The USA has ratified neither the quota increase nor NAB.

Denmark has not granted direct loans to any of the countries of Southeast Asia affected by the crisis, and has only provided credit indirectly via the ordinary financing of the IMF's activities. Denmark's reserve position with the IMF has thus increased from kr. 3,601 million at the end of 1996 to kr. 4,311 million at the end of 1997. In January 1998 the IMF drew another large amount, so that the reserve position at the close of the month was kr. 6,697 million.

In connection with the IMF's annual meeting in Hong Kong in September 1997 approval in principle of a quota increase by 45 per cent was achieved. The distribution of the quota increase among the individual countries varies according to the development in each country's relative significance to the international economy. For Denmark the proposal

Box 6: The IMF's capital base

entails a quota increase from SDR 1,070 million to SDR 1,643 million (kr. 15,136 million). The proposal was approved by the IMF's Board of Governors on January 30, 1998. Box 6 presents the IMF's capital base.

In addition, approval was gained to initiate procedures to amend the IMF's Articles of Agreement to provide for a special one-off allocation of SDR. The primary purpose of this one-off allocation is to ensure that all members, new and old, are allocated the same quantity of SDR in relation to their quotas. So far, a country's SDR allocation has depended on how long the country has been an IMF member and whether the country has participated in all allocations. The SDR system was established in 1970 and the most recent allocation took place in 1979-81. It has been decided in principle that all countries shall be allocated SDR equivalent to 29.32 per cent of their quotas. This will lead to a doubling of the existing amount to SDR 42.8 billion (kr. 394.3 billion).

In February 1997 a special fund was established under the auspices of the IMF to finance the IMF's participation in the debt initiative for the most debt-ridden developing countries, the HIPC initiative. This fund has been established as a special facility under the auspices of the IMF's Enhanced Structural Adjustment Facility, ESAF, which grants loans on favourable terms to poor developing countries. Under the debt initiative the creditors of a number of especially poor and debt-ridden developing countries may grant debt alleviation according to guidelines agreed in advance so as to reduce the countries' debt burden to a sustainable level. A further condition for inclusion in this initiative is that the country has complied with the conditions of an economic and political stabilization programme for an extended period. So far, three countries have been declared eligible for support under the initiative. In February 1997 it was decided to transfer SDR 180 million and in November 1997 a further SDR 70 million to the special fund in order to finance the IMF's share of the debt-alleviation expenditure. So far these transfers have been made from the reserves of ESAF, which are kept separate from the IMF's general reserves.

The Nationalbank's Participation in Technical Assistance Programmes

After the collapse of the Soviet Union the new republics have established their own central banks and have therefore required technical assistance. This has been organized by international organizations, first and foremost the IMF.

The Nationalbank has participated in this cooperation and in 1997 provided technical assistance to the central banks of Russia and the Baltic states. The technical assistance was provided within the areas of payment and settlement of securities transactions, use of repo agreements in monetary-policy management and planning of exchange-rate policy. The Nationalbank provided technical assistance to the Baltic states on government-debt management.

No major adjustments have been made to the Nationalbank's organization since the re-organization in the autumn of 1996. Certain areas were expanded in 1997, whereas others were subject to reductions, so that the number of employees has been reduced by seven to 579 full-time employees.

The Nationalbank's accounts for 1997 show a profit of kr. 5.6 billion. After allocations to the Value Adjustment Reserve and to the General Reserves the remainder of kr. 3.2 billion is payable to the central government.

Tasks

The extensive adjustments to the Nationalbank's internal organization in  the autumn of 1996 were concluded with the establishment of the Payment Systems Department as of February 1, 1997, cf. the Organization Chart. No further adjustments to the organization have taken place, although considerable changes are being made to the preparation of the balance-of-payments statistics and the handling of the supply of banknotes and coins. Furthermore, the information service has been ex- panded.

The adjustments concerning the cash supply are described in the section on banknotes and coins.

The restructuring of the collection of statistics for compilation of the balance of payments and the foreign debt has been under way for several years. So far the banks have reported payments between Denmark and abroad to the Nationalbank using paper-based forms. The data was then entered manually at the Nationalbank. During 1998 this reporting system will be converted to an electronic reporting system, thus eliminating the manual entry of the statistics.

The international requirements of financial statistics and of the publication of statistics have increased, so that more work is now required.

As from January 1, 1998 the Nationalbank expanded and amended its publication of statistics with the "Nyt" ("News") publication series whereby statistical data is published as soon as it is available. "Nyt" comprises statistics on interest rates and exchange rates, financial institutions, securities, central-government finances and central-government debt, the foreign debt, direct investments and external payments. The publication is in Danish with an English translation of the tables. "Nyt" will consist of around 130 issues per year and may be ordered on tel.: +45 33 63 70 00. The subscription price is kr. 700 per year.

As from May 1998 the "Monthly Financial Statistics" will be published, presenting monthly and annual statistics over an extended period. The publication will include English translations. The subscription price will be kr. 240 per year.

Under the Secretariat an information desk has been established in order to centralize the processing of the many general enquiries in writing or by telephone received by the Nationalbank. Previously these were processed by various departments of Danmarks Nationalbank.

In the spring of 1998 the Nationalbank will establish a home page on the Internet with information on the Nationalbank, press releases, publications, banknotes and coins, statistics, market information, as well as centralgovernment debt.

The home page will be available in Danish and English versions at the address http://www.nationalbanken.dk.

Table 10 The Nationalbank's staff, converted into full-time positions

Staff

During 1997 the Nationalbank's staff decreased by seven to 579 full-time employees, cf. Table 10. This decrease was distributed on most employee groups.

In 1997 nine employees resigned from the bank under severance agreements. At the close of 1997 20 employees were on leave, primarily working for international organizations, of whom six at the EMI. Three employees were on leave under statutory leave schemes.

The Nationalbank's administrative personnel on March 1, 1998 is listed on p. 102ff.

As an element of the collective wage agreement concluded with the Staff Association, as from October 1, 1997 a new salary system was introduced for bank and clerical employees and for canteen and cleaning staff. The new salary system comprises fewer job categories and narrower automatic salary scales.

In line with the development in the financial sector, at the beginning of 1998 employees were offered home computers. The objective is to meet the growing demand for use of new technology in banking activities.

The Nationalbank's Management

As Governor by Royal Appointment Ms. Bodil Nyboe Andersen is Chairman of the Board of Governors. The two other members are Mr. Torben Nielsen and Mr. Jens Thomsen.

The Board of Directors re-elected Ms. Jette W. Knudsen, Mr. Kjeld Larsen and Ms. Kirsten Nielsen for a new five-year term from April 1, 1997. The Folketing (Parliament) elected Ms. Karen Højte Jensen as member of the Board of Directors to replace Ms. Anne Birgitte Lundholt who left Parliament on October 9, 1997.

The Board of Directors re-elected Professor Hans E. Zeuthen as Chairman and Ms. Helle Bechgaard as Deputy Chairman for the period April 1, 1997 to March 31, 1998.

For the period April 1, 1997 to March 31, 1998 the Board of Directors re-elected Mr. Uffe Ellemann-Jensen, Mr. Torben Lund, Mr. Erik B. Rasmussen, Ms. Margit Vognsen and Professor Hans E. Zeuthen as members of the Committee of Directors. Two members of the Committee of Directors, Mr. Michael Dithmer and Mr. Karsten Olsen, are appointed by the Royal Bank Commissioner.

The Committee of Directors re-elected Professor Hans E. Zeuthen as Chairman and Mr. Michael Dithmer as Deputy Chairman for the period April 1, 1997 to March 31, 1998.

A list of the Management of the Nationalbank on March 1, 1998 will be found on p. 100f.

The Royal Bank Commissioner re-appointed State-Authorized Public Accountant Mr. John Gath and State-Authorized Public Accountant Mr. Svend Ørjan Jensen to be the Nationalbank's external auditors for the year ending March 31, 1998.

Danmarks Nationalbank's Anniversary Foundation of 1968

The establishment, objective and activities of the Foundation are described in the 1993 Annual Report. In total, the Nationalbank has contributed kr. 60 million to the Foundation since 1968.

The Foundation's capital is invested in bonds. The current revenue is used to promote primarily crafts and artistic design, but also other artistic areas.

In 1997 the Foundation received 1,330 applications, of which 143 were granted in full or in part. In addition, eight grants without prior application were made. Total grants amounted to kr. 5.5 million.

In 1997 the Anniversary Foundation's honorary grant was awarded to Ms. Nanna Ditzel, industrial designer, and Ms. Puk Lippmann, weaver, who each received kr. 100,000. An exhibition of works by the two artists in the Nationalbank's entrance hall was opened concurrently with the awarding of the grants.

On March 1, 1998 the Board of the Foundation comprised Governor Bodil Nyboe Andersen (Chairman), Professor Hans E. Zeuthen (Deputy Chairman), Ms. Bodil Busk Larsen, Ms. Bente Scavenius, Mr. Teit Weylandt and Mr. Mads Øvlisen.

The Nationalbank's Guest Apartments at Nyhavn 18

The Nationalbank has seven guest apartments at Nyhavn 18 which are made available to foreign scientists and artists. Residence in the guest apartments is free and granted from three months up to one year.

In 1997 the guest apartments at Nyhavn 18 were allocated to 13 visitors.

The Committee formed to advise on the allocation of the apartments consists of Professor Ole Feldbæk (Chairman), Dr. Else Marie Bukdahl and Professor Niels I. Meyer.

The Erik Hoffmeyer Travel Grant Foundation

The establishment and objective of the Foundation are described in the 1995 Annual Report.

The first grants were awarded in 1996. In 1997 two grants of kr. 40,000 each were made for further studies abroad: one to the Tamil temple dancer and ethnic affairs consultant Thiageswary Vasanthahumar and the other to the author Carsten Jensen.

On March 1, 1998 the Board of the Travel Grant Foundation comprised Professor Hans E. Zeuthen (Chairman), former Governor Erik Hoffmeyer and former Chief Rabbi Bent Melchior.

Presentation of the Nationalbank's Accounts

The Nationalbank's accounts with notes are shown on pp. 114-119.

The accounts reflect that the Nationalbank issues banknotes and coins, administers the foreign-exchange reserve and functions as banker to the banks and the central government. The Nationalbank's profit not allocated to the reserves shall be paid to the central government.

In 1997 the result from ordinary operations was kr. 4.797 million, and thus virtually unchanged from 1996.

With extraordinary expenditure of kr. 187 million and positive value adjustments, etc. of kr. 1,014 million the profit for the year amounted to kr. 5,624 million, or kr. 244 million less than in 1996.

Total net interest income was kr. 5,224 million, which is equivalent to the level in 1996.

The considerable augmentation of the foreign-exchange reserve, is reflected in an increase in interest income on foreign assets by kr. 819 million to kr. 4,888 million.

Interest on lending to and deposits from the banks gave net interest expenditure of kr. 1,195 million in 1997, against net interest expenditure of kr. 283 million in 1996. The rates of interest for deposits and lending, i.e. the rate of interest for certificates of deposit and repurchase agreements respectively, are identical. However, current-account deposits, accounting for only a small proportion of deposits, accrue interest at the discount rate, which is 1/4 per cent below the rate of interest for certificates of deposit. The average interest rate on certificates of deposit was slightly lower in 1997 than in 1996. In 1997 the banks' net position was positive and rising since the Nationalbank's foreign-exchange purchases have led to an improvement in the banks' liquidity.

The Nationalbank's interest expenditure on the central government's deposit fell by kr. 182 million to kr. 1,271 million. On average the central government's deposit was lower than in 1996. The rate of interest on the central government's deposit is the discount rate.

Interest and dividend on bonds and shares, etc. fell by kr. 80 million to kr. 2,628 million.

Total expenditure increased by kr. 23 million to kr. 427 million.

Administrative expenses amounted to kr. 328 million. Direct and indirect staff expenses increased by 3.6 per cent. Expenditure on purchases of equipment and machinery and on data processing increased, whereas expenditure on operation of properties remained unchanged. Expenditure on information concerning the new 200- and 500-krone notes amounted to approximately kr. 10 million.

Expenses related to the banknote production fell by kr. 10 million to kr. 78 billion, of which kr. 8 million is attributable to a change in the accrual of large prepaid and outstanding expenses and to the capitalization of stocks of raw materials.

Expenses incidental to The Royal Mint fell by kr. 3 million reflecting inter alia the discontinuation of production of coin blanks in 1996. Income decreased by kr. 9 million due to e.g. lower income from sales of metal. Net expenses incidental to The Royal Mint thus increased by kr. 6 million.

Extraordinary expenditure in 1997 amounted to kr. 187 million, of which the major part concerns the ship credit scheme.

As an element of the political shipyard agreement of 1986, at the government's request the Nationalbank acquired index-linked bonds issued by the Ship Credit Fund to finance newbuildings. The Nationalbank acquired the index-linked bonds at par. Irrespective of the market price of the underlying bonds these loans can be prematurely redeemed at par. In recent years a proportion of the bonds have been redeemed prematurely. In that case the Nationalbank must either deliver equivalent bonds to the Ship Credit Fund or undertake to cover the future payments on the bonds. Since in 1997 the market value of the bonds was higher than the bonds' nominal value these early redemptions entailed expenditure. The Nationalbank has supplied bonds for kr. 2,117 million, resulting in a capital loss of kr. 165 million. Moreover, an obligation has been incurred to cover future payments for a nominal amount of kr. 1,011 million. The cost will affect the accounts in the coming years.

A commemorative coin was issued on the occasion of Queen Margrethe's silver jubilee on January 14, 1997. Since claims for encashment of the commemorative coin are considered unlikely, on the issue of the commemorative coin an estimated profit of kr. 19 million is distributed at half to the Crown and half to the Ministry of Economic Affairs for charity purposes.

Value adjustments, etc. resulted in a gain of kr. 1,014 million.

Value adjustment of the Nationalbank's gold stock gave a loss of kr. 469 million due to a drop in the gold price which was only partly set off by a strengthening of the dollar, the currency used for gold price-fixing.

Value adjustment of foreign-exchange positions, which in addition to the foreign-exchange reserve comprise forward transactions and domestic foreign-exchange balances, provided a gain of kr. 1,617 million derived from an exchange-rate gain of kr. 2,114 million and a market-value loss of kr. 497 million. The exchange-rate gain is related in particular to higher exchange rates for the dollar and the pound sterling, while the value adjustment of stock-exchange prices is due to the falling price of securities with high nominal coupon rates as a consequence of the reduction of remaining maturity.

The value adjustment of bonds and shares, etc. gave a total loss of kr. 134 million. The capital gain on sale of shares was kr. 9 million. Mortgage-credit bonds generated a gain of kr. 172 million, whereas Danish government bonds gave a loss of kr. 277 million and other bonds a loss of kr. 38 million. The drop in bond yields led to bond-price increases, but a large proportion of the portfolio consists of securities at high nominal coupon rates of which the price has fallen as a consequence of the reduction of remaining maturity.

The capital losses on domestic and foreign bonds due to the reduction of remaining maturity, amounting to an estimated just over kr. 1 billion, are set off by high interest income which is included in the profit from ordinary operations. The distribution of income on ordinary operations and

Table 11 Currency distribution of the Nationalbank's foreignexchange positions

value adjustments was thus affected by the high nominal coupon rates of the bonds.

The Nationalbank's considerable purchases of foreign exchange in 1997 led to an increase in foreign-exchange positions by kr. 49 billion to kr. 137 billion, cf. Table 11. This has augmented the potential effect of exchange rates on the profit for the year. A general increase in the value of the krone of 1 per cent would entail an exchange-rate loss of kr. 1.4 billion at the end of 1997, corresponding to 3.3 per cent of the Nationalbank's equity capital, against kr. 1.0 billion at the end of 1996.

The overall framework for the composition of the foreign-exchange position is set out in an agreement on coordinated management of the exchange-rate risk on the foreign-exchange reserve and on the central government's foreign debt concluded with the Ministry of Finance and the Ministry of Economic Affairs. The foreign exchange purchased in 1997 was placed primarily as D-marks, the currency entailing the lowest exchange-rate risk.

A general increase in interest rates by 1 per cent would entail a market-value loss on foreign bonds of kr. 1.4 billion at the end of 1997. The greatest proportion of this loss would be attributable to bonds denominated in D-marks and dollars, cf. Table 12. The interest-rate sensitivity was by and large unchanged from 1996. The background is that additions to the foreign-exchange reserve were placed in assets with short maturities and therefore a small interest-rate risk. This investment strategy was chosen in

Table 12 The Nationalbank's sensitivity to changes in interest rates

order to avoid the sensitivity to changes in interest rates being affected by fluctuations in the size of the foreign-exchange reserve.

Holdings of Danish bonds and shares, etc. amounted to kr. 34 billion at the end of 1997. A general increase in interest rates of one percentage point would entail a market-value loss on domestic bonds of kr. 0.9 billion.

The overall interest-rate sensitivity of foreign and domestic bonds was thus kr. 2.4 billion, equivalent to 5.7 per cent of equity capital.

The Nationalbank is working on the year-2000 problem both externally under the auspices of the data-processing centre, BEC, used by the Nationalbank and internally as a review of each system.

The result for the year is a profit of kr. 5,624 million, against a profit of kr. 5,868 in 1996. In accordance with the guidelines for allocation of profits set out in 1995 an amount of kr. 1,014 million, equivalent to the gain on value adjustments, is allocated to the Value Adjustment Reserve and kr. 1,383 million, equivalent to 30 per cent of the profit before value adjustments, is allocated to the General Reserves. The remainder of kr. 3,227 million is payable to the central government.

Bodil Nyboe Andersen        Torben Nielsen        Jens Thomsen

At the meeting of the Board of Directors held on March 18, 1998 the Board of Governors reported on the activities of the Nationalbank in 1997. The report was noted.

The Nationalbank's Accounts for 1997 were submitted by the Board of Governors for adoption on the recommendation of the Committee of Directors. The Board of Directors and the Royal Bank Commissioner accepted the recommendation. Of the profit for the year of kr. 5,624 million an amount of kr. 3,227 million is thus payable to the central government.

Management

Royal Bank Commissioner:

Marianne Jelved, Minister of Economic Affairs and Minister for
Nordic Cooperation

Board of Governors:

Bodil Nyboe Andersen, Governor by Royal Appointment, Chairman

Torben Nielsen

Jens Thomsen

Committee of Directors:

Hans E. Zeuthen, Professor
(elected Chairman for the period ending March 31, 1998)

Michael Dithmer, Permanent Secretary, Ministry of Economic Affairs
(elected Deputy Chairman for the period ending March 31, 1998)

Elected by the Board of Directors for the period ending March 31, 1998:

Uffe Ellemann-Jensen, MP

Torben Lund, MP

Erik B. Rasmussen, General Manager, Civil Engineer

Margit Vognsen, Vice-President of the Danish Trade Union of Public Employees

Hans E. Zeuthen, Professor

Appointed by the Royal Bank Commissioner for the period ending March 31, 2001:

Michael Dithmer, Permanent Secretary, Ministry of Economic Affairs

Karsten Olsen, Former Deputy Permanent Secretary

Board of Directors:

Hans E. Zeuthen, Professor
(elected Chairman for the period ending March 31, 1998)

Helle Bechgaard, Senior Vice President, Ph.D. (Pharm.)
(elected Deputy Chairman for the period ending March 31, 1998)

Elected by the Folketing for the period ending March 31, 2001:

Pia Christmas-Møller, MP

Uffe Ellemann-Jensen, MP

Jørgen Estrup, MP

Ove Fich, MP

Karen Højte Jensen, MP

Torben Lund, MP

Jes Lunde, MP

Anders Fogh Rasmussen, MP

Appointed by the Royal Bank Commissioner for the period ending March 31, 2001:

Michael Dithmer, Permanent Secretary, Ministry of Economic Affairs

Karsten Olsen, Former Deputy Permanent Secretary

Elected by the Board of Directors:	for periods ending March 31,
Knud Koch Jensen, Engineer		1998
Erik B. Rasmussen, General Manager, Civil Engineer		1998
Helge Sørensen, Civil Engineer		1998
Bent le Fèvre, General Manager		1999
Jens Rostrup-Nielsen, Director, R. & D. Division		1999
Hans E. Zeuthen, Professor		1999
Helle Bechgaard, Senior Vice President, Ph.D. (Pharm.)		2000
B. Frank Nielsen, General Manager		2000
Kirsten Stallknecht, Former President
of the Danish Nursing Council		2000
Harry Nicolaisen, Farmer		2001
Finn Thorgrimson, Former President
of the Trade Union Federation		2001
Margit Vognsen, Vice-President
of the Danish Trade Union of Public Employees		2001
Jette W. Knudsen, Managing Director		2002
Kjeld Larsen, Farmer		2002
Kirsten Nielsen, President of the Consumer Council		2002

Administration

Image: Organization Chart.

Representation in International Organizations

As an element of the international foreign-exchange and monetary-policy cooperation Danmarks Nationalbank participates in a number of committees, sub-committees and working groups, of which the most significant are:

The European Monetary Institute, EMI:

The Council: Governor Bodil Nyboe Andersen.

The Committee of Alternates: Governor Jens Thomsen, and Niels Bartholdy, Assistant Head of Department.

The Banking Supervisory Sub-Committee: Jørgen Ovi, Assistant Governor, (with Henrik Bjerre-Nielsen, Director General, the Financial Supervisory Authority).

The Monetary Policy Sub-Committee: Anders Møller Christensen, Director, and Hugo Frey Jensen, Head of Department.

The Foreign Exchange Policy Sub-Committee: Anders Møller Christensen, Director, and Helge Fosgaard, Assistant Head of Depart- ment.

The Working Group on EU Payment Systems: Governor Torben Nielsen and Jesper Berg, Head of Payment Systems.

The Working Group on Information Systems: Leif Kjærgaard, Head of IT, and Jørgen Petersen, Assistant Head of Department.

The Working Group of Legal Experts: Kirsten Rohde Jensen, Assistant Head of Department, and Jesper Ulriksen Thuesen, Head of Section.

The Working Group on Accounting Issues: Viggo Sørensen, Head of Department, and Kristian Kjeldsen, Head of Section.

The Working Group on Printing and Issuing a European Banknote: Niels Holm, Director, and Tage Heering, Chief Cashier.

The Working Group on Statistics: John Larsen, Head of Statistics, and Kim Abildgren, Assistant Head of Department.

The Monetary Committee:

Governor Jens Thomsen (with Michael Dithmer, Permanent Secretary, Ministry of Economic Affairs).

Benny Andersen, Head of Department, is an alternate member of the Committee (with Henrik Fugmann, Deputy Secretary, Ministry of Economic Affairs).

The Economic Policy Committee:

Hugo Frey Jensen, Head of Department (with Per Bremer Rasmussen, Deputy Secretary, and Lise-Lotte Teilmand, Special Adviser, Ministry of Economic Affairs, and Per Callesen, Deputy Secretary, Ministry of Finance).

The Banking Advisory Committee:

Jørgen Ovi, Assistant Governor (with Torben Garne, Director, Ministry of Economic Affairs, and Henrik Bjerre-Nielsen, Director General, the Financial Supervisory Authority).

The Working Group of Mint Directors:

Laust Grove, Director, The Royal Mint, and Winnie Jakobsen, Head of Section.

The International Monetary Fund, IMF

Governor Bodil Nyboe Andersen is the Danish member of the IMF's Board of Governors. (Michael Dithmer, Permanent Secretary, Ministry of Economic Affairs, is an alternate member of the Board.)

Organization for Economic Co-operation and Development, OECD

The Economic Policy Committee:

Governor Jens Thomsen (with Michael Dithmer, Permanent Secretary, Ministry of Economic Affairs, and Anders Eldrup, Permanent Secretary, Ministry of Finance).

Nordic Council of Ministers

Nordic Financial Committee:

Governor Jens Thomsen and Benny Andersen, Head of Department (with Henrik Fugmann, Deputy Secretary, Ministry of Economic Affairs).

---

Annex 1

The Nationalbank's Press Releases

Interest-rate changes

October 9, 1997

In view of the development in European interest rates the Nationalbank's discount rate will be raised by 1/4 per cent to 31/2 per cent with effect from October 10, 1997. Likewise, the rate of interest on the banks' current accounts with the Nationalbank is raised by 1/4 per cent to 31/2 per cent.

On October 10, the rate of interest on sale of certificates of deposit will be raised by 0.25 per cent to 3.75 per cent.

New 500-krone note

June 18, 1997

On September 12, 1997 the Nationalbank will issue a new 500-krone note. It is the second in the series of new banknotes which was introduced on the issue of the 200-krone note in March 1997.

The new note series is being issued because new developments in graphic technology have made it necessary to improve the special features which protect the notes against counterfeiting.

The faces of all the banknotes in the new series show portraits of Danish men and women who have made a contribution to art or science. The motifs on the reverse are inspired by old stone reliefs in Danish churches.

The face of the 500-krone note bears a characteristic portrait of the nuclear physicist Niels Bohr, one of the leading Danish scientists of the 20th century. The motif on the reverse is inspired by a motif from the font of Lihme Church in Salling.

The principal colour of the new note is blue. It is 1 centimetre longer than the 200-krone note. All notes in the new series are of the same height. The dimensions of the 500-krone note are 155 x 72 mm.

The new 500-krone note will be presented at a press conference at Danmarks Nationalbank shortly before it is issued. In connection with the issue a folder will be distributed to all households in Denmark with information on the security features of the note. The folder will also be available at banks. Information will also be presented in radio and TV spots.

The old 500-krone notes will remain legal tender, but will be withdrawn from circulation as they are returned to the Nationalbank. There are approximately 12 million 500-krone notes in circulation, for a value of kr. 6  billion. The circulation of 500-krone notes has increased significantly in recent years. One reason is that at the beginning of the 1990s the banks began to use the 500-krone note in cash dispensing machines.

200-krone silver commemorative coin to mark Queen Margrethe's silver jubilee

January 7, 1997

The silver 200-krone coin issued on January 6, 1997 to mark Queen Margrethe's silver jubilee on January 14, 1997 will be minted in a maximum edition of 60,000, as previously announced.

The silver coin has been in such high demand that all coins have now been sold by The Royal Mint.

Abolition of limits on current-account deposits

April 23, 1997

With effect from May 1, 1997 the limits on the banks' interest-bearing current-account deposits will be abolished. In future all of the deposit on a bank's current account will earn interest at the current-account rate. The limits were introduced together with the current monetary-policy instruments in April 1992. The objective was to develop a more efficient money market. Today the money market is well-functioning, with the participation of all major banks. This provides the basis for the abolition of the limits.

Publication of a money-market interest rate on very short-term uncollateralized inter-bank loans

April 23, 1997

With effect from May 2, 1997 the Nationalbank will on a daily basis calculate and publish a tomorrow/next inter-bank lending rate. The calculation is made on behalf of the 14 banks which report interest rates. This corresponds to the Nationalbank's role in the calculation of CIBOR.

The tomorrow/next rate is the day-to-day interest rate from tomorrow to the day after. The rate is calculated as a weighted average of the tomorrow/next rates of the 14 reporting banks. The interest rates are weighted together with the money-market loans issued by the banks concerned. The reported interest rates are based on the reporting banks' actual money-market lending in the inter-bank market.

Information on the weighted interest rate will be published via DN News and via major news agencies. The tomorrow/next rate of the previous banking day is published daily at 12.00 noon.

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Annex 2

The Statutory Basis for the Financial Sector

In 1997 only a few adjustments were made to the statutory basis for the financial sector. During the year a number of analyses of conditions in the financial sector were conducted. Reports were prepared on confidentiality and the definition of parties in financial supervision and on the handling of banking crises.

New Management Regulations and Regulations on Speculation

Act no. 475 of June 10, 1997 harmonizes the rules for the financial sector concerning speculation and on the access for general managers, etc. of financial institutions to undertake posts other than management of the financial institution. This Act amends the provisions of a number of laws, including the Commercial Banks and Savings Banks Act, the Mortgage Credit Act, the Insurance Activities Act and the Securities Trading Act. This Act stipulates a prohibition in principle on speculative trading. In November 1997 the Danish Financial Supervisory Authority issued an Executive Order stipulating more detailed rules concerning which asset transactions are considered to be speculative trading.

Investment Associations and Special Purpose Associations Act

This Act entered into force on January 1, 1998. It expands the scope of the Act on Investment Associations to also include certain categories of special purpose associations. Like investment associations these special purpose associations may receive capital to be placed mainly in securities in accordance with the principle of risk diversification. The principal difference between the special purpose associations and the investment associations is that the former are subject to special placement rules. The Act comprises four types of special purpose associations. Placement associations have access to place funds with one single issuer to a greater extent than is the case for investment associations. Money market associations must primarily place capital in money-market related securities. Funds of funds may make capital placements in the shares of other investment associations and special purpose associations. SME associations must primarily place their capital in shares issued by unlisted companies. Furthermore, the Act stipulates a number of requirements to ensure that investors are fully informed of the risks pertaining to the associations in question. Act no. 475 of June 10, 1997, cf. above, thus gives access for pension funds in banks to be placed in shares in special purpose associations.

Amendment of the EC Directives on Solvency Ratios and the Capital Adequacy of Investment Companies and Credit Insti- tutions

In November 1997 the EU member states reached agreement in principle on three proposals to amend the solvency ratio directive and the directive on the capital adequacy of investment companies and credit institutions. One of the proposals e.g. contains capital requirements for the non-listed derivative instruments of credit institutions. The second proposal extends a transitional period, thereby allowing member states to continue for a number of years to set lower capital requirements for commercial mortgage lending by credit institutions. The third proposal contains provisions on capital requirements for commodities and commodity derivatives of investment companies and credit institutions and allows the use of internal risk management models to calculate market risks.

Proposal for an EC Directive on Settlement Finality and Collateral Security in Payment Systems and Securities Settlement Systems

In October 1997 the EU member states reached agreement in principle on this directive which is e.g. designed to reduce the systemic risk in payment and securities settlement systems, cf. p. 72f.

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Accounts for the Year 1997

Profit and Loss Account for the Year 1997

Note			1997 kr. '000	1996 kr. '000
	Income from interest, etc.:
	Interest on foreign assets	4,888,487		4,069,585
1	Interest on loans, etc.	1,351,587		1,766,966
	Interest and dividend on bonds and shares, etc.	2,628,426		2,708,379
	Commission and other income	6,226		9,772
			8,874,726	8,554,702
	Expenditure on interest, etc.:
	Interest on foreign liabilities	69,887		62,059
2	Interest on deposits, etc. and certificates of deposit	3,580,900		3,307,240
			3,650,787	3,369,299
	Net income from interest		5,223,939	5,185,403
	Expenses:
3	Administrative expenses	327,821		300,571
4	Expenses incidental to the note production	78,122		87,711
5	Expenses incidental to The Royal Mint	20,719		15,156
			426,662	403,438
	Profit on ordinary operations		4,797,277	4,781,965
6	The ship credit scheme	- 165,087		- 7,190
7	Commemorative coin, Queen Margrethe's silver jubilee	- 19,000		-
	Other expenses	- 3,148		-
			- 187,235	- 7,190
	Profit before value adjustments, etc.		4,610,042	4,774,775
	Profit before value adjustments, etc.		4,610,042	4,774,775
	Value adjustments, etc.:
8	Value adjustment of gold	- 468,869		105,805
9	Value adjustment of foreign assets	1,617,092		138,013
10	Value adjustment of bonds and shares, etc.	- 134,289		849,103
			1,013,934	1,092,921
	Net profit for the year		5,623,976	5,867,696
	Allocation:
	Allocation to Value Adjustment Reserve		1,013,934	1,092,921
	Allocation to General Reserves		1,383,013	1,432,433
	Payable to central government		3,227,029	3,342,342
Pursuant to the Danmarks Nationalbank Act the profit for the year after allocations is payable to the central government.
(Comments on the Profit and Loss Account will be found on pp. 95-99)

Balance Sheet of Danmarks Nationalbank at December 31, 1997

Note			1997 kr. '000	1996 kr. '000
	Assets
11	Stock of gold		3,330,909	3,652,024
11	Foreign assets		115,843,756	73,623,711
11	Claims on the European Monetary Institute		4,790,341	4,979,376
	Special Drawing Rights in the IMF (SDRs)		2,291,311	996,501
	Denmark's IMF quota		9,856,347	9,134,271
12	Loans, etc.		37,115,599	49,658,578
13	Bonds and shares, etc.		33,766,468	35,108,190
	Sundry debtors		301,699	185,328
14	Accruals		2,520,324	2,198,364
15	Total assets		209,816,754	179,536,343
	Liabilities
	Banknotes		35,078,755	33,186,885
	Coins		3,630,988	3,426,422
	Foreign liabilities		876,282	1,633,980
	Allocations of Special Drawing Rights in the IMF (SDRs)		1,647,767	1,527,051
	International Monetary Fund		5,545,608	5,533,266
16	Deposits, etc.		33,862,778	28,068,469
	Certificates of deposit		52,738,000	30,865,000
	Central government		33,953,919	34,994,811
	Sundry creditors		1,127,290	1,407,103
	Total creditors		168,667,585	140,784,121
	General Capital Fund	50,000	50,000
	Statutory Reserve	250,000	250,000
	Value Adjustment Reserve	2,106,855	1,092,921
	General Reserves	38,742,314	37,359,301
	Total net capital		41,149,169	38,752,222
	Total liabilities		209,816,754	179,536,343
17	Off-balance-sheet items:
	Guarantees		419,925	374,438
	Other liabilities		57,537,178	52,439,525
			57,957,103	52,813,963

Danmarks Nationalbank

Copenhagen, February 16, 1998

Bodil Nyboe Andersen        Torben Nielsen        Jens Thomsen        /K. Røhl, regnskabschef

Report of the internal audit
We have audited the annual accounts of Danmarks Nationalbank for the year 1997 presented by the Management.

Basis of opinion
We have conducted the audit on the basis of the Danmarks Nationalbank Act and Danmarks Nationalbank's By-Laws and in accordance with the auditing standards generally accepted in Denmark.

Based on an evaluation of materiality and risk we have assessed whether the Bank's procedures and internal control systems provide adequate security, just as we have tested the basis and documentation for the amounts and other information presented in the annual accounts. This included an assessment of the applied accounting policies and the accounting estimates made, as well as an assessment of the adequacy of the information presented in the annual accounts.

The audit has not resulted in any qualifications.

Opinion
In our opinion the annual accounts have been prepared in accordance with the Danmarks Nationalbank Act and Danmarks Nationalbank's By-Laws and reflect the income and expenses for the year and the assets and liabilities as at December 31, 1997.

Copenhagen, February 16, 1998        Henrik Larsen, Chief Auditor

These accounts, audited in the manner prescribed by the By-Laws of Danmarks Nationalbank, are hereby adopted by the Board of Directors.

Report of the external auditors
As auditors appointed by the Royal Bank Commissioner we have audited the annual accounts for the year ended December 31, 1997 of Danmarks Nationalbank.

Basis of opinion
We planned and conducted our audit in continuation of the audit performed by the Bank's internal audit and in accordance with the auditing standards generally accepted in Denmark to obtain reasonable assurance that the annual accounts are free of material misstatements. Based on an evaluation of materiality and risk, we have tested the basis and documentation for the amounts and disclosures in the annual accounts. Our audit included an assessment of the accounting policies applied and estimates made. In addition we have evaluated the overall adequacy of the presentation of information in the annual accounts.

Our audit has not resulted in any qualifications.

Opinion
In our opinion the annual accounts have been prepared in accordance with the Danmarks Nationalbank Act and Danmarks Nationalbank's By-Laws and reflect the income and expenses for the year and the assets and liabilities as at December 31, 1997.

Copenhagen, February 16, 1998      John Gath, State-Authorized Public Accountant      Sv. Ørjan Jensen, State-Authorized Public Accountant

Copenhagen, March 18, 1998
Hans E. Zeuthen      Helle Bechgaard      Michael Dithmer
Pia Christmas-Møller      Uffe Ellemann-Jensen      Jørgen Estrup      Bent le Fèvre      Ove Fich      Karen Højte Jensen      Knud Koch Jensen      Jette W. Knudsen      Kjeld Larsen      Torben Lund      Jes Lunde      Harry Nicolaisen      B. Frank Nielsen      Kirsten Nielsen      Karsten Olsen      Anders Fogh Rasmussen      Erik B. Rasmussen      Jens Rostrup-Nielsen      Kirsten Stallknecht      Helge Sørensen      Finn Thorgrimson      Margit Vognsen

Notes on the accounts for 1997

Accounting policies
The annual accounts for 1997 have been prepared in accordance with the same accounting policies as in the previous year, with the exception that accruals have been made for large prepaid and outstanding cost items, and stocks of raw materials have been capitalized. This has increased the profit for the year by kr. 8 million.

Note		1997 kr. '000	1996 kr. '000
1	Interest on loans, etc.
	Interest on loans to domestic banks	1,051,484	1,514,286
	Interest on loans to other borrowers	300,103	252,680
		1,351,587	1,766,966
2	Interest on deposits, etc. and certificates of deposit
	Interest on deposits from domestic banks	137,034	119,021
	Interest on the central government's deposits	1,270,655	1,453,085
	Interest to other depositors, etc.	64,217	57,130
	Interest on certificates of deposit	2,108,994	1,678,004
		3,580,900	3,307,240
3	Administrative expenses
	Fees and salaries	166,862	162,310
	Indirect staff expenses, including contributions to staff pension schemes	37,520	35,010
	Purchases of machinery and equipment	14,998	11,961
	Real property, current expenses	30,630	30,851
	Dataprocessing and expenses incidental to the Securities Centre	31,022	27,999
	Other expenses	46,789	32,440
		327,821	300,571
4	Expenses incidental to the note production
	Fees and salaries	37,982	36,872
	Indirect staff expenses, including contributions to staff pension schemes	7,524	7,271
	Purchases of paper and materials	7,529	17,414
	Purchases of machinery and equipment	7,975	11,378
	Real property, current expenses	9,105	8,729
	Other expenses	8,007	6,047
		78,122	87,711
5	Expenses incidental to The Royal Mint
	Expenses
	Fees and salaries	7,874	9,535
	Indirect staff expenses	1,771	1,675
	Purchases of metal, blanks and materials	10,269	11,432
	Purchases of machinery and equipment	319	256
	Real property, current expenses	2,892	3,278
	Other expenses	1,537	2,037
		24,662	28,213
	Receipts
	Sales of metal	2,310	6,598
	Sales of coin sets and medals	1,474	1,594
	Other receipts	159	4,865
		3,943	13,057
	Net expenses	20,719	15,156
6	The ship credit scheme
	The Nationalbank is obliged to deliver Ship Credit Fund bonds to the Ship Credit Fund at par should a borrower redeem a loan prematurely. Expenditure is incurred because in such cases the market price has been above par.
7	Commemorative coin
	Since claims for encashment of the commemorative coin are considered unlikely, on the issue of the commemorative coin an estimated profit of kr. 19 million is distributed at half to the Crown and half to the Ministry of Economic Affairs for charity purposes.
8	Value adjustment of gold
	Value adjustment of gold - including gold deposited with the European Monetary Institute - is made on the basis of the price quoted at the year's last gold fixing in London.
9	Value adjustment of foreign assets
	This adjustment is based on the official exchange rates and market prices ruling at year-end.
10	Value adjustment of bonds and shares, etc.
	The value adjustment of the bond portfolio is based on the official market prices quoted at year-end.
11	Stock of gold, foreign assets and claims on the European Monetary Institute
	As an element of the European Monetary System, EMS, 20 per cent of the stock of gold and USD is deposited with the European Monetary Institute.
12	Loans, etc.
	Banks	31,650,599	40,805,290
	Other borrowers	5,465,000	8,853,288
		37,115,599	49,658,578
13	Bonds and shares, etc.
	As previously the Nationalbank's share portfolio - with an estimated value of kr. 1.3 billion - is included at a value of kr. 1 per shareholding.
14	Accruals
	This amount includes outstanding interest of kr. 2,491 million (1996: kr. 2,180 million).
15	Total assets
	The Nationalbank's properties - in the latest official real-estate assessment valued at kr. 649 million (1996: kr. 649 million) - and machinery and equipment are accounted as expenditure in the year of acquisition.
16	Deposits, etc.
	Banks	28,551,107	21,111,095
	Other depositors	5,311,671	6,957,374
		33,862,778	28,068,469
17	Off-balance-sheet items
	Other liabilities include unsettled gross purchases on forward terms of kr. 57,537 million (1996: kr. 52,440 million).

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Appendix of Tables

Table 1
Annual accounts and monthly balance sheets of Danmarks Nationalbank

End of period	Assets												End of period	Liabilities															End of period
	Stock of gold	Foreign assets	Assets deposited wiht the Euro- pean Monetary Institute	Special Drawing Rights (SDRs)	Denmark's IMF quota	Lending1)	The government2)	Bonds and shares3)	Government guarantee for coin in circulation4)	Guarantees5)	Sundry debtors6)	Total		Notes in circula- tion	Coin in circula- tion	Foreign liabilities	International Monetary Fund (IMF)	Alloca- tions of SDRs in IMF	Deposits1)	Certificates of deposit1)	Special deposits1)	The government2)	Guaran- tees5)	Sundry credi tors6)	General Capital Fund and Reserve Fund	Value adjustment reserve	Reserve against loss on assets	Total
	Kr. million													Kr. million
1987	4 858	54 078	3 777	1 301	6 147	18 319	–	24 189	639	1 120	19 398	133 826	1987	21 093	1 716	710	5 082	1 547	1 403	–	756	59 971	1 120	15 876	300	•	24 252	133 826	1987
1988	4 595	59 063	10 454	1 542	6 566	1 712	6 246	26 911	639	1 059	30 084	148 871	1988	22 094	1 776	1 582	4 399	1 652	7 865	•	•	50 384	1 059	28 950	300	•	28 810	148 871	1988
1989	4 340	33 180	4 625	1 850	6 173	19 536	–	32 431	639	795	16 025	119 594	1989	23 290	1 755	1 304	3 960	1 553	8 977	•	•	34 504	795	14 346	300	•	28 810	119 594	1989
1990	3 720	52 707	5 200	1 246	5 844	6 246	–	37 717	639	569	18 469	132 357	1990	24 453	2 530	1 361	4 037	1 470	13 114	•	•	38 405	569	17 362	300	•	28 756	132 357	1990
1991	3 464	38 588	2 814	1 430	6 018	5 320	–	44 361	639	433	12 327	115 394	1991	25 565	2 646	3 888	3 863	1 514	18 125	•	•	16 010	433	10 698	300	•	32 352	115 394	1991
1992	3 456	63 540	2 757	528	9 208	29 132	–	32 018	539	•	3 327	144 505	1992	25 391	2 629	28 292	6 233	1 539	4 800	5 743	•	35 075	•	495	300	•	34 008	144 505	1992
1993	4 339	62 818	4 947	580	9 953	81 689	–	41 235	539	•	4 502	210 602	1993	26 880	2 776	790	7 077	1 664	5 455	27 812	•	94 548	•	573	300	•	42 727	210 602	1993
1994	3 790	44 658	3 460	1 107	9 502	61 749	•	39 505	•	•	2 274	166 045	1994	29 708	2 980	1 537	6 886	1 589	4 591	25 979	•	56 910	•	1 080	300	•	34 485	166 045	1994
1995	3 531	53 577	4 521	880	8 818	49 670	•	34 096	•	•	2 348	157 441	1995	31 434	3 222	2 200	5 521	1 474	3 219	33 813	•	38 808	•	1 523	300	•	35 927	157 441	1995
1996	3 652	73 624	4 979	997	9 134	49 659	•	35 108	•	•	2 383	179 536	1996	33 187	3 426	1 634	5 533	1 527	28 068	30 865	•	34 995	•	1 548	300	1 093	37 359	179 536	1996
1997	3 331	115 844	4 790	2 291	9 856	37 116	•	33 766	•	•	2 822	209 817	1997	35 079	3 631	876	5 546	1 648	33 863	52 738	•	33 954	•	1 333	300	2 107	38 742	209 817	1997
1996 Jan	3 498	64 834	4 934	880	8 818	42 862	•	34 236	•	•	2 014	162 076	Jan 1996	29 754	3 118	614	5 521	1 474	19 444	29 903	•	31 342	•	6 121	300	•	34 485	162 076	Jan.1996
Feb.	3 504	64 183	4 934	904	8 818	50 195	•	33 962	•	•	1 658	168 158	Feb.	29 689	3 128	335	5 521	1 474	16 054	31 258	•	39 857	•	6 057	300	•	34 485	168 158	Feb.
March	3 513	73 384	4 934	904	8 818	47 417	•	34 723	•	•	1 517	175 210	March	30 282	3 172	555	5 396	1 474	3 042	42 205	•	51 620	•	1 237	300	•	35 927	175 210	March
April	3 481	84 321	5 435	904	8 818	31 380	•	34 411	•	•	1 098	169 848	April	31 172	3 211	666	5 404	1 474	16 506	39 583	•	33 916	•	1 689	300	•	35 927	169 848	April
May	3 495	79 252	5 435	921	8 818	38 646	•	34 274	•	•	1 055	171 896	May	31 433	3 273	1 282	5 404	1 474	3 949	31 957	•	55 133	•	1 764	300	•	35 927	171 896	May
June	3 497	75 356	5 435	921	8 818	38 968	•	34 168	•	•	1 282	168 445	June	32 103	3 302	2 084	5 404	1 474	2 772	29 109	•	53 993	•	1 977	300	•	35 927	168 445	June
July	3 479	70 827	5 214	921	8 818	44 015	•	33 589	•	•	1 663	168 526	July	31 964	3 295	1 846	5 336	1 474	16 999	36 785	•	32 229	•	2 371	300	•	35 927	168 526	July
Aug.	3 479	67 857	5 214	940	8 818	42 661	•	33 986	•	•	967	163 922	Aug.	31 319	3 283	2 331	5 355	1 474	2 827	31 385	•	46 537	•	3 184	300	•	35 927	163 922	Aug.
Sept.	3 483	72 248	5 214	942	8 818	50 089	•	34 174	•	•	1 398	176 366	Sept.	31 062	3 275	1 409	5 355	1 474	8 232	36 207	•	50 087	•	3 038	300	•	35 927	176 366	Sept.
Oct.	3 494	77 439	4 938	942	8 818	51 017	•	34 161	•	•	2 107	182 916	Oct.	31 407	3 282	1 616	5 313	1 474	22 759	50 454	•	26 972	•	3 412	300	•	35 927	182 916	Oct.
Nov.	3 502	73 952	4 938	963	8 818	54 549	•	34 795	•	•	1 067	182 584	Nov.	31 847	3 318	1 819	5 338	1 474	15 387	44 080	•	39 147	•	3 947	300	•	35 927	182 584	Nov.
Dec.	3 506	73 200	4 938	963	8 818	49 533	•	34 049	•	•	1 136	176 143	Dec.	33 187	3 426	1 633	5 338	1 474	28 068	30 865	•	31 652	•	4 272	300	•	35 927	176 143	Dec.
1997 Jan	3 665	83 190	5 394	997	9 134	56 782	•	34 608	•	•	2 274	196 044	Jan 1997	31 650	3 332	459	5 624	1 527	14 689	68 305	•	26 925	•	7 306	300	•	35 927	196 044	Jan. 1997
Feb.	3 672	82 274	5 394	1 375	9 134	58 286	•	35 147	•	•	3 559	198 841	Feb.	31 511	3 330	465	5 649	1 527	11 260	55 129	•	46 265	•	7 478	300	•	35 927	198 841	Feb.
March	3 672	81 025	5 394	1 375	9 134	64 734	•	35 244	•	•	2 625	203 203	March	32 773	3 399	480	5 712	1 527	19 350	50 068	•	49 712	•	1 430	300	1 093	37 359	203 203	March
April	3 665	88 587	5 032	1 372	9 134	41 202	•	34 973	•	•	2 423	186 388	April	32 786	3 404	261	5 712	1 527	25 363	53 582	•	23 580	•	1 421	300	1 093	37 359	186 388	April
May	3 674	95 066	5 032	1 912	9 134	44 396	•	35 350	•	•	2 349	196 913	May	33 241	3 459	269	5 712	1 527	12 352	47 697	•	52 134	•	1 770	300	1 093	37 359	196 913	May
June	3 686	96 659	5 032	1 882	9 134	48 628	•	34 944	•	•	2 569	202 534	June	33 735	3 496	554	5 799	1 527	27 258	42 022	•	47 391	•	2 000	300	1 093	37 359	202 534	June
July	3 677	99 333	4 712	1 944	9 134	48 858	•	33 944	•	•	2 975	204 577	July	33 888	3 490	601	5 799	1 527	31 393	60 430	•	25 936	•	2 761	300	1 093	37 359	204 577	July
Aug.	3 680	99 377	4 712	1 965	9 134	44 337	•	35 231	•	•	2 981	201 417	Aug.	33 187	3 502	815	5 799	1 527	19 478	60 409	•	34 886	•	3 062	300	1 093	37 359	201 417	Aug.
Sept.	3 683	105 639	4 712	1 908	9 134	42 091	•	34 950	•	•	3 379	205 499	Sept.	33 027	3 491	1 220	5 556	1 527	29 148	53 549	•	36 093	•	3 135	300	1 093	37 359	205 499	Sept.
Oct.	3 693	123 675	4 783	1 796	9 134	22 938	•	34 201	•	•	3 672	203 892	Oct.	33 248	3 482	1 386	5 556	1 527	19 751	77 674	•	18 786	•	3 730	300	1 093	37 359	203 892	Oct.
Nov.	3 712	117 081	4 778	1 529	9 134	33 757	•	34 606	•	•	2 105	206 703	Nov.	33 627	3 529	1 880	5 556	1 527	15 947	59 128	•	42 624	•	4 133	300	1 093	37 359	206 703	Nov.
Dec.	3 718	114 392	4 778	2 186	9 134	36 836	•	33 589	•	•	2 287	206 920	Dec.	35 079	3 631	875	5 097	1 527	33 863	52 738	•	30 727	•	4 632	300	1 093	37 359	206 920	Dec.
Note: Theannual figures are from the annual accounts of Danmarks Nationalbank. The monthly figures (also at end-December) are from the monthly balance sheets.
1) A specification of the banks' accounts with the Nationalbank is given in Table 5.
2) Until end-1990 including Post Giro funds. The amount stated under Assets in 1988 is Post Giro funds.
3) In the period as from 1989 until end-1991 including bonds acquired in connection with bond-repurchase agreements.
4) In 1992 written down by kr.100 million, equivalent to the value of uncashed 5- and 10-øre coins. Discontinued at the end-1994 in accordance with the Maastricht Treaty and related Council regulation.
5) As from 1992 guarantees are not included in the balance sheet.
6) Until end-1991 including uncovered forward transactions not entered in the balance sheet as from 1992.

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Table 2
Specification of notes in circulation

End of period	Kr.1000	Kr.500	Kr.200	Kr.100	Kr.50	Total
	Kr. million
1987	10 595	3 360	•	5 715	398	20 068
1988	11 547	3 361	•	5 735	399	21 042
1989	12 410	3 433	•	5 955	413	22 211
1990	13 167	3 688	•	6 544	588	23 987
1991	14 029	3 851	•	6 668	629	25 177
1992	14 164	3 806	•	6 402	618	24 990
1993	15 386	3 983	•	6 495	655	26 519
1994	17 294	4 693	•	6 646	695	29 328
1995	18 238	5 307	•	6 759	737	31 041
1996	19 280	5 819	•	6 926	778	32 803
1997	19 589	6 556	1 618	6 119	799	34 681
Note: Notes in circulation as entered in the Nationalbank's balance sheet furthermore includes the special notes circulating on the Faroe Islands (on December 31, 1997: kr.187 million) and 20-, 10- and 5-krone notes.

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Table 3
Specification of coin in circulation

End of period	Kr.20	Kr.10	Kr.5	Kr.2	Kr.1	50 øre	25 øre	Total
	Kr. million
1987	•	544	389	•	452	•	169	1 554
1988	•	569	397	•	470	•	174	1 610
1989	•	620	383	•	454	44	135	1 636
1990	746	601	392	•	459	64	126	2 388
1991	845	596	392	•	467	77	131	2 508
1992	893	599	394	•	471	88	134	2 579
1993	932	613	399	170	381	94	138	2 727
1994	1 013	656	421	214	378	105	145	2 932
1995	1 122	697	442	248	385	112	152	3 158
1996	1 211	738	462	280	393	121	158	3 363
1997	1 299	773	483	310	401	126	163	3 555
Note: Coin in circulation as entered in the Nationalbank's balance sheet furthermore includes 200-krone coins (commemora- tive coins) and 2-krone coins put into circulation up to end-1959.

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Table 4
Central-government financing

	Gross financing require- ment	Redemp- tion of foreign govern- ment loans	Redemp- tion of domestic govern- ment loans1)	Net finan- cing require- ment2)	Met by
					Net sales of central- government securities in kroner to1)		Net foreign borrowing	Sales of ECU bonds	Reduction of the account with the National- bank5)
					Busi- ness, house- holds, etc.3)	The National- bank, the banks, etc.4)
	Kr.billion
1988	131.4	36.3	86.8	8.3	- 2.2	10.1	- 10.1	_	10.5
1989	130.1	17.8	89.5	22.7	11.6	7.6	- 4.7	_	8.2
1990	119.7	14.7	79.1	25.9	41.2	- 18.5	5.6	_	- 2.4
1991	136.9	30.6	64.5	41.8	36.5	13.3	- 28.4	_	20.4
1992	142.6	16.3	96.0	30.3	46.2	- 17.4	11.1	10.2	- 19.8
1993	135.9	16.7	74.3	44.9	81.2	- 34.7	56.7	_	- 58.3
1994	134.7	14.9	73.6	46.2	- 11.6	57.6	- 31.3	- 1.1	32.7
1995	171.3	32.5	104.5	34.2	58.8	- 26.2	- 19.7	- 0.2	21.5
1996	127.9	33.2	76.7	18.1	40.5	- 21.2	- 3.7	- 1.3	3.8
1997	99.0	25.2	79.0	- 5.2	16.6	- 22.5	0.7	- 0.8	0.9
1996 Jan.	15.0	0.2	3.9	10.8	14.1	- 8.7	1.5	- 0.2	4.1
Feb.	3.2	2.2	21.8	- 20.7	- 5.1	- 5.2	- 1.9	- 0.1	- 8.5
March	10.3	5.0	_	5.3	16.6	4.2	- 3.6	- 0.1	- 11.8
April	21.7	0.3	_	21.4	9.0	- 5.6	0.4	- 0.1	17.7
May	- 15.8	1.2	_	- 17.0	0.4	4.5	- 0.5	- 0.2	- 21.2
June	17.1	2.2	0.0	14.9	9.3	5.0	- 0.2	- 0.4	1.1
July	14.9	0.7	1.2	13.0	- 0.7	- 7.5	- 0.4	- 0.1	21.8
Aug.	6.8	9.1	18.2	- 20.5	- 11.6	4.5	0.9	0.0	- 14.3
Sept.	13.0	2.0	0.0	11.0	13.2	1.7	- 0.4	0.0	- 3.6
Oct.	23.0	0.2	1.0	21.9	- 0.5	- 0.7	0.0	_	23.1
Nov.	6.1	7.3	29.9	- 31.1	- 12.3	- 6.7	0.0	_	- 12.2
Dec.	12.6	2.8	0.8	9.0	8.0	- 6.8	0.4	_	7.5
1997 Jan.	17.1	2.3	6.4	8.5	18.6	- 12.7	- 2.1	- 0.1	4.7
Feb.	- 3.1	2.1	22,7	- 28.0	- 13.8	5.1	0.2	- 0.2	- 19.3
March	5.9	0.6	1.2	4.1	- 13.2	18.4	2.3	_	- 3.4
April	24.9	0.3	3.1	21.5	3.7	- 8.4	0.1	- 0.1	26.1
May	- 15.6	0.2	4.3	- 20.1	11.6	- 3.0	- 0.2	_	- 28.6
June	17.5	1.2	1.0	15.2	11.5	- 1.4	0.4	0.0	4.7
July	18.8	3.6	2.7	12.5	1.6	- 10.1	- 0.3	- 0.1	21.5
Aug.	1.5	2.9	25.3	- 26.7	- 4.6	- 13.3	0.2	_	- 9.0
Sept.	19.9	6.5	0.5	12.8	16.6	- 2.3	0.1	- 0.4	- 1.2
Oct.	24.2	3.4	1.0	19.8	- 3.6	- 5.2	11.3	_	17.3
Nov.	- 27.2	0.4	6.2	- 33.8	- 3.8	4.8	- 10.9	_	- 23.8
Dec.	15.2	1.7	4.6	8.9	- 8.0	5.5	- 0.5	_	11.9
Note: The financing requirement is calculated on the basis of the Nationalbank's balance sheet. Until end-1991 on calculation no allowance is made for fluctuations in Post Giro funds. As from 1989 excluding redemption of foreign short-term government loans (Commercial Paper). As from 1990 excluding redemption of domestic short-term government loans (Treasury bills). On purchase of central-government securities the purchased securities are included in redemptions at transaction value. On maturity of the purchased securities redemptions are reduced by the nominal value of the securities. On calculation of the net financing requirement the Social Pension Fund's net purchase of bonds has been included in the expenditure. 1) Including repayment of compulsory savings in 1990 - 1992. 2) In contrast to the central government's accounts, as from 1994 the net financing requirement is calculated excluding the premium or discount on purchase of domestic government securities. 3) Including net purchases by non-residents, as specified in Table 31. 4) Including the Kingdom of Denmark Mortgage Bank and Post Giro. 5) Until end-1991 excluding fluctuations in Post Giro funds.

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Table 5
The banks' balances with the Nationalbank

End of period	Certificates of deposit1)	Deposits	Loans2)	Total net position	Lending concerning decent- ralized bank-note holdings	Special deposits3)	Bond- repurchase accounts4)
	Kr. million
1987	_	160	17 816	- 17 656	•	754	•
1988	•	5 884	1 312	4 572	•	•	•
1989	•	351	18 388	- 18 037	20	•	6 376
1990	•	1 748	3 055	- 1 307	1 013	•	8 764
1991	•	14 369	5	14 364	1 085	•	2 016
1992	5 741	3 338	23 781	- 14 702	1 073	•	•
1993	27 783	3 387	77 937	- 46 767	1 267	•	•
1994	25 851	2 685	55 937	- 27 401	1 338	•	•
1995	33 570	1 867	43 969	- 8 532	1 361	•	•
1996	30 617	15 215	33 735	12 097	1 438	•	•
1997	52 111	17 976	19 817	50 270	1 655	•	•
1996 Jan.	29 718	18 138	37 266	10 590	1 165	•	•
Feb.	30 987	14 689	44 489	1 186	1 185	•	•
March	42 056	1 760	41 758	2 058	1 095	•	•
April	39 499	14 991	25 815	28 675	1 249	•	•
May	31 693	2 562	33 041	1 214	1 278	•	•
June	28 892	1 294	33 474	- 3 288	1 080	•	•
July	36 633	15 424	38 181	13 876	1 434	•	•
Aug.	31 129	1 290	37 053	- 4 635	1 136	•	•
Sept.	36 083	6 299	44 488	- 2 107	1 136	•	•
Oct.	50 290	15 195	40 095	25 390	1 325	•	•
Nov.	43 913	1 693	37 730	7 876	1 109	•	•
Dec.	30 617	15 215	33 735	12 097	1 438	•	•
1997 Jan.	68 017	1 087	39 908	29 196	1 109	•	•
Feb.	54 882	1 311	44 557	11 636	1 156	•	•
March	49 802	1 225	43 066	7 961	1 210	•	•
April	53 126	17 601	29 944	40 783	1 341	•	•
May	47 257	1 452	29 442	19 267	1 473	•	•
June	41 715	9 108	26 695	24 128	1 393	•	•
July	59 744	18 295	32 581	45 458	1 622	•	•
Aug.	59 765	1 774	23 590	37 949	1 421	•	•
Sept.	52 819	14 173	25 204	41 788	1 482	•	•
Oct.	76 770	2 214	4 131	74 853	1 395	•	•
Nov.	58 257	1 205	17 288	42 174	1 307	•	•
Dec.	52 111	17 976	19 817	50 270	1 655	•	•
Note: The annual figures are from the annual accounts of the Nationalbank. The monthly figures (also at end-December) are from the monthly balance sheets. The figures exclude transactions concerning settlement accounts. 1) Nominal value. 2) Comprises drawings on current account (in the period as from August 1987 until end-March 1992) and repurchase agreements in central-govenment securities (as from april 1992). Until end-1989 also including loans in the money market, etc. 3) As a consequence of amounts exceeding the basic rate of increase fixed for individual banks' domestic deposits, pursuant to the deposit monitoring system. The deposit monitoring system was suspended as from January 1988 and was discontinued on March 1, 1991. 4) Proceeds from established bond-repurchase agreements, which were included in line with general deeds of pledge as security for current-account drawings.

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Table 6
Factors affecting the banks' net position with the Nationalbank

	Central-government finance			Net purchase of foreign exchange by the National- bank4) 5)	The National- bank's net bond purchases5)	Other factors6)	The banks' net position with the Nationalbank
	Domestic gross financing require- ment1)	Sales of central- government securities (-)2)	Liquidity effect3)
							Change	End of period
	Kr. billion
1988	95.1	- 94.7	0.4	18.8	- 0.1	3.1	22.2	4.6
1989	112.2	- 108.7	3.6	- 23.0	- 0.3	- 2.9	- 22.6	- 18.0
1990	105.0	- 101.8	3.2	16.0	2.0	- 4.4	16.7	- 1.3
1991	106.3	- 114.4	- 8.0	7.5	12.0	4.2	15.7	14.4
1992	126.3	- 124.8	1.5	- 20.7	- 11.8	2.0	- 29.1	- 14.7
1993	119.2	- 120.9	- 1.6	- 32.5	6.9	- 4.8	- 32.1	- 46.8
1994	119.8	- 119.6	0.2	19.5	1.6	- 1.9	19.4	- 27.4
1995	138.8	- 137.2	1.6	32.9	- 7.2	- 8.4	18.9	- 8.5
1996	94.7	- 96.0	- 1.2	25.9	- 0.1	- 3.9	20.6	12.1
1997	73.8	- 73.0	0.8	43.2	- 1.5	- 4.3	38.2	50.3
1996 Jan.	14.7	- 9.3	5.4	11.9	0.1	1.7	19.1	10.6
Feb.	1.1	- 11.6	- 10.5	1.7	- 0.3	- 0.3	- 9.4	1.2
March	5.3	- 20.7	- 15.5	12.8	0.8	2.8	0.9	2.1
April	21.4	- 3.5	18.0	11.0	- 0.3	- 2.1	26.6	28.7
May	- 17.0	- 4.9	- 21.9	- 5.0	- 0.1	- 0.5	- 27.5	1.2
June	14.9	- 14.3	0.6	- 4.1	- 0.1	- 0.8	- 4.5	- 3.3
July	14.2	7.0	21.2	- 3.9	- 0.6	0.4	17.2	13.9
Aug.	- 2.3	- 11.1	- 13.4	- 4.4	0.4	- 1.1	- 18.5	- 4.6
Sept.	11.0	- 15.0	- 4.0	5.7	0.2	0.6	2.5	- 2.1
Oct.	22.9	0.3	23.2	4.7	0.0	- 0.4	27.5	25.4
Nov.	- 1.2	- 11.0	- 12.2	- 3.7	0.6	- 2.3	- 17.5	7.9
Dec.	9.9	- 2.0	7.9	- 0.9	- 0.7	- 2.0	4.2	12.1
1997 Jan.	14.9	- 12.3	2.6	13.2	- 0.5	1.8	17.1	29.2
Feb.	- 5.2	- 14.1	- 19.3	- 0.6	0.5	1.8	- 17.6	11.6
March	5.3	- 6.4	- 1.1	- 3.6	0.1	1.0	- 3.7	8.0
April	24.6	1.6	26.2	7.3	- 0.3	- 0.4	32.8	40.8
May	- 15.8	- 13.0	- 28.8	7.2	0.4	- 0.4	- 21.5	19.3
June	16.2	- 11.1	5.1	0.8	- 0.4	- 0.7	4.9	24.1
July	15.2	5.8	21.0	2.8	- 1.0	- 1.5	21.3	45.5
Aug.	- 1.4	- 7.3	- 8.8	- 0.3	1.3	0.3	- 7.5	37.9
Sept.	13.4	- 14.8	- 1.4	6.3	- 0.3	- 0.7	3.8	41.8
Oct.	20.8	7.8	28.6	6.6	- 0.7	- 1.3	33.1	74.9
Nov.	- 27.6	- 7.1	- 34.7	3.6	0.4	- 1.9	- 32.7	42.2
Dec.	13.5	- 2.0	11.4	- 0.1	- 1.0	- 2.2	8.1	50.3
1) Excluding redemption of foreign government loans and purchase of ECU bonds. See also the note to Table 4. 2) Gross sales of central-government bonds and Treasury notes and net sales of Treasury bills. 3) Reduction of the central government's account with the Nationalbank increased by the central government's net borrowing abroad and the central government's net sales of ECU bonds. 4) Change in the foreign-exchange reserve excluding the central government's net borrowing abroad and the central government's net sales of ECU bonds. 5) Excluding the Nationalbank's trading in ECU bonds. 6) Including inter alia changes in note and coin circulation, changes in the Nationalbank's accounts with the Danish Export Finance Corporation and the Kingdom of Denmark Mortgage Bank and until end-1991 fluctuations in Post Giro funds.

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Table 7
The banks' lending

End of period	From resident units				From units abroad				Total
	To residents		To non-residents		To residents		To non-residents
	Kroner	Currency	Kroner	Currency	Kroner	Currency	Kroner	Currency
	Kr. billion
1988 Dec.	297.5	2.6	2.6	2.6	9.4	104.0	1.4	57.7	477.8
1989 ,,	317.5	4.0	3.0	5.4	10.4	113.2	2.0	70.3	525.8
1990 ,,	334.4	15.5	5.3	13.6	14.7	121.9	3.2	77.4	586.1
1991 ,,	334.8	16.5	5.5	19.6	29.8	110.7	2.5	71.5	591.0
1992 ,,	319.2	17.5	11.4	18.9	15.1	97.9	3.2	66.7	549.8
1993 ,,	284.6	15.3	46.2	20.6	21.1	76.2	4.4	73.9	542.5
1994 ,,	261.6	14.2	29.3	29.9	28.6	53.3	2.7	54.2	473.9
1995 ,,	277.2	14.3	31.2	21.9	27.7	46.8	2.8	68.3	490.0
1996 ,,	290.8	15.0	38.6	33.0	37.3	36.7	3.9	93.9	549.2
1997 ,,	315.0	17.5	53.8	42.4	46.4	38.2	3.4	132.2	648.9
1996 Jan.	260.1	13.7	27.9	22.3	28.0	45.3	2.9	67.3	467.5
Feb.	269.4	12.8	19.5	21.1	29.1	43.9	2.7	72.8	471.3
March	279.3	15.1	26.5	23.1	30.2	43.5	2.9	78.9	499.5
April	269.6	15.2	30.6	26.2	30.2	43.0	3.2	78.5	496.6
May	277.0	14.8	28.9	23.3	30.5	41.8	2.9	78.1	497.3
June	287.4	15.5	33.2	27.8	31.1	41.6	2.8	83.9	523.3
July	276.6	14.0	28.4	30.2	31.8	40.7	3.0	79.3	504.0
Aug.	281.2	14.3	22.0	27.5	31.8	40.7	3.8	79.5	500.8
Sept.	285.7	15.4	35.2	28.5	32.6	39.7	4.0	82.0	523.0
Oct.	274.1	15.3	33.2	28.7	34.1	37.3	3.7	86.5	512.8
Nov.	282.9	14.0	25.7	32.3	36.3	35.2	4.2	91.3	521.9
Dec.	290.8	15.0	38.6	33.0	37.3	36.7	3.9	93.9	549.2
1997 Jan.	280.8	14.5	56.8	31.4	39.4	33.8	4.2	95.7	556.6
Feb.	291.8	16.4	57.0	32.4	40.4	33.3	4.2	98.6	574.1
March	303.2	15.6	43.4	34.0	41.5	33.1	4.1	107.5	582.4
April	291.7	16.1	45.6	33.9	41.9	33.3	3.5	108.2	574.2
May	299.3	16.1	45.1	31.4	43.2	33.5	3.8	112.3	584.6
June	311.0	16.6	47.3	30.4	43.5	33.3	3.9	124.6	610.5
July	305.0	17.3	48.2	33.0	44.3	34.1	3.6	132.8	618.2
Aug.	307.0	16.2	44.5	34.1	44.6	34.2	3.5	120.4	604.5
Sept.	311.3	16.7	51.5	46.0	44.4	36.7	4.1	126.2	637.0
Oct.	299.9	16.5	60.0	40.7	44.5	34.6	4.4	125.8	626.3
Nov.	311.3	17.0	49.2	44.5	44.5	34.7	3.3	127.5	632.1
Dec.	315.0	17.5	53.8	42.4	46.4	38.2	3.4	132.2	648.9
Note: Based on consolidated figures of legal entities and Danish subsidiary banks abroad. Subsidiaries in Ireland which are not credit institutions are included in line with other units abroad. Branches of foreign banks in Denmark are included within resident units. Until end-December 1990 including lending to mortgage-credit institutes, etc., and excluding private mortgage-term loans.

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Table 8
The banks' holdings of bonds and shares

End of period	Resident units					Units abroad		Total
	Bonds			Shares		Danish krone- denom- inated bonds	Other bonds and shares
	Danish		Foreign	Danish	Foreign
	Central- govern- ment1)	Other
	Kr. billion
1988 Dec.	105.7	44.0	6.1	17.3	6.4	2.0	10.0	191.6
1989 ,,	107.6	51.9	16.9	22.3	10.2	3.4	14.6	226.9
1990 ,,	83.7	43.9	26.1	24.4	10.6	2.7	18.4	209.7
1991 ,,	103.8	46.6	29.4	14.4	4.3	3.1	25.7	227.3
1992 ,,	103.6	41.6	31.0	14.8	3.5	1.4	17.9	213.7
1993 ,,	68.5	68.7	32.4	10.2	3.7	0.8	17.6	201.9
1994 ,,	124.5	54.5	19.4	14.0	5.2	5.5	29.2	252.3
1995 ,,	99.3	65.7	29.1	13.1	4.7	0.8	44.2	256.9
1996 ,,	85.0	85.8	35.5	13.0	6.2	0.6	51.7	277.9
1997 ,,	68.8	103.5	50.7	16.2	9.5	0.8	54.8	304.3
1996 Jan.	97.1	68.3	29.0	13.8	5.6	1.0	48.9	263.7
Feb.	92.1	75.3	26.7	13.9	5.5	0.7	47.7	262.0
March	95.5	79.7	25.3	14.0	5.6	0.7	48.8	269.7
April	89.5	66.6	28.9	13.7	5.8	0.7	49.9	255.1
May	94.2	66.9	29.8	13.5	5.7	0.7	52.2	262.9
June	99.8	75.7	30.6	13.1	5.7	0.7	51.4	277.0
July	92.9	70.3	28.5	13.1	5.7	0.7	46.8	258.1
Aug.	97.5	77.9	35.1	13.1	5.7	0.7	49.1	279.1
Sept.	99.2	77.6	38.7	13.2	5.8	0.7	50.5	285.8
Oct.	98.4	75.2	31.1	12.7	5.8	0.6	50.2	274.1
Nov.	91.3	79.4	31.4	12.7	6.0	0.6	53.0	274.5
Dec.	85.0	85.8	35.5	13.0	6.2	0.6	51.7	277.9
1997 Jan.	79.1	80.3	35.5	16.6	8.0	0.6	50.4	270.4
Feb.	84.2	84.6	36.2	16.0	8.5	0.6	51.3	281.4
March	102.0	86.2	34.6	15.8	8.8	0.6	53.2	301.2
April	93.5	74.6	37.0	15.5	9.0	0.6	51.1	281.3
May	90.5	83.3	39.2	15.7	9.2	0.6	52.2	290.7
June	88.9	86.2	37.6	16.0	9.4	0.8	53.1	292.1
July	78.1	88.2	41.8	16.1	9.7	0.8	56.2	290.9
Aug.	64.9	100.5	37.6	15.9	9.3	0.7	52.5	281.5
Sept.	62.5	100.7	37.1	15.9	9.1	0.7	52.8	278.8
Oct.	57.0	88.9	40.5	15.8	9.1	0.7	55.2	267.2
Nov.	61.9	98.6	45.3	15.7	9.2	0.7	57.7	289.1
Dec.	68.8	103.5	50.7	16.2	9.5	0.8	54.8	304.3
Note: See the note to Table 7. In 1989 and 1990 the bond portfolios of the banks were influenced by repurchase agreements with the Nationalbank. As from 1991 excluding shares in subsidiary banks, etc. 1) Including Treasury notes and Treasury bills.

---

Table 9
Deposits with the banks

End of period	With resident units				With units abroad				Total
	From residents		From non-residents		From residents		From non-residents
	Kroner	Currency	Kroner	Currency	Kroner	Currency	Kroner	Currency
	Kr. billion
1988 Dec.	413.5	4.9	8.3	35.0	0.1	1.9	2.5	24.7	490.8
1989 ,,	412.4	8.8	8.2	44.9	0.2	2.5	2.4	36.4	515.7
1990 ,,	435.2	10.6	8.2	45.5	0.1	2.9	3.2	41.2	546.8
1991 ,,	447.7	10.1	10.2	11.9	0.1	2.5	3.5	29.9	515.9
1992 ,,	443.3	13.0	9.6	16.0	0.2	1.8	5.0	24.8	513.6
1993 ,,	489.4	15.4	16.3	20.6	0.2	3.4	5.0	30.9	581.3
1994 ,,	459.5	15.8	25.2	17.7	0.2	1.6	2.4	30.1	552.5
1995 ,,	474.7	16.0	30.6	14.8	0.5	1.6	2.6	37.9	578.8
1996 ,,	508.1	18.9	27.7	20.3	0.3	1.8	4.0	56.5	637.7
1997 ,,	538.0	17.7	35.6	27.4	0.3	2.0	4.9	74.3	700.1
1996 Jan.	502.3	20.3	26.4	17.6	0.5	1.4	2.7	39.8	610.9
Feb.	497.2	16.5	20.7	18.4	0.4	1.4	2.7	40.4	597.9
March	482.6	18.0	20.2	18.6	0.4	1.3	3.7	49.8	594.6
April	514.8	18.5	24.5	19.2	0.4	1.5	3.3	45.0	627.3
May	495.9	19.8	26.5	19.4	0.5	1.5	2.7	49.1	615.3
June	485.9	20.9	25.1	19.9	0.5	1.7	2.6	44.7	601.3
July	511.1	18.7	27.6	18.1	0.4	1.8	2.5	43.4	623.6
Aug.	508.9	19.7	25.0	20.3	0.4	1.7	3.4	46.7	626.1
Sept.	501.4	19.0	29.6	23.6	0.4	2.0	4.0	51.6	631.5
Oct.	532.2	18.6	27.6	22.9	0.4	1.6	4.2	50.0	657.4
Nov.	515.0	17.8	24.6	20.8	0.4	1.5	3.6	60.3	644.3
Dec.	508.1	18.9	27.7	20.3	0.3	1.8	4.0	56.5	637.7
1997 Jan.	539.9	18.9	34.4	25.7	0.4	1.5	4.8	57.2	682.7
Feb.	528.8	19.6	36.2	29.5	0.3	1.5	4.7	58.8	679.4
March	510.7	22.7	35.9	25,4	0.3	1.7	6.1	80.5	683.4
April	531.2	21.6	39.4	25.4	0.2	1.8	4.9	62.3	686.8
May	526.8	19.9	38.6	28.1	0.3	1.7	4.5	62.0	681.9
June	516.7	18.4	38.0	21.5	0.2	1.7	4.5	74.1	675.1
July	545.0	18.7	36.0	24.9	0.2	1.8	3.9	80.3	710.7
Aug.	529.9	18.2	37.9	23.9	0.2	1.6	4.5	75.3	691.6
Sept.	520.2	18.9	40.4	36.1	0.2	1.9	4.7	79.8	702.2
Oct.	556.5	18.8	38.2	29.7	0.2	1.8	4.9	82.0	732.0
Nov.	530.9	18.0	37.7	35.6	0.3	1.6	4.6	89.2	717.8
Dec.	538.0	17.7	35.6	27.4	0.3	2.0	4.9	74.3	700.1
Note: See the note to Table 7. Until end-December 1990 including bonds issued by banks, and deposits from mortgage-credit institutes, etc.

---

Table 10
Breakdown by sector of domestic lending and deposits with the banks

End of period	Business								Non-business		Total
	Farming, fishing and ex- traction of raw ma- terials	Manu- facturing indus- tries, etc.1)	Build- ing and con- struction	Trading, trans- port, etc.	Finance, insur- ance, real property, etc.2)	Public admin- istration and other services	Other sectors	Total
									Stu- dents3)	Other3)
	Kr. billion
Lending
1986 Dec.	16.9	25.1	9.2	38.9	40.0	8.5	14.9	153.4	8.2	112.2	273.9
1987 ,,	19.3	27.7	10.9	49.4	49.0	10.1	16.9	183.3	7.4	112.9	303.5
1988 ,,	18.0	24.0	11.0	40.9	54.5	10.7	21.2	180.2	7.0	110.7	297.9
1989 ,,	17.3	31.6	11.6	49.0	66.6	10.9	16.5	203.4	6.4	114.0	323.9
1990 ,,	18.6	34.4	12.6	47.5	65.8	10.8	32.5	222.3	5.9	121.7	349.9
1991 ,,	18.3	30.6	14.1	46.6	65.9	14.4	16.8	206.6	5.6	121.8	334.0
1992 ,,	20.9	26.9	16.2	45.2	70.7	13.7	17.4	210.9	4.7	115.9	331.4
1993 ,,	17.9	24.5	8.4	41.4	69.7	11.9	20.4	194.2	4.1	101.7	300.0
1994 ,,	17.7	25.5	7.6	37.5	55.9	11.9	12.5	168.6	3.3	103.9	275.8
1995 ,,	16.2	30.4	6.8	44.1	59.0	13.8	6.0	176.2	2.6	112.7	291.5
1996 ,,	16.7	30.1	6.7	45.9	66.1	13.8	3.9	183.2	•	122.6	305.8
1996 March	15.5	30.3	7.2	48.2	57.3	13.6	5.9	177.9	2.4	114.0	294.4
June	17.5	31.1	7.6	46.1	58.4	14.5	8.9	184.1	2.2	116.5	302.9
Sept.	17.1	28.7	6.8	46.5	59.7	14.0	10.8	183.7	•	117.4	301.1
Dec.	16.7	30.1	6.7	45.9	66.1	13.8	3.9	183.2	•	122.6	305.8
1997 March	16.9	31.2	7.5	50.9	67.7	16.3	4.3	194.7	•	124.0	318.8
June	19.0	31.0	7.7	48.9	71.9	16.4	6.5	201.4	•	126.2	327.6
Sept.	19.4	30.3	7.5	49.5	67.2	16.3	7.3	197.6	•	130.5	328.1
Dec.	. . .	. . .	. . .	. . .	. . .	. . .	. . .	. . .	•	. . .	. . .
Deposits
1986 Dec.	15.1	23.7	8.8	37.4	64.5	31.7	16.3	197.4	•	180.7	378.2
1987 ,,	15.2	26.8	8.9	41.0	69.7	25.8	19.2	206.5	•	184.0	390.5
1988 ,,	14.9	26.2	10.1	33.7	80.4	25.4	25.5	216.2	•	200.1	416.4
1989 ,,	16.7	25.9	8.7	33.7	71.4	26.1	20.8	203.3	•	217.5	420.8
1990 ,,	15.9	27.6	8.3	34.5	71.3	25.8	31.8	215.2	•	230.6	445.8
1991 ,,	16.4	25.2	7.8	34.3	51.0	29.5	16.3	180.5	•	236.2	416.7
1992 ,,	17.2	24.6	7.8	31.8	56.2	24.5	16.9	179.0	•	248.2	427.2
1993 ,,	15.4	33.3	8.9	44.3	67.8	37.9	33.0	240.6	•	264.2	504.8
1994 ,,	16.8	31.0	9.4	39.6	63.1	39.3	20.0	219.2	•	256.1	475.3
1995 ,,	14.7	29.9	10.3	44.7	68.1	42.3	10.2	220.1	•	270.6	490.6
1996 ,,	17.1	38.7	11.0	49.0	75.7	40.6	10.1	242.2	•	284.7	527.0
1996 March	15.5	32.6	9.3	40.6	67.5	47.2	12.9	225.6	•	274.9	500.5
June	16.4	32.9	9.8	43.1	69.4	42.6	11.9	225.9	•	280.9	506.8
Sept.	16.7	34.3	10.8	47.8	71.0	45.6	16.2	242.4	•	277.9	520.3
Dec.	17.1	38.7	11.0	49.0	75.7	40.6	10.1	242.2	•	284.7	527.0
1997 March	16.7	36.9	10.1	44.5	77.5	44.0	11.5	241.2	•	292.2	533.4
June	17.1	37.5	11.7	45.9	78.1	38.6	11.8	240.6	•	294.5	535.1
Sept.	18.1	38.4	10.4	45.0	76.8	42.2	12.1	243.0	•	296.1	539.1
Dec.	. . .	. . .	. . .	. . .	. . .	. . .	. . .	. . .	•	. . .	. . .
Source: Statistics Denmark. Note: Resident banks' lending to and deposits from resident customers. In 1991 and 1992 excluding newly-established banks. 1) Including supply of energy and water. 2) Until end-December 1990 including lending to and deposits from mortgage-credit institutes, etc. 3) As from the 3rd quarter of 1996 student loans are included under "Other".

---

Table 11
Money stock

End of period	Notes and coin1)	Deposits with the banks2)			Money stock	Year-on-year increase in money stock
		On demand	At notice	Time deposits3)
	Kr. billion					Per cent
1986	18.8	140.6	58.1	115.9	333.4	8.8
1987	20.4	149.2	45.5	128.7	343.8	3.1
1988	21.9	184.9	42.0	107.7	356.5	3.7
1989	23.1	187.8	37.1	120.0	367.9	1.0
1990	23.6	202.8	42.4	122.2	391.0	6.3
1991	24.2	224.7	36.9	93.1	379.0	4.2
1992	25.0	218.5	33.6	97.6	374.6	- 1.2
1993	25.8	246.4	29.7	114.7	416.6	11.2
1994	28.9	243.4	27.0	94.6	394.0	- 5.4
1995	30.6	251.7	31.8	96.0	410.1	4.1
1996	31.6	278.4	32.8	97.0	439.8	7.2
1996 Jan.	29.0	262.3	32.7	115.7	439.7	7.4
Feb.	28.8	260.8	32.9	108.8	431.3	8.1
March	29.7	257.9	32.7	99.5	419.7	5.4
April	30.1	279.4	32.8	110.7	453.0	8.2
May	31.0	272.4	33.0	100.3	436.7	6.1
June	31.4	266.6	32.8	96.7	427.5	5.2
July	30.6	276.7	32.9	109.5	449.7	6.0
Aug.	30.9	278.0	34.2	105.9	449.0	8.9
Sept.	30.2	274.1	33.0	103.4	440.6	7.0
Oct.	30.4	288.5	34.2	117.9	471.1	8.7
Nov.	31.4	281.5	33.1	107.6	453.5	7.9
Dec.	31.6	278.5	32.6	97.0	439.7	7.2
1997 Jan.	31.4	290.4	33.3	115.2	470.3	7.0
Feb.	31.2	284.2	33.7	110.8	459.9	6.6
March	31.4	273.5	32.5	108.1	445.5	6.1
April	31.6	290.5	32.1	111.7	465.9	2.9
May	32.4	289.6	32.0	107.6	461.6	5.7
June	32.3	284.5	31.8	101.1	449.7	5.2
July	32.2	298.7	32.0	114.9	477.7	6.2
Aug.	32.2	291.8	32.3	106.1	462.4	3.0
Sept.	31.6	290.6	31.6	99.6	453.3	2.9
Oct.	32.5	310.0	32.7	115.2	490.4	4.1
Nov.	32.6	296.4	32.8	102.6	464.4	2.4
Dec.	33.2	295.1	30.9	103.4	462.7	5.2
Note: On calculation of the rates of increase adjustment is made for breaks in series. Until end-1990 including mortgage-credit institutes' deposits with the banks. 1) Notes and coin in circulation, excluding the banks' holdings. 2) Accounts with residents in resident units in kroner and foreign exchange. Including Post Giro deposits. Excluding long-term savings schemes, apart from premium-savings accounts. 3) Including bonds, etc. with an original maturity of up to 2 years issued by banks.

---

Table 12
Factors affecting the money stock

	Reduction of the central govern- ment's account with the National- bank1)	Increase in bank lending2)	Bond pur- chases3) 4)	Increase (-) in long-term savings schemes, etc.5)	Increase (-) in net deposits from mortgage- credit institutes, etc.6)	Change in the external position of the banks	Change in the foreign- exchange reserve etc.4) 7)	Other factors8)	Total change in money stock
	Kr. billion
1988	0.4	- 4.0	17.5	- 8.2	•	- 2.0	22.4	- 13.5	12.7
1989	3.6	30.0	11.6	- 5.9	3.7	- 6.9	- 19.3	- 9.4	3.7
1990	3.2	31.8	- 25.6	- 5.4	3.7	9.5	22.2	- 12.6	23.0
1991	- 8.0	1.7	7.0	- 6.1	- 4.3	11.4	13.7	- 27.3	- 12.0
1992	1.5	- 6.5	- 29.1	- 4.3	6.2	50.3	- 15.5	- 7.0	- 4.4
1993	- 1.6	- 29.1	- 5.6	- 7.1	- 38.7	149.7	- 32.8	7.2	42.0
1994	0.2	- 16.4	32.0	5.1	29.2	- 84.6	20.1	- 8.1	- 22.6
1995	1.6	16.6	- 14.6	- 0.6	- 17.7	7.4	35.2	- 11.8	16.2
1996	- 1.2	19.1	- 4.2	- 7.9	- 0.1	3.5	26.6	- 6.1	29.7
1997	0.8	29.8	- 7.8	- 6.8*	- 12.0*	- 30.8*	43.5	6.2*	22.8*
1996 Jan.	5.4	- 12.9	- 9.7	0.1	18.7	10.9	12.2	4.8	29.5
Feb.	- 10.5	8.4	1.6	0.5	- 3.3	- 3.0	1.0	- 3.2	- 8.4
March	- 15.5	12.2	8.8	0.8	- 22.3	- 9.1	12.8	0.7	- 11.6
April	18.0	- 9.5	- 19.6	0.0	38.0	- 3.9	11.1	- 0.9	33.2
May	- 21.9	6.9	4.5	0.5	2.3	- 11.0	- 3.9	6.3	- 16.3
June	0.6	11.1	14.3	- 0.7	- 29.7	11.3	- 4.2	- 11.9	- 9.2
July	21.2	- 12.3	- 13.4	0.0	29.2	- 0.6	- 3.9	2.0	22.3
Aug.	- 13.4	4.9	12.4	0.2	- 2.1	- 3.3	- 4.3	4.9	- 0.7
Sept.	- 4.0	5.6	2.3	0.5	- 11.7	2.4	5.7	- 9.2	- 8.4
Oct.	23.2	- 11.8	- 3.3	- 0.2	7.7	5.6	4.7	4.5	30.4
Nov.	- 12.2	7.6	- 1.6	- 0.8	0.7	- 6.2	- 3.8	- 1.4	- 17.6
Dec.	7.9	8.9	- 0.5	- 8.8	- 27.7	10.4	- 0.9	- 2.8	- 13.7
1997 Jan.	2.6	- 7.4	- 21.5	0.3	33.1	0.7	13.2	9.5	30.5
Feb.	- 19.3	12.9	9.8	0.1	- 9.6	- 4.8	- 0.6	1.1	- 10.4
March	- 1.1	10.6	20.0	0.3	- 17.5	- 22.0	- 3.6	- 1.1	- 14.4
April	26.2	- 10.9	- 19.4	0.6	22.6	- 4.8	7.4	- 1.3	20.4
May	- 28.8	7.6	6.2	0.9	- 4.7	4.6	7.1	2.7	- 4.3
June	5.1	12.1	0.7	- 0.3	- 32.7	6.1	0.9	- 3.9	- 11.9
July	21.0	- 5.4	- 9.2	- 0.6	26.3	- 5.2	2.8	- 1.7	28.1
Aug.	- 8.8	1.0	0.6	0.3	- 7.9	3.7	- 0.3	- 4.0	- 15.3
Sept.	- 1.4	4.8	- 2.3	0.5	- 24.9	9.9	6.5	- 2.1	- 9.1
Oct.	28.6	- 11.7	- 18.1	- 0.1	32.5	- 3.9	6.6	3.2	37.1
Nov.	- 34.7	12.0	15.1	0.2	- 1.2	- 16.9	3.6	- 4.0	- 26.0
Dec.	11.4	4.1	10.4	- 9.1*	- 28.1*	1.8*	- 0.1	7.8*	- 1.7*
1) Increased by the central government's net borrowing abroad and the central government's net sales of ECU bonds, i.e. equivalent to the sum of the last three columns in Table 4. 2) Until end-1990 including lending to mortgage-credit institutes, etc. 3) The Nationalbank, the banks, the Kingdom of Denmark Mortgage Bank and Post Giro. 4) Excluding the Nationalbank's trading in ECU bonds. 5) Excluding premium-savings accounts, and with the addition of bonds with an original maturity of 2 years or more issued by banks. 6) Net deposits are calculated as debt to mortgage-credit institutes, etc., with deduction of claims. 7) Excluding exchange-rate adjustment, etc. of the foreign-exchange reserve as well as net borrowing abroad by the central government, the Kingdom of Denmark Mortgage Bank and the Danish Export Finance Corporation. Furthermore excluding the proceeds of the central government's net sales of ECU bonds. 8) Residual amounts, including inter alia increases in lending by the Kingdom of Denmark Mortgage Bank and the Danish Export Finance Corporation, increases in bank holdings of uncleared cheques and additions (-) to the banks' net capital and subordinate capital investments from residents.

---

Table 13
Mortgage-credit institutesŽ domestic lending, outstanding loans and net lending

	Non-profit housing	Commercial property			Owner- occupied dwellings	Total
		Private housing rental	Trade and industry, etc.	Agriculture
	Kr. billion
Adjusted book value1)
1993	112.5	44.1	124.0	100.7	354.0	735.4
1994	118.3	42.2	114.9	101.4	379.5	756.3
1995	121.9	44.3	113.7	103.9	399.4	783.2
1996	125.6	47.3	115.6	105.7	434.1	828.4
1997	127.9	52.1	116.7	110.3	481.3	888.2
1996 1st qtr.	125.2	45.6	117.8	105.2	408.0	801.6
2nd ,,	124.7	46.0	115.0	104.4	415.3	805.3
3rd ,,	126.8	47.4	118.8	106.0	428.8	827.9
4th ,,	125.9	47.4	115.9	106.0	434.9	830.1
1997 1st qtr.	128.0	48.6	116.7	107.0	442.3	842.6
2nd ,,	126.9	49.5	116.1	107.5	454.1	853.9
3rd ,,	128.7	52.1	116.3	109.7	468.0	874.9
4th ,,	128.0	52.1	116.8	110.4	481.6	888.8
Calculated book value2)
1996 1st qtr.	125.3	45.4	113.4	104.8	406.3	795.2
2nd ,,	123.8	46.6	114.0	104.1	412.8	801.3
3rd ,,	125.6	48.5	119.4	106.0	425.7	825.1
4th ,,	124.0	48.6	114.4	105.6	431.1	823.6
1997 1st qtr.	128.6	48.3	115.2	106.5	441.0	839.6
2nd ,,	127.2	49.6	114.7	107.1	452.6	851.2
3rd ,,	130.1	50.9	115.7	108.8	465.3	870.9
4th ,,	128.4	51.5	117.9	110.0	477.3	885.2
Net lending including adjustment of value to maturity
1995	3.2	3.2	1.2	3.0	20.4	31.1
1996	2.0	4.3	0.7	1.7	31.7	40.4
1997	2.8	4.2	2.3	4.3	43.2	56.8
1996 1st qtr.	3.4	1.1	- 0.2	1.0	6.8	12.0
2nd ,,	- 1.5	1.2	0.6	- 0.7	6.5	6.1
3rd ,,	1.7	1.8	5.4	2.0	12.9	23.8
4th ,,	- 1.6	0.1	- 5.1	- 0.5	5.5	- 1.5
1997 1st qtr.	3.0	1.0	- 0.4	0.8	6.9	11.2
2nd ,,	- 1.4	1.3	- 0.4	0.7	11.5	11.7
3rd ,,	3.0	1.3	0.9	1.7	12.8	19.7
4th ,,	- 1.7	0.5	2.3	1.2	12.0	14.3
Note: Lending against mortgages on real property in Denmark. The basis for the calculation is described in further detail in the Monetary Review - February 1996. In 1997 provisional figures. 1) The adjusted book value corresponds to the outstanding mortgage debt according to the mortgage-credit institutes' balance sheets, with deduction of the discount account calculated by the mortgage-credit institutes for loans based on bonds issued at a price below par and granted after 1991. 2) Calculated as the adjusted book value at the end of the preceding year with addition of net lending and adjustment of value to maturity of bond loans granted at a discount after 1991.

---

Table 14
Mortgage-credit institutesŽ domestic lending, new lending, redemptions and repayments

	Non-profit housing	Commercial property			Owner- occupied dwellings	Total
		Private housing rental	Trade and industry, etc.	Agriculture
	Kr. billion
Gross new lending
1995	9.1	8.4	23.9	14.2	83.5	139.0
1996	10.2	14.4	50.5	24.0	115.7	214.8
1997	7.2	15.3	41.5	30.3	146.0	240.2
1996 1st qtr.	4.9	4.8	19.4	10.3	34.9	74.4
2nd ,,	1.6	3.7	11.9	4.2	26.3	47.6
3rd ,,	2.5	3.6	14.0	4.9	31.4	56.4
4th ,,	1.1	2.3	5.3	4.6	23.1	36.4
1997 1st qtr.	2.9	3.6	10.0	6.9	28.4	51.8
2nd ,,	0.6	3.5	9.6	6.5	35.7	55.9
3rd ,,	3.0	4.4	12.8	9.4	43.6	73.2
4th ,,	0.7	3.7	9.0	7.6	38.2	59.2
Premature Redemptions
1995	2.1	4.1	18.1	8.8	52.5	85.5
1996	3.8	8.8	44.4	19.7	73.6	150.3
1997	0.5	9.1	33.6	23.0	91.9	158.1
1996 1st qtr.	1.7	3.6	18.5	9.1	25.6	58.5
2nd ,,	1.2	1.9	9.8	4.0	17.1	34.0
3rd ,,	0.6	1.5	7.6	2.6	16.0	28.2
4th ,,	0.3	1.8	8.6	4.0	14.9	29.6
1997 1st qtr.	0.2	2.5	9.4	5.8	19.0	36.7
2nd ,,	0.1	1.7	8.1	4.9	21.4	36.1
3rd ,,	0.1	2.9	10.7	7.3	28.1	49.2
4th ,,	0.2	2.1	5.4	5.1	23.5	36.1
Ordinary Redemptions
1995	5.2	1.2	4.7	2.6	11.0	24.7
1996	5.6	1.4	5.5	2.9	10.8	26.2
1997	5.9	1.6	6.2	3.4	11.2	28.3
1996 1st qtr.	0.3	0.2	1.1	0.3	2.6	4.6
2nd ,,	2.5	0.6	1.5	1.0	2.8	8.3
3rd ,,	0.3	0.2	1.1	0.4	2.6	4.6
4th ,,	2.5	0.4	1.8	1.1	2.8	8.6
1997 1st qtr.	0.3	0.2	1.2	0.4	2.6	4.8
2nd ,,	2.6	0.6	1.9	1.1	2.9	9.0
3rd ,,	0.3	0.2	1.2	0.5	2.8	5.0
4th ,,	2.6	0.6	1.9	1.4	2.9	9.4
Net lending
1995	1.7	3.1	1.1	2.9	20.0	28.8
1996	0.7	4.2	0.6	1.5	31.3	38.4
1997	0.8	4.6	1.7	3.9	42.9	53.9
1996 1st qtr.	2.9	1.1	- 0.3	0.9	6.7	11.3
2nd ,,	- 2.0	1.2	0.6	- 0.8	6.4	5.3
3rd ,,	1.6	1.8	5.4	1.9	12.8	23.5
4th ,,	- 1.7	0.1	- 5.1	- 0.5	5.4	- 1.8
1997 1st qtr.	2.4	0.9	- 0.5	0.7	6.8	10.3
2nd ,,	- 2.0	1.3	- 0.5	0.6	11.5	10.8
3rd ,,	2.6	1.3	0.9	1.6	12.7	19.0
4th ,,	- 2.1	1.1	1.7	1.1	11.9	13.7
Note: See the note to Table 13

---

Table 15
Supply of krone-denominated bonds quoted on the Stock Exchange (Nominal values)

	Gross supply				Redemptions				Net supply
	Domestic govern- ment se- curities1)	Mortgage- credit bonds	Other bonds	Total	Domestic govern- ment se- curities1)	Mortgage- credit bonds	Other bonds	Total	Domestic govern- ment se- curities1)	Mortgage- credit bonds	Other bonds	Total
	Milliarderkroner
1988	95,3	84,6	7,5	187,4	86,8	31,6	6,4	124,8	8,5	53,0	1,1	62,6	1988
1989	111,7	77,4	9,8	198,9	89,5	65,2	7,7	162,4	22,2	12,2	2,1	36,5	1989
1990	125,4	81,4	12,3	219,0	95,5	61,7	5,9	163,1	29,9	19,7	6,4	56,0	1990
1991	180,4	94,5	14,3	289,2	124,0	69,5	7,5	201,0	56,4	25,0	6,9	88,2	1991
1992	226,9	88,7	23,8	339,3	187,2	86,5	7,4	281,1	39,7	2,2	16,4	58,2	1992
1993	213,4	233,8	16,0	463,2	162,7	93,8	7,3	263,8	50,7	140,0	8,7	199,4	1993
1994	232,4	282,2	14,8	529,3	175,6	358,9	12,6	547,2	56,7	- 76,7	2,1	- 17,9	1994
1995	242,8	150,0	9,0	401,7	202,2	109,5	10,0	321,7	40,6	40,5	- 1,0	80,0	1995
1996	202,2	227,9	20,0	450,1	181,3	188,8	16,2	386,3	20,9	39,1	3,8	63,8	1996
1997	164,2	254,3	33,3	451,9	167,7	189,4	17,8	374,9	- 3,4	64,9	15,5	77,0	1997
1996 Jan.	28,9	37,2	0,9	67,0	24,0	28,1	3,9	55,9	5,0	9,1	- 3,0	11,1	Jan. 1996
Feb.	11,6	20,2	0,6	32,4	21,8	3,1	0,4	25,2	- 10,3	17,2	0,2	7,1	Feb.
March	20,6	24,7	1,1	46,4	_	4,3	0,1	4,4	20,6	20,3	1,1	42,0	March
April	30,4	18,2	1,4	49,9	26,5	61,8	0,7	89,0	3,9	- 43,7	0,7	- 39,1	April
May	5,0	13,1	1,2	19,2	_	7,2	0,1	7,3	5,0	5,9	1,1	11,9	May
June	14,7	17,6	0,4	32,7	0,0	3,0	0,4	3,4	14,7	14,6	0,0	29,3	June
July	22,3	16,5	0,7	39,5	30,2	39,8	2,5	72,6	- 7,8	- 23,3	- 0,9	- 33,0	July
Aug.	11,3	33,9	1,6	46,9	18,2	5,6	1,1	24,9	- 6,8	28,3	0,5	22,0	Aug.
Sept.	15,3	6,9	0,8	23,0	0,0	3,5	0,0	3,5	15,3	3,4	0,8	19,5	Sept.
Oct.	24,0	11,0	3,0	38,1	24,9	23,6	0,0	48,6	- 0,9	- 12,6	3,0	- 10,5	Oct.
Nov.	11,1	12,5	6,3	29,9	29,9	5,1	4,2	39,3	- 18,8	7,4	2,1	- 9,4	Nov.
Dec.	7,0	16,0	2,2	25,2	5,8	3,5	2,9	12,2	1,2	12,5	- 0,7	13,0	Dec.
1997 Jan.	28,1	20,4	4,8	53,3	21,5	36,4	3,7	61,6	6,6	- 16,0	1,1	- 8,3	Jan. 1997
Feb.	14,3	18,7	4,4	37,3	22,7	4,2	0,2	27,1	- 8,4	14,5	4,2	10,3	Feb.
March	6,5	18,4	2,1	26,9	1,2	1,9	0,1	3,2	5,3	16,5	1,9	23,7	March
April	24,5	17,6	3,3	45,4	28,8	38,0	1,1	67,9	- 4,3	- 20,4	2,2	- 22,5	April
May	13,2	16,8	1,9	32,0	4,3	4,0	0,1	8,4	8,9	12,9	1,8	23,6	May
June	11,1	22,6	2,1	35,8	1,0	2,5	0,2	3,7	10,1	20,1	1,9	32,0	June
July	20,0	28,8	1,6	50,4	28,4	40,1	5,1	73,7	- 8,4	- 11,4	- 3,5	- 23,3	July
Aug.	7,2	20,6	1,3	29,2	25,2	4,2	0,5	29,9	- 18,0	16,5	0,8	- 0,8	Aug.
Sept.	14,8	27,6	3,0	45,4	0,5	1,9	0,5	3,0	14,3	25,7	2,5	42,4	Sept.
Oct.	14,5	25,0	4,4	43,9	23,1	50,4	3,4	76,9	- 8,6	- 25,5	1,0	- 33,1	Oct.
Nov.	7,3	14,9	2,1	24,2	5,9	4,2	0,1	10,2	1,4	10,7	2,0	14,1	Nov.
Dec.	2,7	23,0	2,4	28,1	5,0	1,7	2,6	9,3	- 2,3	21,3	- 0,2	18,8	Dec.
Note: For index-linked bonds the nominal value includes indexation.
1) Including Treasury notes and Treasury bills.

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Table 16
Net supply and placement of krone-denominated bonds quoted on the Stock Exchange (Market values)

	Domestic govern- ment se- curities1)	Mortgage- credit bonds	Other bonds	Total	Taken up by:
					The National- bank2)	The banks2)	Spcial Pension Fund and the Kingdom of Denmark Mortgage Bank3)	ATP and LD4)	Other resident investors5)	Non- resident investors
	Kr. billion
1988	7,9	50,9	1,1	59,9	- 0,1	15,7	7,0	5,3	19,3	12,6	1988
1989	19,2	10,2	1,7	31,1	- 0,3	10,5	6,4	5,2	18,3	- 9,0	1989
1990	23,3	15,2	5,8	44,3	2,0	- 25,5	3,9	6,4	28,9	28,6	1990
1991	50,3	20,9	5,9	77,1	12,0	- 0,3	1,7	7,5	16,6	39,5	1991
1992	29,2	- 3,0	15,4	41,7	- 11,8	- 11,0	- 0,6	2,5	15,4	47,1	1992
1993	46,6	119,1	7,8	173,4	6,9	- 9,6	2,2	10,9	87,8	75,2	1993
1994	46,0	- 92,9	1,6	- 45,4	1,6	30,3	3,4	- 7,3	10,7	- 84,1	1994
1995	32,6	38,9	- 1,5	70,1	- 7,2	- 6,6	3,4	10,6	32,6	37,2	1995
1996	19,3	29,4	2,7	51,4	- 0,1	- 4,7	- 0,3	6,7	19,3	30,5	1996
1997	- 5,9	58,6	13,4	66,0	- 1,5	- 8,5	1,6	7,7	21,7	45,1	1997
1996 Jan.	5,5	7,5	- 3,0	10,0	0,1	- 9,7	0,6	- 0,6	3,8	15,8	Jan. 1996
Feb.	- 10,2	15,6	0,2	5,5	- 0,3	1,9	1,6	- 0,6	7,4	- 4,4	Feb.
March	20,7	19,0	1,0	40,6	0,8	7,7	1,0	1,9	21,9	7,4	March
April	3,5	- 43,9	0,7	- 39,7	- 0,3	- 19,2	- 0,3	- 0,2	- 23,0	3,2	April
May	4,9	5,2	1,0	11,1	- 0,1	4,9	0,0	1,9	19,9	- 15,5	May
June	14,3	13,4	0,0	27,7	- 0,1	14,4	0,0	1,2	11,3	1,0	June
July	- 8,2	- 23,8	- 1,9	- 33,9	- 0,6	- 12,0	- 1,3	- 2,4	- 15,3	- 2,4	July
Aug.	- 7,0	26,9	0,5	20,3	0,4	12,1	0,2	2,1	14,5	- 8,9	Aug.
Sept.	15,0	3,1	0,8	18,9	0,2	1,5	0,6	2,9	5,8	8,0	Sept.
Oct.	- 1,3	- 12,9	2,8	- 11,4	0,0	- 3,2	- 0,1	- 1,9	- 20,3	14,1	Oct.
Nov.	- 18,9	7,1	1,7	- 10,2	0,6	- 3,1	- 3,0	1,6	- 3,2	- 3,1	Nov.
Dec.	1,2	12,3	- 0,9	12,5	- 0,7	0,0	0,7	0,8	- 3,5	15,3	Dec.
1997 Jan.	5,9	- 16,4	0,5	- 10,1	- 0,5	- 20,7	- 0,8	- 0,9	- 5,1	18,0	Jan. 1997
Feb.	- 8,7	14,2	3,9	9,5	0,5	9,3	- 1,0	2,6	2,0	- 4,0	Feb.
March	5,2	16,0	1,8	23,0	0,1	19,1	4,3	1,0	17,4	- 18,8	March
April	- 4,7	- 20,9	1,9	- 23,6	- 0,3	- 19,8	- 0,1	- 1,4	- 6,4	4,2	April
Maj	8,6	12,4	1,7	22,7	0,4	5,5	0,9	2,4	3,1	10,4	Maj
June	10,1	19,6	1,7	31,4	- 0,4	0,8	0,3	2,5	18,8	9,5	June
July	- 8,5	- 12,1	- 3,6	- 24,2	- 1,0	- 8,8	0,4	- 1,5	- 17,1	3,8	July
Aug.	- 18,0	15,8	0,7	- 1,5	1,3	- 0,9	- 0,4	0,8	- 3,9	1,7	Aug.
Sept.	14,3	24,9	2,4	41,5	- 0,3	- 2,3	0,4	1,3	26,6	15,8	Sept.
Oct.	- 8,7	- 26,1	0,8	- 34,0	- 0,7	- 17,1	- 2,3	- 3,2	- 18,3	7,6	Oct.
Nov.	1,0	10,4	1,9	13,2	0,4	14,7	- 0,1	3,0	- 3,6	- 1,2	Nov.
Dec.	- 2,5	20,9	- 0,3	18,0	- 1,0	11,7	0,0	1,0	8,1	- 1,9	Dec.
1) Including Treasury notes and Treasury bills. As from 1994 adjusted for purchase of central-government securities, cf. Table 4, note 1.
2) Adjusted for bond-repurchase agreements between the Nationalbank and the banks.
3) Including Post Giro.
4) Supplementary (Labour Market) Pension Fund and Employees' Capital Pension Fund.
5) Calculated as residual amounts.

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Table 17
Circulating krone-denominated bonds quoted on the Stock Exchange (Nominal values)

End of period	Domestic central-government securities				Mortgage- credit bonds	Other bonds	Total
	Bonds	Treasury notes1)	Treasury bills	Total
	Kr. billion
1987	301.3	43.7	•	345.0	668.8	44.8	1 058.6
1988	299.5	54.1	•	353.6	724.0	46.0	1 123.6
1989	311.2	64.6	•	375.8	739.3	48.5	1 163.6
1990	315.4	68.9	21.4	405.6	762.8	55.7	1 224.1
1991	338.7	74.1	49.3	462.0	790.3	63.1	1 315.4
1992	375.0	71.2	55.5	501.7	795.0	80.1	1 376.8
1993	399.8	94.2	58.3	552.3	936.7	89.3	1 578.4
1994	441.1	111.7	56.2	609.1	861.5	91.9	1 562.5
1995	488.5	102.7	58.4	649.6	904.3	91.6	1 645.5
1996	534.8	84.5	51.2	670.5	945.4	96.2	1 712.1
1997	567.9	49.1	50.0	667.1	1 013.2	112.6	1 792.8
1996 Jan.	498.6	104.3	51.6	654.6	913.6	88.8	1 657.0
Feb.	499.3	87.0	58.1	644.3	931.0	89.1	1 664.4
March	508.7	90.0	66.2	664.9	951.7	90.2	1 706.8
April	523.1	92.1	53.6	668.8	908.2	91.0	1 668.1
May	524.2	92.2	57.4	673.8	914.4	92.2	1 680.3
June	533.7	93.2	61.5	688.4	929.2	92.3	1 710.0
July	537.4	97.6	45.6	680.6	906.0	90.4	1 677.0
Aug.	542.1	81.2	50.4	673.7	934.4	91.0	1 699.1
Sept.	551.6	82.6	54.8	689.0	937.9	91.8	1 718.7
Oct.	556.8	83.9	47.4	688.1	925.4	94.8	1 708.3
Nov.	532.6	84.8	51.8	669.3	932.9	96.9	1 699.0
Dec.	534.8	84.5	51.2	670.5	945.4	96.2	1 712.1
1997 Jan.	537.5	89.8	49.8	677.1	929.7	97.4	1 704.2
Feb.	541.9	71.6	55.1	668.7	944.5	101.7	1 714.8
March	544.2	70.8	59.0	674.0	961.3	103.7	1 738.9
April	551.2	70.3	48.1	669.7	941.2	106.0	1 716.8
May	558.1	67.2	53.3	678.6	954.3	107.9	1 740.8
June	563.2	67.7	57.8	688.7	974.7	109.8	1 773.2
July	567.6	68.5	44.3	680.3	963.5	106.3	1 750.1
Aug.	569.9	45.6	46.9	662.3	980.2	107.1	1 749.6
Sept.	574.7	47.1	54.8	676.6	1 006.0	109.7	1 792.3
Oct.	577.3	48.4	42.3	668.0	980.8	110.7	1 759.4
Nov.	572.3	49.1	47.9	669.4	991.6	112.7	1 773.7
Dec.	567.9	49.1	50.0	667.1	1 013.2	112.6	1 792.8
Note: The statistics cover domestic krone-denominated bonds quoted on the Copenhagen Stock Exchange. For index-linked bonds the nominal value includes indexation. 1) Bonds with an original maturity of 11/2 and 21/2 years.

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Table 18
Issue of euro-krone-bond loans

	Foreign issuers			Danish issuers			Total
	Nominal value	Market value at issue	Issues	Nominal value	Market value at issue	Issues	Nominal value	Market value at issue	Issues
	Kr. million		Number	Kr. million		Number	Kr. million		Number
1988	5 030	4 733	16	1 850	1 766	6	6 880	6 499	22
1989	1 700	1 559	5	_	_	_	1 700	1 559	5
1990	600	612	2	450	457	2	1 050	1 069	4
1991	300	305	1	1 700	1 682	6	2 000	1 987	7
1992	900	915	3	1 200	1 219	4	2 100	2 134	7
1993	_	_	_	8 050	7 356	18	8 050	7 356	18
1994	1 550	1 580	6	3 510	3 504	7	5 060	5 084	13
1995	11 950	11 692	30	4 000	4 071	10	15 950	15 763	40
1996	17 121	13 564	34	3 700	3 750	8	20 821	17 314	42
1997	24 025	23 939	56	1 200	1 220	3	25 225	25 159	59
Total	79 095	74 874	204	33 840	32 324	85	112 935	107 198	289
Loans redeemed
before 1997	24 449	24 100	78	11 230	10 300	33	35 679	34 400	111
Loans redeemed
in 1997	675	680	2	3 050	3 031	7	3 725	3 711	9
Outstanding
loans end-1997	53 971	50 094	124	19 560	18 993	45	73 531	69 087	169
Note: The table comprises bonds denominated in Danish kroner which are listed on stock exchanges abroad.

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Table 19
Principal financial assets of insurance companies, pension funds and social funds

End of period	Cash-in-hand and balance with the banks, etc.	Quoted Danish bonds1)	Quoted Danish shares2)	Other investment assets
				Total3)	Of which foreign bonds and shares
	Kr. billion
Insurance companies
1986	2.4	175.1	11.7	20.7	2.8
1987	3.2	187.4	10.2	22.0	3.2
1988	3.5	199.4	12.7	24.6	5.4
1989	5.3	204.6	20.8	31.4	9.4
1990	3.8	204.9	27.0	43.4	12.0
1991	5.2	208.6	24.2	61.7	17.2
1992	7.2	211.7	16.7	88.5	16.1
1993	9.1	253.0	24.6	99.9	19.7
1994	6.7	246.8	27.6	95.9	26.0
1995	7.8	283.6	30.0	103.8	27.5
1996	7.4	320.9	42.0	117.9	37.4
Pension funds
1986	0.8	67.1	5.7	11.1	0.5
1987	0.9	70.6	6.4	12.1	0.6
1988	1.5	72.9	8.6	13.4	1.0
1989	1.0	76.1	12.8	16.1	1.5
1990	1.5	82.2	15.6	18.4	1.5
1991	2.0	88.7	17.4	21.7	4.1
1992	2.5	95.3	15.7	23.6	5.4
1993	3.3	103.2	21.9	28.6	11.6
1994	2.0	105.4	23.4	29.3	10.9
1995	2.0	118.8	23.4	31.4	12.4
1996	1.7	128.8	29.4	32.8	19.3
Supplementary (Labour Market) Pension Fund
1986	0.1	52.6	8.3	0.2	•
1987	0.0	57.9	8.8	0.2	•
1988	0.0	63.0	14.7	0.2	•
1989	0.0	68.3	19.5	0.7	•
1990	0.1	74.9	18.6	1.0	0.4
1991	0.0	81.2	23.0	2.0	1.4
1992	0.1	81.4	18.6	3.4	2.6
1993	0.0	94.1	26.9	4.9	4.9
1994	0.0	88.2	26.5	6.5	6.2
1995	0.0	99.3	29.9	9.0	8.7
1996	0.0	105.9	40.3	12.3	12.9
Employees' Capital Pension Fund
1986	0.2	21.0	3.3	1.8	•
1987	0.1	22.1	3.2	2.0	•
1988	0.1	22.3	5.8	2.4	•
1989	0.1	22.1	5.5	2.6	•
1990	0.9	22.7	6.8	2.6	0.1
1991	0.4	24.1	7.6	3.1	0.6
1992	0.3	23.6	5.6	3.6	1.1
1993	0.1	26.5	7.6	3.6	1.3
1994	0.5	23.6	8.9	3.6	1.4
1995	0.1	25.4	10.1	3.7	2.0
1996	0.8	26.3	12.8	3.9	2.8
Sources: The Financial Supervisory Authority and the annual reports of the Supplementary (Labour Market) Pension Fund and the Employees' Capital Pension Fund. 1) Nominal value up to end-1991. Thereafter market value. 2) Market value. 3) Unlisted Danish bonds and shares, shares in private limited companies and cooperative enterprises, lending and foreign bonds and shares. For the EmployeesŽ Capital Pension Fund also including mortgage deeds acquired.

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Table 20
The assets and liabilities of major financing companies

End of period	Assets
	Cash-in-hand and balance with the banks	Securities portfolio	Leasing assets1)	Lending	Other assets	Total
	Kr. billion
1987	1.0	8.6	19.1	6.6	6.9	42.2
1988	3.1	6.2	18.0	8.2	6.2	41.7
1989	2.1	7.4	22.7	9.1	2.1	43.5
1990	3.4	12.2	35.6	8.2	4.1	63.5
1991	3.4	6.6	36.9	8.9	4.6	60.5
1992	3.6	5.2	36.2	7.3	2.5	54.7
1993	3.2	5.8	35.7	7.6	2.8	55.1
1994	4.1	4.9	34.3	10.2	2.3	55.9
1995	2.8	4.0	33.5	12.0	2.5	54.8
1996	1.4	3.1	36.8	11.7	4.4	57.4
End of period	Liabilities
	Debt			Net capital	Other liabilities	Total
	Banks	Other short-term	Long-term
	Kr. billion
1987	11.6	3.4	19.8	6.3	1.2	42.2
1988	13.5	3.2	17.0	6.1	1.9	41.7
1989	14.9	2.6	19.0	5.7	1.2	43.5
1990	19.1	3.0	31.5	8.0	1.8	63.5
1991	19.5	3.4	28.0	8.2	1.3	60.5
1992	17.7	2.8	25.0	8.3	0.9	54.7
1993	17.2	3.3	24.2	8.9	1.5	55.1
1994	14.5	7.7	23.2	8.3	2.1	55.9
1995	20.2	5.6	19.0	8.5	1.5	54.8
1996	24.3	5.9	17.5	8.4	1.4	57.4
Source: Statistics Denmark. 1) Book value.

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Table 21
The assets and liabilities of investment associations

End of period	Assets							Liabilities
	Deposits with bank, etc.	Securities portfolios		Other assets		Total		Capital account1)		Other liabilites		Total
	Kr. billion
1988	1.4	21.9		0.3		23.6		22.6		0.9		23.6
1989	1.3	23.9		0.3		25.6		24.4		1.2		25.6
1990	1.7	19.2		0.3		21.2		20.3		0.8		21.2
1991	1.3	20.9		0.3		22.5		21.5		1.0		22.5
1992	1.1	21.8		0.3		23.3		22.5		0.7		23.3
1993	1.2	30.1		0.5		31.7		30.4		1.3		31.7
1994	2.5	30.6		0.5		33.7		32.4		1.3		33.7
1995	1.5	33.9		0.5		35.9		34.4		1.5		35.9
1996	2.8	52.6		0.7		56.0		52.7		3.4		56.0
End of period	Bonds				Shares				Other securities		Total
	Listed on the Copenhagen Stock Exchange		Listed on stock exchange abroad		Listed on the Copenhagen Stock Exchange		Listed on stock exchange abroad
	Kr. billion
1988	4.8		0.9		2.7		11.1		2.4		21.9
1989	4.1		1.3		2.6		13.4		2.4		23.9
1990	4.3		1.4		1.9		10.0		1.6		19.2
1991	3.9		1.9		2.0		11.7		1.4		20.9
1992	4.9		3.7		1.7		10.5		1.0		21.8
1993	6.2		6.0		2.8		14.1		0.9		30.1
1994	7.5		4.8		3.8		13.7		0.7		30.6
1995	9.8		4.4		4.3		14.7		0.7		33.9
1996	21.3		5.6		5.5		19.8		0.5		52.6
Source: The Financial Supervisory Authority. 1) MembersŽ assets

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Table 22
The Nationalbank's official interest rates

Effective year-end/ from	Discount rate	Current- account deposits1)	Repurchase agreements and certificates of deposit2) 3)	Effective year-end/ from	Discount rate	Current- account deposits1)	Repurchase agreements and certificates of deposit2) 3)
	Per cent per annum				Per cent per annum
1989	7.00	11.00	•	1995 Sept. 28	5.00	5.00	5.40
1990	8.50	9.50	•	Oct. 5			5.30
1991	9.50	9.50	•	Nov. 9	4.75	4.75	5.15
1992	9.50	9.50	13.00	- 23			5.00
1993	6.25	6.25	6.75	Dec. 15	4.25	4.25	4.75
1994	5.00	5.00	5.50	- 28			4.60
1995	4.25	4.25	4.60
1996	3.25	3.25	3.50	1996 Jan.11			4.50
1997	3.50	3.50	3.75	- 25	4.00	4.00	4.35
				Feb. 8			4.25
1994 Jan. 6	6.00	6.00	6.50	March 7	3.75	3.75	4.10
- 19	5.75	5.75	6.25	- 21			4.00
Feb. 18	5.50	5.50	6.00	April 1			3.90
April 15	5.25	5.25	5.90	- 19	3.25	3.25	3.80
May 2			5.80	June 6			3.70
- 11			5.70	Aug. 23			3.50
- 13	5.00	5.00
- 19			5.60	1997 Oct.10	3.50	3.50	3.75
July 7			5.50	(Dec. 31)	3.50	3.50	3.75
1995 March 8	6.00	6.00	7.00
April 6			6.75
- 27			6.50
May 18			6.35
July 6	5.75	5.75	6.20
- 27			6.05
Aug. 3	5.50	5.50	5.90
- 25	5.00	5.00	5.65
Sept. 7			5.50
1) As from April 1992 until end-April 1997 interest-earning deposits were subject to maximum limits. Until end-March 1992 the banks also had access to drawings on current account. The rate of interest for these drawings was 1/2 to 1 per cent higher. 2) 14-day zero-coupon certificates of deposit issued by and registered with the Nationalbank. 3) The Nationalbank's interest rate for repurchase agreements in central-government securities as well as for sale of the Nationalbank's certificates of deposit. On purchasing certificates of deposit before expiration the Nationalbank's buy-back price is normally based on a slightly higher interest rate.

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Table 23
The banks' average lending and deposit interest rates

	Lending				Deposits1)
	Public author- ities	Business	Non- business	Total	Public author- ities	Business	Non- business	Total
	Per cent per annum
1994	. . .	. . .	. . .	10.0	. . .	. . .	. . .	3.5
1995	. . .	. . .	. . .	10.3	. . .	. . .	. . .	3.9
1996	5.5	7.5	10.9	8.7	3.4	3.2	2.5	2.8
1995 3rd qtr.	. . .	. . .	. . .	10.5	. . .	. . .	. . .	4.0
4th ,,	7.1	8.8	11.8	9.9	4.6	4.4	3.0	3.7
1996 1st qtr.	6.0	8.1	11.3	9.3	3.9	3.7	2.7	3.2
2nd ,,	5.4	7.4	11.0	8.6	3.2	3.1	2.4	2.7
3rd ,,	5.4	7.5	10.6	8.6	3.1	3.1	2.3	2.7
4th ,,	5.1	7.1	10.5	8.3	3.2	3.0	2.5	2.7
1997 1st qtr.	5.4	6.6	10.3	7.8	3.0	3.0	2.2	2.6
2nd ,,	5.6	6.6	10.3	7.9	3.2	3.0	2.2	2.6
3rd ,,	5.5	6.5	10.2	7.7	3.4	2.9	2.2	2.6
Note: Since the calculation principles have not been finally determined there can be minor inaccuracies in some of the figures up to the end of the 3rd quarter of 1995. The basis for the calculation is described in further detail in Monetary Review - May 1996. 1) Excluding pool schemes.

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Table 24
Inter-bank interest rates

	Tomorrow/next1)			3 months2)
				Uncollateralized			Collateralized3)
	Average	High	Low	Average	High	Low	Average	High	Low
	Per cent per annum
1996 Jan.	•	•	•	4.40	4.65	4.25	4.28	4.46	4.14
Feb.	•	•	•	4.33	4.45	4.25	4.18	4.29	4.11
March	•	•	•	4.21	4.30	4.10	4.10	4.22	4.00
April	•	•	•	3.80	4.10	3.63	3.74	3.92	3.59
May	•	•	•	3.75	3.89	3.68	3.69	3.79	3.59
June	•	•	•	3.85	3.89	3.79	3.74	3.82	3.71
July	•	•	•	3.83	3.87	3.70	3.71	3.74	3.69
Aug.	•	•	•	3.79	3.85	3.70	3.65	3.71	3.52
Sept.	•	•	•	3.70	3.80	3.59	3.53	3.56	3.48
Oct.	•	•	•	3.59	3.65	3.57	3.49	3.54	3.47
Nov.	•	•	•	3.59	3.63	3.53	3.53	3.55	3.51
Dec.	•	•	•	3.57	3.60	3.51	3.51	3.52	3.50
1997 Jan.	3.46	3.70	3.30	3.55	3.59	3.54	3.49	3.51	3.47
Feb.	3.53	3.75	3.30	3.55	3.57	3.55	3.50	3.51	3.50
March	3.53	3.79	3.31	3.60	3.66	3.56	3.57	3.64	3.52
April	3.42	3.73	3.30	3.59	3.63	3.57	3.55	3.61	3.51
May	3.54	3.81	3.30	3.57	3.59	3.55	3.51	3.52	3.49
June	3.45	3.62	3.30	3.57	3.58	3.56	3.50	3.52	3.48
July	3.45	3.85	3.29	3.56	3.59	3.52	3.50	3.52	3.48
Aug.	3.45	3.68	3.30	3.60	3.61	3.58	3.56	3.59	3.52
Sept.	3.44	3.71	3.30	3.62	3.65	3.60	3.59	3.62	3.55
Oct.	3.60	3.96	3.31	3.83	3.95	3.65	3.83	3.95	3.62
Nov.	3.74	4.04	3.56	3.92	3.94	3.92	3.87	3.89	3.84
Dec.	3.69	3.92	3.56	3.93	3.95	3.92	3.84	3.86	3.83
1) Based on daily average weighted by transaction volume. 2)Interest rate offered for inter-bank deposits. 3) Repurchase agreements in central-government securities.

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Tabel 25
Copenhagen Inter-bank Offered Rates (CIBOR)

	1 month			2 months			3 months				4 months			5 months			6 months				9 months			12 months
	Average	High	Low	Average	High	Low	Average	High	Low		Average	High	Low	Average	High	Low	Average	High	Low		Average	High	Low	Average	High	Low
	Per cent per annum										Per cent per annum										Per cent per annum
1996 Jan.	4,55	4,76	4,41	4,54	4,76	4,41	4,54	4,77	4,41	1996 Jan.	4,54	4,76	4,41	4,55	4,77	4,42	4,55	4,77	4,42	1996 Jan.	4,56	4,82	4,41	4,58	4,87	4,41
Feb.	4,41	4,53	4,35	4,43	4,60	4,35	4,45	4,68	4,35	Feb.	4,47	4,72	4,35	4,49	4,77	4,38	4,53	4,82	4,39	Feb.	4,57	4,91	4,43	4,61	4,98	4,45
March	4,27	4,40	4,20	4,31	4,43	4,24	4,34	4,50	4,27	March	4,37	4,51	4,30	4,41	4,54	4,33	4,46	4,56	4,35	March	4,52	4,61	4,43	4,59	4,70	4,49
April	3,92	4,11	3,74	3,93	4,17	3,74	3,95	4,20	3,74	April	3,97	4,23	3,76	3,99	4,26	3,77	4,01	4,30	3,79	April	4,10	4,36	3,89	4,19	4,43	3,97
May	3,83	3,90	3,74	3,83	3,92	3,74	3,84	3,95	3,75	May	3,86	3,97	3,77	3,89	4,00	3,79	3,92	4,05	3,81	May	4,02	4,15	3,90	4,10	4,25	3,99
June	3,89	3,95	3,85	3,92	4,00	3,87	3,96	4,03	3,91	June	3,99	4,06	3,94	4,02	4,09	3,96	4,05	4,13	3,99	June	4,17	4,24	4,10	4,29	4,35	4,22
July	3,85	3,87	3,82	3,88	3,91	3,85	3,93	3,96	3,90	July	3,97	4,00	3,94	4,02	4,07	3,98	4,07	4,15	4,01	July	4,22	4,29	4,17	4,35	4,45	4,30
Aug.	3,82	3,87	3,71	3,87	3,93	3,77	3,92	3,96	3,82	Aug.	3,95	3,99	3,85	3,99	4,03	3,89	4,03	4,09	3,92	Aug.	4,15	4,23	4,07	4,27	4,35	4,17
Sept.	3,72	3,75	3,68	3,77	3,84	3,74	3,83	3,90	3,78	Sept.	3,87	3,94	3,80	3,90	3,98	3,83	3,93	4,02	3,85	Sept.	4,04	4,15	3,95	4,15	4,26	4,05
Oct.	3,61	3,66	3,60	3,65	3,73	3,62	3,67	3,76	3,65	Oct.	3,70	3,79	3,66	3,72	3,81	3,68	3,74	3,84	3,71	Oct.	3,82	3,94	3,78	3,92	4,04	3,87
Nov.	3,60	3,62	3,60	3,64	3,68	3,63	3,67	3,72	3,65	Nov.	3,70	3,76	3,68	3,73	3,80	3,70	3,76	3,85	3,73	Nov.	3,88	3,95	3,85	3,98	4,05	3,94
Dec.	3,60	3,63	3,58	3,62	3,64	3,60	3,65	3,66	3,63	Dec.	3,67	3,68	3,65	3,69	3,71	3,67	3,72	3,75	3,69	Dec.	3,82	3,84	3,79	3,92	3,94	3,89
1997 Jan.	3,59	3,61	3,58	3,61	3,63	3,60	3,63	3,65	3,62	1997 Jan.	3,65	3,68	3,63	3,67	3,70	3,64	3,69	3,71	3,66	1997 Jan.	3,74	3,80	3,70	3,81	3,90	3,76
Feb.	3,60	3,60	3,60	3,61	3,61	3,60	3,62	3,63	3,62	Feb.	3,64	3,65	3,64	3,66	3,67	3,66	3,69	3,71	3,68	Feb.	3,74	3,75	3,73	3,78	3,80	3,77
March	3,61	3,65	3,60	3,64	3,70	3,61	3,68	3,75	3,63	March	3,71	3,80	3,65	3,75	3,85	3,67	3,80	3,90	3,69	March	3,88	4,07	3,74	3,95	4,16	3,79
April	3,60	3,63	3,58	3,62	3,67	3,60	3,67	3,74	3,63	April	3,72	3,79	3,68	3,77	3,85	3,73	3,82	3,91	3,78	April	3,93	4,05	3,88	4,03	4,14	3,96
May	3,58	3,58	3,57	3,60	3,61	3,60	3,63	3,64	3,63	May	3,66	3,68	3,65	3,70	3,73	3,68	3,73	3,77	3,71	May	3,83	3,87	3,80	3,92	3,96	3,90
June	3,57	3,58	3,57	3,60	3,62	3,59	3,62	3,64	3,62	June	3,65	3,68	3,64	3,68	3,71	3,67	3,72	3,74	3,70	June	3,80	3,82	3,79	3,90	3,92	3,89
July	3,57	3,58	3,57	3,59	3,61	3,58	3,62	3,64	3,60	July	3,65	3,67	3,63	3,68	3,71	3,65	3,72	3,76	3,68	July	3,78	3,82	3,75	3,87	3,90	3,84
Aug.	3,58	3,59	3,57	3,61	3,62	3,60	3,65	3,68	3,64	Aug.	3,71	3,73	3,68	3,77	3,79	3,73	3,84	3,86	3,78	Aug.	3,95	3,98	3,84	4,06	4,11	3,93
Sept.	3,58	3,59	3,57	3,62	3,64	3,60	3,67	3,69	3,64	Sept.	3,73	3,76	3,69	3,79	3,84	3,76	3,86	3,91	3,82	Sept.	4,00	4,07	3,94	4,14	4,21	4,08
Oct.	3,77	3,90	3,58	3,85	3,97	3,64	3,93	4,06	3,69	Oct.	4,00	4,13	3,76	4,06	4,18	3,84	4,13	4,26	3,91	Oct.	4,29	4,45	4,06	4,43	4,61	4,20
Nov.	3,84	3,85	3,84	3,93	3,94	3,91	4,01	4,03	4,00	Nov.	4,07	4,09	4,06	4,12	4,14	4,11	4,18	4,21	4,17	Nov.	4,33	4,37	4,30	4,45	4,49	4,42
Dec.	3,86	3,86	3,85	3,94	3,95	3,93	4,02	4,04	4,01	Dec.	4,07	4,09	4,05	4,13	4,14	4,10	4,18	4,21	4,15	Dec.	4,30	4,33	4,25	4,42	4,45	4,35
Note: Average based on reports from banks participating in the fixing of CIBOR rates. The 2 highest and lowest rates are not included.

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Table 26
Yields on selected bonds quoted on the Stock Exchange, and minimum coupon rate

End of period	Central-government securities (bullet issues)1)			Mortgage-credit bonds (annuity loans)1)			Average bond yield2)	Minimum coupon rate3)
	Maturity, years
	10	5	2	30	20	10
	Per cent per annum
1987	11.15	10.58	10.34	12.79	12.61	11.67	11.73	10
1988	9.03	8.98	8.53	9.92	9.82	9.32	9.78	9
1989	10.26	10.56	11.30	10.49	10.57	10.38	10.79	9
1990	10.50	10.71	10.79	11.15	11.17	10.62	11.01	9
1991	8.76	9.14	9.34	9.80	9.83	9.63	9.90	8
1992	8.91	9.67	9.87	10.17	10.34	10.55	10.25	8
1993	6.09	5.71	5.50	7.11	7.17	7.21	7.74	6
1994	9.14	8.77	8.06	9.73	9.53	9.00	9.17	6
1995	7.23	6.26	5.08	8.36	7.98	7.12	7.40	6
1996	6.52	5.34	3.98	7.87	7.09	6.31	6.55	4
1997	5.63	5.12	4.47	7.28	7.11	5.60	6.16	4
1996 Jan.	7.06	5.90	4.78	8.33	7.97	6.96	7.21	6
Feb.	7.60	6.33	5.00	8.85	8.43	7.18	7.51	6
March	7.53	6.58	4.73	8.69	8.13	7.05	7.35	6
April	7.20	6.27	4.31	8.44	7.91	6.87	7.05	6
May	7.45	6.49	4.61	8.69	8.10	6.85	7.25	6
June	7.44	6.47	4.61	8.73	8.07	6.98	7.25	6
July	7.34	6.38	5.05	8.69	8.07	6.81	7.18	6
Aug.	7.33	6.27	4.86	8.52	7.83	6.63	7.10	6
Sept.	6.94	5.81	4.44	8.17	7.43	6.39	6.81	6
Oct.	6.85	5.76	4.40	8.13	7.45	6.40	6.77	4
Nov.	6.62	5.52	4.25	7.98	7.24	6.23	6.65	4
Dec.	6.52	5.34	3.98	7.87	7.09	6.31	6.55	4
1997 Jan.	6.48	5.23	4.03	7.97	7.41	6.11	6.46	4
Feb.	6.20	5.03	3.97	7.66	7.13	5.90	6.28	4
March	6.69	5.45	4.40	7.99	7.47	6.22	6.60	4
April	6.49	5.23	4.18	7.88	7.35	6.14	6.43	4
May	6.60	5.12	4.12	7.78	7.29	6.01	6.41	4
June	6.29	4.81	3.87	7.58	7.07	5.90	6.20	4
July	5.97	4.89	4.27	7.40	7.02	5.90	6.10	4
Aug.	6.25	5.22	4.54	7.61	7.23	6.03	6.33	4
Sept.	5.99	5.18	4.59	7.42	7.11	5.96	6.25	4
Oct.	6.16	5.41	4.79	7.58	7.31	6.11	6.40	4
Nov.	5.93	5.27	4.70	7.38	7.13	5.75	6.29	4
Dec.	5.63	5.12	4.47	7.28	7.11	5.60	6.16	4
Note: The redemption yield calculated for a full year by the Copenhagen Stock Exchange. 1) If no open series with the relevant maturities exist for a given period, series (closed if necessary) with approx. corresponding residual maturities are used. 2) The calculation includes all central-government bonds and a selection of mortgage-credit bonds. The average yield is weighted on the basis of the market value of the circulating amounts. 3) In accordance with the Danish Capital Gains Act. I beregningen indgår samtlige statsobligationer og et udvalg af realkreditobligationer. Gennemsnitsrenten er sammenvejet på grundlag af kursværdien af de cirkulerende beløb.

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Table 27
The foreign-exchange reserve

End of period	Stock of gold	Foreign assets	Assets deposited with the European Monetary Institute	Special Drawing Rights (SDRs)	Reserve position in IMF1)	Total (gross)	Foreign liabilities	Total (net)2)
	Kr. million
1987	4 858	54 078	3 777	1 301	1 065	65 079	710	64 369
1988	4 595	59 063	10 454	1 542	2 167	77 821	1 582	76 239
1989	4 340	33 180	4 625	1 850	2 213	46 208	1 304	44 904
1990	3 720	52 707	5 200	1 246	1 807	64 680	1 361	63 319
1991	3 464	38 588	2 814	1 430	2 155	48 451	3 888	44 563
1992	3 456	63 540	2 757	528	2 975	73 256	28 292	44 964
1993	4 339	62 818	4 947	580	2 876	75 560	790	74 770
1994	3 790	44 658	3 460	1 107	2 616	55 631	1 537	54 094
1995	3 531	53 577	4 521	880	3 297	65 806	2 200	63 606
1996	3 652	73 624	4 979	997	3 601	86 853	1 634	85 219
1997	3 331	115 844	4 790	2 291	4 310	130 566	876	129 690
1996 Jan.	3 498	64 834	4 934	880	3 297	77 443	614	76 829
Feb.	3 504	64 183	4 934	904	3 297	76 822	335	76 487
March	3 513	73 384	4 934	904	3 422	86 157	555	85 602
April	3 481	84 321	5 435	904	3 414	97 555	666	96 889
May	3 495	79 252	5 435	921	3 414	92 517	1 282	91 235
June	3 497	75 356	5 435	921	3 414	88 623	2 084	86 539
July	3 479	70 827	5 214	921	3 482	83 923	1 846	82 077
Aug.	3 479	67 857	5 214	940	3 463	80 953	2 331	78 622
Sept.	3 483	72 248	5 214	942	3 463	85 350	1 409	83 941
Oct.	3 494	77 439	4 938	942	3 505	90 318	1 616	88 702
Nov.	3 502	73 952	4 938	963	3 480	86 835	1 819	85 016
Dec.	3 506	73 200	4 938	963	3 480	86 087	1 633	84 454
1997 Jan.	3 665	83 190	5 394	997	3 510	96 756	459	96 297
Feb.	3 672	82 274	5 394	1 375	3 485	96 200	465	95 735
March	3 672	81 025	5 394	1 375	3 422	94 888	480	94 408
April	3 665	88 587	5 032	1 372	3 422	102 078	261	101 817
May	3 674	95 066	5 032	1 912	3 422	109 106	269	108 837
June	3 686	96 659	5 032	1 882	3 335	110 594	554	110 040
July	3 677	99 333	4 712	1 944	3 335	113 001	601	112 400
Aug.	3 680	99 377	4 712	1 965	3 335	113 069	815	112 254
Sept	3 683	105 639	4 712	1 908	3 578	119 520	1 220	118 300
Oct.	3 693	123 675	4 783	1 796	3 578	137 525	1 386	136 139
Nov.	3 712	117 081	4 778	1 529	3 578	130 678	1 880	128 798
Dec.	3 718	114 392	4 778	2 186	4 037	129 111	875	128 236
Note: The annual figures are from the annual accounts of Danmarks Nationalbank. The monthly figures (also at end-December) are from the monthly balance sheets. 1) Denmark's quota (latest raise in November 1992 to SDR 1,070 million) less IMF holdings of Danish kroner. Value adjustment on the basis of the SDR rate at the time of compilation. 2) As a result of exchange-rate adjustments the foreign-exchange reserve declined by kr.1,501 million in 1987, increased by kr.3,178 million in 1988, declined by kr.3,675 million in 1989, by kr.3,147 million in 1990, increased by kr.2,082 million in 1991, by kr.1,529 million in 1992, by kr.4,965 million in 1993, declined by kr.7,715 million in 1994, by kr.3,841 million in 1995, increased by kr.765 million in December 1996 and by kr.1,454 million in December 1997.

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Tabel 28
Recorded payments between residents and non-residents

	I. Current payments										II. Capital payments2)
	Merchan- dise trade	Maritime transport	Tourism and travel	Other goods and services1)	Interrest and dividend1)	The European Union	Aid to developing Countries	Other Unilateral payments	Current payments, total		Public sector3)		Business loans5)		Portfolio investments		Direct investments5)		Private loans, ect.		Capital Payments, total		Total recorded payments (I+II)	Errors and omissions	Capital valuation changes	Decrease in the banks' external position8)	Change in the foreign- exchange reserve
											Assets4)	Liabilities	Assets6)	Liabilities7)	Assets	Liabilities	Assets	Liabilities	Assets	Liabilities	Assets	Liabilities
	Kr. billion										Kr. billion
From abroad										From abroad									From abroad
1988	185,4	30,0	16,3	38,7	24,7	10,6	•	1,5	307,2	1988	0,2	31,6	17,1	200,2	28,4	153,3	0,7	5,8	0,3	1,5	46,7	392,5	746,3	•	•	•	•	1988
1989	212,1	36,8	16,9	43,3	34,0	9,2	•	2,5	354,7	1989	0,3	31,6	25,0	179,5	34,2	102,5	1,3	13,6	0,3	6,3	61,1	333,6	749,4	•	•	•	•	1989
1990	227,0	35,9	20,6	48,8	36,5	10,2	•	2,2	381,1	1990	0,6	38,0	22,2	218,7	62,8	158,9	1,8	11,7	0,4	24,9	87,8	452,2	921,2	•	•	•	•	1990
1991	241,8	43,4	22,2	47,2	58,9	10,7	•	2,3	426,5	1991	1,3	19,5	29,4	211,5	84,5	290,6	2,3	11,1	0,3	31,6	117,8	564,2	1 108,5	•	•	•	•	1991
1992	250,4	42,7	23,4	50,5	92,9	10,5	•	2,2	472,7	1992	1,1	91,3	25,5	180,5	115,0	552,5	16,0	67,2	0,1	29,9	157,7	921,2	1 551,6	•	•	•	•	1992
1993	243,5	44,9	20,3	51,8	147,0	12,1	•	2,4	522,0	1993	1,7	209,8	50,6	170,1	98,7	1 152,9	38,5	48,9	1,0	12,3	190,5	1 594,0	2 306,4	•	•	•	•	1993
1994	268,2	49,3	20,8	57,9	142,7	10,8	•	2,8	552,5	1994	3,4	64,7	146,4	108,0	121,0	1 213,6	28,0	57,6	0,1	11,7	299,0	1 455,6	2 307,1	•	•	•	•	1994
1995	282,3	50,8	20,6	62,2	157,2	12,4	•	2,8	588,4	1995	2,0	75,6	198,1	114,0	78,8	1 120,3	32,4	58,5	0,1	7,8	311,4	1 376,3	2 276,0	•	•	•	•	1995
1996	302,4	52,1	19,9	70,2	218,5	11,4	•	2,9	677,4	1996	2,1	117,1	127,4	111,8	84,2	1 403,4	46,5	55,9	0,1	6,8	260,3	1 695,0	2 632,6	•	•	•	•	1996
1997	338,4	58,3	21,0	79,9	226,2	11,5	•	3,6	738,8	1997	1,3	86,1	121,7	173,6	95,2	1 498,8	33,7	76,3	0,2	6,5	252,1	1 841,4	2 832,4	•	•	•	•	1997
1997 1st qtr.	74,7	12,7	3,4	18,9	53,5	6,6	•	0,9	170,7	1997 1st qtr.	0,2	29,2	30,3	46,1	27,8	395,1	8,3	16,5	0,0	1,0	66,6	488,0	725,2	•	•	•	•	1st qtr.1997
2nd. -	85,4	11,2	5,1	18,5	49,6	1,9	•	0,9	172,8	2nd. -	0,2	19,5	19,3	44,8	20,3	298,9	9,2	21,4	0,0	0,9	49,0	385,5	607,3	•	•	•	•	2nd. -
3rd. -	85,6	18,2	8,5	19,8	64,0	1,6	•	1,1	198,7	3rd. -	0,2	21,0	26,4	40,6	25,0	427,9	7,1	15,6	0,0	0,8	58,8	505,9	763,3	•	•	•	•	3rd. -
4th. -	92,6	16,2	4,0	22,7	59,1	1,4	•	0,8	196,7	4th. -	0,8	16,4	45,6	42,2	22,1	376,9	9,2	22,8	0,0	3,7	77,8	462,0	736,5	•	•	•	•	4th. -
To abroad										To abroad									To abroad
1988	165,8	25,8	21,1	38,9	52,7	8,0	3,2	2,7	318,2	1988	1,3	42,2	20,9	172,7	32,9	141,7	5,5	2,4	0,5	0,8	61,0	359,9	739,1	•	•	•	•	1988
1989	188,3	33,0	21,4	44,1	66,1	7,7	3,4	2,3	366,3	1989	1,5	36,9	32,8	165,4	45,3	110,9	16,1	5,7	0,6	2,1	96,2	320,9	783,4	•	•	•	•	1989
1990	190,7	29,9	22,7	46,4	72,2	8,1	5,4	2,7	378,1	1990	1,6	35,6	29,6	189,7	70,5	133,4	11,1	4,2	0,5	22,0	113,2	384,9	876,3	•	•	•	•	1990
1991	194,4	33,6	21,6	45,4	95,1	9,1	4,1	3,8	407,3	1991	3,7	52,1	38,0	208,8	110,8	249,8	14,1	1,8	0,3	18,6	166,8	531,1	1 105,2	•	•	•	•	1991
1992	204,7	34,0	23,0	48,4	127,1	8,8	3,9	3,6	453,6	1992	5,2	82,2	24,6	194,3	105,4	498,6	29,4	61,0	0,1	40,7	164,7	876,8	1 495,1	•	•	•	•	1992
1993	189,7	35,8	20,8	51,7	178,1	9,4	4,0	3,8	493,2	1993	5,4	149,5	53,2	179,7	97,8	1 070,3	47,4	38,0	0,9	13,1	204,7	1 450,6	2 148,5	•	•	•	•	1993
1994	222,3	40,2	22,8	57,4	174,5	10,6	4,9	4,3	536,9	1994	3,9	91,7	144,6	126,3	126,9	1 282,0	53,7	26,4	0,1	13,9	329,3	1 540,3	2 406,5	•	•	•	•	1994
1995	251,5	39,7	24,0	64,7	184,6	9,7	5,3	4,1	583,5	1995	3,6	96,3	197,8	124,0	83,3	1 079,4	49,3	35,0	0,0	9,7	334,1	1 344,4	2 261,9	•	•	•	•	1995
1996	262,6	40,7	24,0	71,6	245,7	10,2	5,3	4,6	664,8	1996	5,2	123,0	126,8	110,6	95,3	1 358,0	60,9	51,4	0,1	7,3	288,4	1 650,3	2 603,5	•	•	•	•	1996
1997	296,6	48,2	27,3	84,2	250,7	11,3	5,6	5,0	728,8	1997	3,7	89,0	122,5	166,5	119,7	1 443,5	60,3	56,8	0,1	6,4	306,4	1 762,1	2 797,4	•	•	•	•	1997
1997 1st qtr.	67,4	11,5	6,0	18,8	58,3	3,6	0,9	1,1	167,8	1997 1st qtr.	0,6	30,6	30,5	47,0	30,5	395,4	11,8	12,8	0,0	3,7	73,4	489,5	730,6	•	•	•	•	1st qtr.1997
2nd. -	76,3	8,0	6,5	21,2	54,4	2,4	1,2	1,0	171,1	2nd. -	0,9	19,5	20,2	45,8	27,5	272,4	17,1	17,5	0,0	0,8	65,7	356,0	592,9	•	•	•	•	2nd. -
3rd. -	72,8	16,3	8,9	21,1	65,8	2,8	1,6	1,3	190,6	3rd. -	0,8	22,0	23,9	39,7	29,2	406,3	13,8	11,8	0,0	0,8	67,7	480,6	738,9	•	•	•	•	3rd. -
4th. -	80,1	12,4	5,9	23,0	72,1	2,4	1,8	1,6	199,3	4th. -	1,5	16,9	48,0	34,1	32,5	369,3	17,5	14,7	0,0	1,1	99,5	436,1	734,9	•	•	•	•	4th. -
Net, from abroad										Net, from abroad									Net, from abroad
1988	19,6	4,2	- 4,8	- 0,2	- 27,9	2,6	- 3,2	- 1,3	- 11,0	1988	- 1,1	- 10,6	- 3,8	27,5	- 4,5	11,6	- 4,8	3,4	- 0,2	0,6	- 14,3	32,6	7,2	- 3,6	6,6	1,5	11,9	1988
1989	23,8	3,8	- 4,5	- 0,8	- 32,1	1,5	- 3,4	0,2	- 11,5	1989	- 1,2	- 5,3	- 7,8	14,2	- 11,1	- 8,4	- 14,8	7,9	- 0,3	4,2	- 35,1	12,6	- 34,0	- 2,5	- 1,7	6,9	- 31,3	1989
1990	36,3	6,0	- 2,2	2,5	- 35,7	2,0	- 5,4	- 0,4	3,0	1990	- 1,0	2,4	- 7,4	29,1	- 7,6	25,4	- 9,3	7,5	- 0,1	2,9	- 25,4	67,2	44,9	- 13,4	- 3,6	- 9,5	18,4	1990
1991	47,4	9,7	0,6	1,8	- 36,2	1,5	- 4,1	- 1,6	19,2	1991	- 2,4	- 32,6	- 8,6	2,7	- 26,3	40,7	- 11,8	9,3	0,0	13,0	- 49,1	33,1	3,3	- 14,3	3,8	- 11,4	- 18,8	1991
1992	45,7	8,7	0,4	2,1	- 34,2	1,7	- 3,9	- 1,4	19,0	1992	- 4,2	9,1	0,9	- 13,8	9,7	53,8	- 13,4	6,1	0,0	- 10,8	- 7,0	44,4	56,5	- 3,1	- 2,7	- 50,3	0,4	1992
1993	53,8	9,1	- 0,6	0,1	- 31,1	2,7	- 4,0	- 1,3	28,8	1993	- 3,7	60,4	- 2,7	- 9,6	1,0	82,6	- 8,9	10,9	0,0	- 0,9	- 14,3	143,4	157,9	7,6	14,0	- 149,7	29,8	1993
1994	45,9	9,1	- 1,9	0,5	- 31,8	0,2	- 4,9	- 1,4	15,6	1994	- 0,5	- 27,0	1,8	- 18,3	- 5,9	- 68,4	- 25,7	31,1	0,1	- 2,2	- 30,3	- 84,7	- 99,3	2,6	- 8,6	84,6	- 20,7	1994
1995	30,8	11,1	- 3,4	- 2,5	- 27,4	2,7	- 5,3	- 1,3	4,9	1995	- 1,6	- 20,6	0,3	- 9,9	- 4,5	40,9	- 16,9	23,4	0,1	- 1,9	- 22,7	31,9	14,1	5,8	- 3,1	- 7,4	9,5	1995
1996	39,7	11,4	- 4,2	- 1,4	- 27,2	1,2	- 5,3	- 1,6	12,6	1996	- 3,2	- 5,9	0,6	1,2	- 11,2	45,5	- 14,4	4,5	0,0	- 0,5	- 28,1	44,7	29,1	- 8,2	4,3	- 3,5	21,6	1996
1997	41,8	10,1	- 6,3	- 4,3	- 24,5	0,2	- 5,6	- 1,4	10,0	1997	- 2,4	- 2,9	- 0,8	7,2	- 24,5	55,3	- 26,7	19,6	0,1	0,1	- 54,3	79,3	35,0	- 21,7	3,9*	27,3*	44,5	1997
1997 1st qtr.	7,4	1,3	- 2,6	0,0	- 4,9	3,0	- 0,9	- 0,3	2,9	1997 1st qtr.	- 0,4	- 1,4	- 0,1	- 0,9	- 2,7	- 0,2	- 3,6	3,6	0,0	- 2,7	- 6,8	- 1,5	- 5,4	- 11,3	•	25,8	9,2	1st qtr.1997
2nd. -	9,1	3,2	- 1,4	- 2,7	- 4,8	- 0,5	- 1,2	- 0,1	1,7	2nd. -	- 0,7	0,0	- 0,9	- 1,0	- 7,2	26,4	- 8,0	4,0	0,0	0,1	- 16,7	29,5	14,4	7,5	•	- 6,2	15,6	2nd. -
3rd. -	12,8	1,9	- 0,4	- 1,3	- 1,8	- 1,3	- 1,6	- 0,2	8,1	3rd. -	- 0,6	- 1,0	2,6	0,9	- 4,2	21,6	- 6,8	3,8	0,0	0,0	- 9,0	25,3	24,4	- 7,5	•	- 8,7	8,3	3rd. -
4th. -	12,5	3,8	- 1,9	- 0,3	- 13,1	- 1,1	- 1,8	- 0,8	- 2,7	4th. -	- 0,7	- 0,5	- 2,3	8,1	- 10,4	7,6	- 8,3	8,2	0,0	2,6	- 21,8	26,0	1,6	- 10,4	3,9*	16,4*	11,4	4th. -
1) For a specification of these items please contact the Information Desk of the Nationalbank.
2) The division into assets and liabilities shows how the payments influence residents' claims against, respectively debts to, non-residents.
3) Comprises the central government and the local governments. Until end-1996 including borrowing abroad by the Kingdom of Denmark Mortgage Bank and the Danish Export Finance Corporation.
4) Loans to developing countries and capital placements abroad, as well as social funds' trading in foreign securities.
5) Intra-group loans are included as from 1992 under "Direct investments", whereas previously they were included under "Business loans".
6) Including loans granted by the Ship Credit Fund and the Danish Export Finance Corporation.
7) Including raising of loans by public enterprises.
8) The external position is the difference between assets and liabilities vis-à-vis non-residents recorded in the balance sheet. The statistics are compiled on the basis of activities in Denmark, and thus include accounts with the banks' units abroad. Exclusive of guarantees included in the balance sheet until end-1990. A positive figure expresses net borrowing abroad.As from 1994 includ- ing implied interest on zero-coupon paper and operating results of branches abroad.

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Table 29
The external position of the banks

End of period	Assets				Liabilities				Net assets
	Lending	Credit institutions, etc.	Other accounts	Total	Deposits1)	Credit institutions, etc.	Other accounts	Total
	Kr. billion
1987 Dec.	2.6	139.1	10.9	152.5	22.3	119.4	15.1	156.9	- 4.3
1988 ,,	5.2	185.3	13.7	204.2	43.3	147.6	21.3	212.2	- 8.0
1989 ,,	8.4	202.1	28.5	239.0	53.1	178.8	20.5	252.4	- 13.4
1990 ,,	18.9	216.0	38.5	273.5	53.7	202.2	19.1	275.0	- 1.5
1991 ,,	41.7	206.6	41.9	290.1	22.4	208.5	51.4	282.3	7.8
1992 ,,	51.1	195.4	45.1	291.6	25.9	165.9	35.7	227.5	64.1
1993 ,,	84.9	259.9	43.3	388.1	37.3	114.1	36.2	187.6	200.5
1994 ,,	74.9	205.0	30.5	310.5	43.2	122.0	20.0	185.2	125.3
1995 ,,	67.0	207.1	39.8	313.8	45.8	114.4	23.6	183.8	130.0
1996 ,,	84.8	238.2	47.8	370.8	48.4	157.5	34.0	239.9	130.9
1997 ,,	111.8	268.0	69.1	448.9	63.3	225.0	55.6	343.9	104.9
1996 Jan.	64.0	233.0	41.2	338.2	44.4	120.1	30.6	195.1	143.1
Feb.	54.1	232.3	38.4	324.7	39.4	116.4	28.8	184.6	140.1
March	63.2	227.0	37.1	327.3	39.0	128.5	28.6	196.2	131.1
April	70.2	220.6	40.7	331.5	44.0	126.0	34.3	204.4	127.1
May	65.4	213.4	41.7	320.5	46.2	129.7	28.4	204.4	116.2
June	74.3	228.8	44.0	347.1	45.3	145.5	28.9	219.6	127.5
July	72.1	234.8	39.8	346.7	46.0	147.4	26.5	219.9	126.8
Aug.	62.8	230.9	46.5	340.2	45.6	143.0	28.1	216.7	123.5
Sept.	76.8	237.7	51.6	366.1	53.5	152.7	34.0	240.1	125.9
Oct.	74.9	234.8	42.3	352.0	50.8	135.8	33.8	220.4	131.5
Nov.	71.2	248.6	43.7	363.4	45.9	155.9	36.2	238.0	125.4
Dec.	84.8	238.2	47.8	370.8	48.4	157.5	34.0	239.9	130.9
1997 Jan.	101.2	259.2	49.5	409.8	60.2	169.0	44.2	273.4	136.4
Feb.	102.6	244.6	51.3	398.5	66.0	162.3	38.6	266.9	131.6
March	90.3	254.6	52.9	397.8	61.7	188.7	37.8	288.1	109.7
April	92.5	238.5	52.1	383.1	65.2	167.8	45.2	278.3	104.8
May	89.9	245.0	54.5	389.4	67.1	164.7	48.1	279.9	109.5
June	91.7	248.2	56.1	395.9	59.9	168.9	51.5	280.3	115.6
July	95.5	272.2	60.4	428.0	61.2	197.0	59.3	317.5	110.4
Aug.	93.1	277.1	54.0	424.3	62.2	191.4	56.5	310.1	114.2
Sept.	112.1	285.1	54.0	451.3	76.9	188.3	62.1	327.3	124.0
Oct.	115.3	286.4	57.3	459.0	68.3	213.3	57.3	338.9	120.1
Nov.	108.6	277.3	62.6	448.5	73.6	212.9	58.9	345.4	103.1
Dec.	111.8	268.0	69.1	448.9	63.3	225.0	55.6	343.9	104.9
Note: The external position of the banks is the difference between assets and liabilities vis-à-vis non-residents recorded in the balance sheet. The statistics are compiled on the basis of activities in Denmark, and thus include accounts with the banks' units abroad. Exclusive of guarantees included in the balance sheet until end-December 1990. 1) Until end-December 1990 including bonds issued by banks, which are thereafter included under "Other accounts".

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Table 30
Factors affecting the external position of the banks

	Hedging of			Krone lending to and deposits from non- residents	Other factors, including the banks' foreign-exchange positions for own account	Total change in the external position
	Foreign- exchange lending to and deposits from residents	Forward foreign-exchange contracts with
		residents	non-residents
	Kr. billion
1992	2.4	- 6.9	49.9	1.8	7.3	54.6
1993	10.2	14.9	66.7	61.5	- 12.7	140.6
1994	- 1.0	7.1	- 72.3	- 6.7	- 11.3	- 84.2
1995	1.2	- 11.8	5.4	- 1.5	11.8	5.1
1996	- 1.2	8.2	- 19.8	4.1	7.3	- 1.3
1997	- 2.4	- 24.4	10.7	- 4.8	- 9.9	- 30.8
1996 Jan.	2.8	1.5	1.3	2.5	2.8	10.9
Feb.	- 2.4	3.2	8.6	- 7.5	- 4.8	- 3.0
March	- 0.6	- 6.0	- 14.0	10.9	0.7	- 9.1
April	1.5	- 4.4	0.9	- 7.0	5.0	- 3.9
May	2.3	3.7	3.1	- 13.3	- 6.8	- 11.0
June	0.5	1.8	1.2	3.4	4.4	11.3
July	- 2.2	0.2	22.2	- 8.5	- 12.4	- 0.6
Aug.	0.4	- 1.1	- 16.2	2.2	11.5	- 3.3
Sept.	- 2.0	3.4	- 8.2	13.2	- 4.0	2.4
Oct.	- 1.6	- 1.0	12.4	- 3.8	- 0.4	5.6
Nov.	1.0	- 6.7	- 11.6	2.1	9.1	- 6.2
Dec.	- 0.7	13.7	- 19.6	9.9	2.2	5.6
1997 Jan.	1.7	- 9.1	- 11.9	24.3	- 4.3	0.7
Feb.	- 1.4	- 5.3	10.3	- 5.7	- 2.8	- 4.8
March	6.6	0.3	- 8.3	- 15.2	- 5.4	- 22.0
April	0.3	1.6	5.9	- 15.4	2.8	- 4.8
May	- 2.7	4.3	4.5	- 3.2	1.8	4.6
June	- 0.8	0.4	- 9.0	5.9	9.5	6.1
July	- 1.8	- 3.3	4.2	9.5	- 13.6	- 5.2
Aug.	0.6	- 4.1	7.2	- 0.9	1.0	3.7
Sept.	1.4	- 4.5	8.8	15.5	- 11.3	9.9
Oct.	2.2	- 1.1	- 0.4	- 15.6	10.9	- 3.9
Nov.	- 3.8	- 1.9	- 3.5	- 16.3	8.6	- 16.9
Dec.	- 4.6	- 1.6	2.8	12.3	- 7.1	1.8

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Tabel 31
Recorded payments regarding portfolio investments

	From abroad					To abroad					Net, from abroad
	Danish securities			Foreign securities		Danish securities			Foreign securities		Danish securities							Foreign securities
	Shares	Central- govern- ment securities1)	Other bonds ect.	Shares	bonds ect.	Shares	Central- govern- ment securities1)	Other bonds ect.	Shares	bonds ect.	Shares	bonds ect.					Total	Shares	bonds ect.		Total
												in kroner				in Foreign currency			in kroner	in Foreign currency
												Central- govern- ment bonds	Treasury notes	Treasury bills	Other paper
	Kr. billion
1988	3,7	77,5	72,2	16,5	11,9	4,8	70,9	66,1	18,5	14,4	- 1,1	5,2	1,6	•	6,0	- 0,1	11,6	- 1,9	0,1	- 2,6	- 4,5	1988
1989	10,4	55,1	36,9	15,2	18,9	9,5	58,9	42,5	18,8	26,4	1,0	- 4,3	0,4	•	- 5,1	- 0,5	- 8,4	- 3,6	- 0,3	- 7,2	- 11,1	1989
1990	9,5	113,3	36,0	15,3	47,6	9,2	89,8	34,4	17,1	53,4	0,3	21,4	2,3	1,4	3,5	- 3,5	25,4	- 1,8	0,3	- 6,1	- 7,6	1990
1991	8,4	252,7	29,4	15,6	68,9	8,3	210,1	31,4	19,4	91,4	0,1	29,5	9,0	4,0	- 3,0	1,2	40,7	- 3,8	- 9,0	- 13,5	- 26,3	1991
1992	8,2	516,1	28,2	14,8	100,2	7,8	464,0	26,8	17,9	87,5	0,3	47,6	- 0,1	- 2,7	2,4	6,3	53,8	- 3,1	7,2	5,5	9,7	1992
1993	20,1	1 092,3	40,5	20,8	77,9	13,2	1 026,2	31,0	22,2	75,6	6,9	53,1	15,9	- 2,4	8,6	0,4	82,6	- 1,3	0,8	1,5	1,0	1993
1994	41,2	1 094,4	77,9	18,4	102,6	25,6	1 173,5	82,8	23,7	103,2	15,6	- 65,5	-22,7	10,6	- 6,4	0,0	- 68,4	- 5,3	1,5	- 2,1	- 5,9	1994
1995	26,1	1 034,4	59,9	21,3	57,5	22,9	1 006,4	50,0	24,3	59,0	3,1	35,9	0,2	- 7,8	9,0	0,6	40,9	- 3,0	0,1	- 1,6	- 4,5	1995
1996	39,7	1 235,0	128,8	24,6	59,5	30,1	1 219,4	108,5	32,1	63,3	9,6	22,7	- 6,0	0,3	13,6	5,2	45,5	- 7,5	- 7,7	3,9	- 11,2	1996
1997	57,5	1 264,6	176,7	48,3	46,9	46,6	1 241,8	155,1	66,2	53,5	10,9	18,0	6,0	- 0,1	21,2	- 0,8	55,3	-18,0	- 5,4	- 1,2	- 24,5	1997
1996 Jan.	3,5	162,2	15,6	2,5	11,5	2,2	149,4	12,9	3,1	8,8	1,3	13,0	0,0	0,0	2,7	- 0,2	16,9	- 0,6	- 0,1	2,8	2,0	Jan. 1996
Feb.	2,8	118,2	11,8	2,2	3,9	2,1	122,4	11,7	2,3	3,0	0,7	- 0,1	- 3,2	- 0,9	- 0,3	0,3	- 3,4	- 0,1	0,2	0,8	0,8	Feb.
March	2,6	95,7	9,1	2,1	6,6	3,1	89,2	7,9	2,5	6,4	- 0,5	4,5	- 1,0	3,2	0,7	0,4	7,2	- 0,4	- 0,2	0,5	- 0,1	March
April	3,8	120,4	10,7	1,8	7,4	3,0	117,6	9,7	2,5	6,0	0,8	6,4	- 2,8	- 0,6	0,3	0,6	4,7	- 0,7	0,0	1,3	0,6	April
May	3,9	69,0	7,2	2,2	4,5	2,7	85,2	6,1	2,6	4,5	1,2	- 12,3	- 2,3	- 1,3	0,5	0,4	- 13,8	- 0,4	0,1	- 0,1	- 0,4	May
June	4,3	92,2	10,6	1,7	3,3	2,5	93,9	7,1	1,9	3,5	1,8	- 0,9	0,7	- 1,2	2,4	0,7	3,5	- 0,3	0,0	- 0,2	- 0,5	June
July	3,0	91,5	11,5	2,2	3,9	2,8	94,7	9,9	3,1	4,2	0,2	- 1,1	- 1,6	- 0,4	0,8	0,8	- 1,4	- 0,9	0,0	- 0,3	- 1,2	July
Aug.	2,6	73,9	7,4	1,3	2,8	2,4	82,2	7,9	2,3	3,0	0,3	- 6,7	- 2,6	1,0	- 0,6	0,0	- 8,6	- 1,0	0,1	- 0,3	- 1,2	Aug.
Sept.	3,3	88,3	12,0	1,8	2,1	2,2	84,5	7,6	2,1	2,0	1,0	2,8	1,7	- 0,5	4,1	0,2	9,3	- 0,3	0,0	0,1	- 0,2	Sept.
Oct.	3,4	121,9	15,4	2,4	3,6	2,5	109,2	13,1	3,3	3,8	0,9	13,3	0,4	- 0,8	1,3	0,7	15,8	- 0,9	- 0,5	0,3	- 1,1	Oct.
Nov.	3,3	109,1	8,5	1,9	5,8	2,0	112,3	7,7	3,0	9,6	1,3	- 1,7	- 1,3	- 0,2	0,1	0,6	- 1,2	- 1,1	- 4,4	0,7	- 4,8	Nov.
Dec.	3,2	92,5	9,0	2,7	4,1	2,6	78,7	6,8	3,3	8,6	0,6	5,6	6,0	2,1	1,5	0,7	16,6	- 0,7	- 2,8	- 1,6	- 5,1	Dec.
1997 Jan.	5,6	137,7	10,9	3,4	7,1	3,3	121,4	9,3	4,9	7,1	2,3	14,9	2,9	- 1,5	1,7	- 0,2	20,1	- 1,5	- 1,4	1,4	- 1,5	Jan. 1997
Feb.	5,4	103,8	17,3	3,7	5,3	3,7	111,9	13,4	5,3	4,7	1,7	- 5,9	- 0,6	- 1,5	3,9	- 0,2	- 2,6	- 1,6	- 0,7	1,2	- 1,1	Feb.
March	4,8	94,4	15,3	3,8	4,6	3,4	116,3	12,6	4,8	3,7	1,5	- 22,0	- 0,9	1,2	3,0	- 0,5	- 17,7	- 1,0	- 0,4	1,3	- 0,1	March
April	3,5	79,1	6,9	3,1	2,8	3,2	76,1	5,6	4,5	3,8	0,3	1,3	2,2	- 0,4	1,1	0,1	4,6	- 1,4	- 0,3	- 0,6	- 2,4	April
May	2,8	85,8	12,0	2,7	5,2	2,7	76,8	12,3	4,3	4,9	0,1	8,4	0,7	- 0,1	1,4	- 1,7	8,9	- 1,5	- 0,2	0,5	- 1,2	May
June	5,6	87,0	16,0	3,7	2,8	4,6	83,1	7,9	6,9	3,3	1,0	2,0	2,8	- 0,5	5,2	2,5	12,9	- 3,3	- 0,2	- 0,2	- 3,7	June
July	5,8	134,4	21,0	4,8	3,8	5,0	132,0	20,0	8,1	4,6	0,8	4,7	- 1,2	- 1,1	1,4	- 0,4	4,3	- 3,3	- 0,4	- 0,5	- 4,1	July
Aug.	5,1	104,6	11,8	4,0	2,5	4,5	103,0	12,2	4,7	2,4	0,6	3,2	- 1,8	0,2	0,2	- 0,5	1,8	- 0,6	- 0,3	0,4	- 0,5	Aug.
Sept.	4,5	123,1	17,6	6,6	3,3	4,1	112,8	12,8	5,5	4,0	0,5	8,9	1,2	0,6	5,1	- 0,7	15,6	1,1	- 0,7	0,0	0,5	Sept.
Oct.	5,6	159,2	23,5	4,0	4,2	4,5	152,6	22,2	5,3	4,1	1,1	6,5	- 0,8	0,8	1,1	0,3	9,1	- 1,3	- 0,2	0,4	- 1,1	Oct.
Nov.	3,9	73,1	11,2	4,2	2,1	3,7	75,7	9,6	5,4	3,7	0,2	- 4,2	- 0,3	1,8	1,5	0,1	- 0,9	- 1,1	- 0,3	- 1,3	- 2,7	Nov.
Dec.	4,7	82,5	13,3	4,3	3,2	3,9	79,9	17,3	6,8	7,3	0,8	0,4	1,7	0,4	- 4,4	0,5	- 0,6	- 2,5	- 0,3	- 3,8	- 6,6	Dec.
1) Including Treasury notes and Treasury bills

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Tabel 32
Distribution by country of payments regarding direct investments

	Belgiun	UK	Finland	France	Greece	Netherlands	Ireland	Italy	Luxem- bourg	Portugal	Spain	Sweden1)	Germany	Austria	EU countries, total	Iceland			Norway	Switzer- land/ Liechten- stein	Turkey	Eastern European countries	Remaning European countries2)	USA	Canada	Mexico	Central Amerika	South Amerika	Japan	NICs in Asia3)	Other countries in Asia	Africa	Australia and other countries in Oceania	All countries
	Kr. billion																		Kr. billion
Payments regarding direct Danish investments abroad																		Payments regarding direct Danish investments abroadt
From abroad									From abroad									From abroad									From abroad
1988	6	20	0	11	0	0	4	19	–	11	10	139	69	4	294	6	1988	1988	14	92	–	–	4	196	–	–	56	1	1	45	–	12	13	733	1988
1989	1	284	31	3	–	11	0	–	0	39	57	143	123	1	694	2	1989	1989	49	54	–	1	- 1	149	0	–	98	28	–	143	2	0	78	1 298	1989
1990	28	354	192	36	–	3	1	0	32	29	–	119	570	–	1 365	4	1990	1990	16	32	15	–	5	560	1	–	–	–	–	4	1	0	–	2 002	1990
1991	9	1 110	26	48	–	0	31	36	1	182	215	106	158	1	1 922	8	1991	1991	6	- 19	10	1	2	201	0	109	2	0	19	1	5	11	–	2 278	1991
1992	3	130	124	284	–	1	77	43	500	17	- 8	592	500	5	2 268	15	1992	1992	31	58	4	15	5	39	3	7	36	151	8	51	10	6	3	2 711	1992
1993	4	943	0	2 309	0	219	72	2	458	264	192	606	811	0	5 879	5	1993	1993	35	471	2	1	1	31	45	0	2	24	10	444	1	10	52	7 013	1993
1994	1	1 045	3	100	–	170	101	3	8	7	27	62	1 441	3	2 971	5	1994	1994	38	19	1	1	7	50	31	0	–	13	36	509	300	28	15	4 023	1994
1995	308	354	74	145	–	133	13	4	421	763	76	97	796	7	3 190	6	1995	1995	143	520	0	44	–	274	4	–	–	31	–	1 724	34	92	13	6 075	1995
1996	548	3 724	6	61	0	962	82	69	101	1	42	76	2 466	2	8 141	11	1996	1996	93	39	27	26	0	1 245	53	–	1	6	–	288	9	35	236	10 211	1996
1997	••	775	96	65	••	92	••	34	29	1 608	63	173	234	17	3 226	7	1997	1997	105	304	••	32	147	438	••	••	49	••	–	613	10	••	121	5 125	1997
To abroad									To abroad									To abroad									To abroad
1988	140	1 253	126	141	5	113	16	34	177	45	220	136	1 052	33	3 491	2	1988	1988	354	66	17	9	15	1 428	87	13	100	7	178	97	46	34	77	6 022	1988
1989	58	3 513	78	2 486	18	5 295	22	19	19	83	207	712	1 267	18	13 795	3	1989	1989	325	819	111	20	262	802	116	105	77	12	33	781	12	21	27	17 323	1989
1990	26	2 220	83	2 908	7	562	340	113	139	63	214	1 344	1 213	36	9 269	9	1990	1990	273	323	14	10	120	1 263	151	85	60	9	187	99	54	10	80	12 014	1990
1991	49	2 389	195	509	6	257	2 091	82	470	662	794	2 414	985	12	10 916	–	1991	1991	294	118	23	60	5	635	1 999	45	9	61	173	882	65	9	98	15 391	1991
1992	506	3 466	249	740	22	259	240	36	494	319	420	2 089	814	48	9 703	13	1992	1992	342	41	10	91	46	669	37	0	15	340	167	201	44	7	14	11 740	1992
1993	139	2 076	269	670	50	541	41	143	226	94	243	1 396	514	67	6 467	0	1993	1993	409	964	10	267	461	1 502	23	16	10	81	172	295	72	17	45	10 811	1993
1994	153	1 157	212	1 062	19	232	17	220	6	236	227	428	1 371	13	5 322	–	1994	1994	896	268	16	308	1	3 497	149	21	82	63	104	222	416	33	53	11 480	1994
1995	66	861	300	672	3	1 145	2	242	0	119	73	2 247	2 876	1 023	9 630	1	1995	1995	328	2 260	21	1 122	47	5 264	16	262	44	91	78	747	482	55	43	20 491	1995
1996	207	1 427	190	573	1	5 506	28	23	–	495	146	4 433	932	18	13 980	1	1996	1996	369	756	66	1 465	0	1 129	18	98	13	161	188	89	433	140	29	18 935	1996
1997	99	3 060	177	300	16	686	42	127	33	1 321	149	5 044	2 887	216	14 157	2	1997	1997	706	1 684	12	1 327	2	1 871	708	144	4	63	••	356	720	209	74	22 096	1997
Payments regarding direct Danish investments in Denmark																		Payments regarding direct Danish investments in Denmark
From abroad									From abroad									From abroad									From abroad
1988	41	427	263	159	–	300	8	7	–	0	2	2 256	280	5	3 747	0	1988	1988	234	221	0	8	0	1 382	2	–	3	0	98	8	13	1	46	5 762	1988
1989	4	470	157	3 838	0	1 251	10	7	178	–	4	5 969	169	3	12 060	1	1989	1989	252	184	–	29	6	470	7	–	340	–	199	11	6	12	3	13 581	1989
1990	8	2 292	232	303	0	901	2	6	165	1	5	3 210	566	14	7 705	–	1990	1990	3 007	420	–	5	20	381	1	–	52	–	32	17	3	3	45	11 692	1990
1991	1 211	420	85	1 390	–	1 362	0	11	54	–	7	2 561	511	15	7 626	2	1991	1991	2 569	353	0	9	3	379	1	–	71	0	76	2	2	3	0	11 097	1991
1992	98	614	188	193	–	548	2	212	54	–	5	1 656	1 879	18	5 467	10	1992	1992	254	289	3	6	9	402	2	–	1	0	42	55	3	6	5	6 556	1992
1993	11	1 491	94	269	–	1 395	25	6	62	0	4	3 046	1 770	9	8 181	6	1993	1993	2 009	595	14	8	14	673	5	–	68	1	18	24	8	5	1	11 629	1993
1994	36	3 945	131	88	0	4 199	10	20	331	1	27	1 054	1 509	4	11 355	5	1994	1994	3 568	224	9	4	24	1 513	4	–	99	2	45	38	3	6	7	16 906	1994
1995	34	8 004	127	640	–	1 984	6	23	196	0	11	3 070	1 548	133	15 776	17	1995	1995	489	449	5	3	7	1 039	0	–	1 187	–	13	447	9	3	0	19 445	1995
1996	966	749	387	391	1	1 648	4	11	47	1	2	3 209	1 611	2	9 028	2	1996	1996	455	263	1	3	39	1 038	0	–	28	1	51	57	4	6	0	10 977	1996
1997	64	2 298	17	718	–	810	–	16	219	0	3	3 054	617	103	7 919	64	1997	1997	1 362	53	2	4	5	547	2	–	266	••	5	75	4	2	4	10 314	1997
To abroad									To abroad									To abroad									To abroad
1988	9	369	0	42	–	21	8	15	15	7	60	775	33	4	1 360	–	1988	1988	98	146	–	–	0	89	8	–	637	0	0	1	0	0	30	2 371	1988
1989	53	865	131	963	32	787	–	1	122	1	10	2 008	63	8	5 045	0	1989	1989	94	128	–	–	12	202	3	–	3	0	1	61	0	109	–	5 660	1989
1990	1	1 087	18	10	–	56	–	2	8	–	4	1 629	18	–	2 833	–	1990	1990	1 233	109	–	–	9	33	5	–	1	–	–	–	–	3	–	4 227	1990
1991	–	81	28	8	–	535	–	–	0	2	11	862	32	–	1 559	–	1991	1991	114	43	–	–	3	39	3	–	0	–	–	2	–	–	0	1 764	1991
1992	57	636	–	199	0	1 961	2	0	1	0	4	1 500	11	1	4 372	–	1992	1992	42	39	–	–	4	6	0	0	1	2	1	1	1	0	–	4 469	1992
1993	9	127	3	2	–	149	–	0	12	–	4	360	230	1	897	–	1993	1993	6	12	–	–	0	310	0	–	–	0	–	1	1	2	0	1 230	1993
1994	1	420	8	45	1	322	–	4	3	0	2	193	205	–	1 204	–	1994	1994	44	89	–	2	0	87	1	–	77	0	1	0	2	1	3	1 513	1994
1995	2	96	27	120	–	929	0	4	12	1	8	47	32	7	1 285	1	1995	1995	13	187	–	0	8	288	4	–	348	1	5	358	2	3	6	2 510	1995
1996	819	164	2	683	–	7 347	5	1	28	0	29	1 538	158	1	10 777	0	1996	1996	39	177	–	0	7	181	5	–	2	0	3	6	2	6	12	11 216	1996
1997	5	163	219	20	–	1 129	–	3	35	2	7	671	140	–	2 393	–	1997	1997	69	31	••	2	19	17	3	–	••	••	2	11	••	2	3	2 574	1997
Note: Direct investments include transactions between residents and non-residents, including contribution of liquid funds, whereby access to exert a substantial influence on the operation of a business enterprise with a permanent place of business, irrespective of the type of company, is achieved, maintained or expanded. As from 1992 also including purchase or sale of non-business properties. As from 1997 contribution of liquid funds is excluded in the statistics. Contrary to the statistics for direct investments in the Table showing recorded payments (Table 28) direct investments abroad by Danish banks are included in the distribution of direct investments by country and sector, whereas intra-group loans are not included. The distribution by country is estimated in certain cases. •• Cannot be stated due to the small number of transactions.
1) Including Scandinavian Airlines Systems' investments in Denmark.
2) Gibraltar, Andorra, Malta and Cyprus.
3) Hong Kong, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.

---

Tabel 33
Distribution by sector of payments regarding direct investments

	Agriculture, fisheries and extraction of raw materials	Manufacturing	Of which			Building and construction	Trade, hotels and restaurants, etc.	Transport, post and telecom- munications	Financial enterprises, etc. and business service1)	Other sectors and undistributed	Total
			Food, beverages and tobacco	Mineral oil, chemicals and plastics, etc.	Iron and metalworking, etc.
	Kr. billion
Payments regarding direct Danish investments abroad
From abroad						From abroad
1988	8	280	97	49	58	23	250	112	57	3	733	1988
1989	–	430	194	74	95	10	267	301	188	102	1 298	1989
1990	10	862	137	75	66	7	355	406	362	–	2 002	1990
1991	26	664	320	85	144	57	183	108	1 223	18	2 278	1991
1992	1	388	141	26	112	9	755	12	1 505	40	2 711	1992
1993	45	463	54	292	66	406	1 088	97	4 850	65	7 013	1993
1994	32	933	469	298	100	2	897	75	2 083	–	4 023	1994
1995	36	860	15	516	123	332	1 815	120	2 882	30	6 075	1995
1996	–	1 279	25	1 175	28	127	6 320	56	2 216	213	10 211	1996
1997	405	558	–	492	••	25	668	22	3 341	106	5 125	1997
To abroad						To abroad
1988	83	2 496	418	883	635	142	1 069	314	1 866	52	6 022	1988
1989	95	2 757	426	474	742	317	5 063	2 033	7 017	41	17 323	1989
1990	71	2 852	378	907	1 097	367	2 608	595	5 484	38	12 014	1990
1991	2 507	3 869	1 796	537	850	124	1 643	279	6 746	223	15 391	1991
1992	40	5 234	2 310	1 456	866	175	2 034	151	3 994	111	11 740	1992
1993	50	5 371	1 912	1 858	1 061	154	1 699	296	3 229	12	10 811	1993
1994	161	4 646	467	2 245	1 493	76	4 975	347	1 269	7	11 480	1994
1995	59	5 333	876	614	2 980	179	3 481	673	10 521	246	20 491	1995
1996	10	3 763	968	1 622	592	690	2 700	5 971	2 966	2 836	18 935	1996
1997	34	6 007	2 521	952	1 676	154	1 971	3 378	10 439	112	22 096	1997
Payments regarding direct Danish investments in Denmark
From abroad						From abroad
1988	413	1 392	166	352	526	35	766	1 478	1 666	12	5 762	1988
1989	355	2 446	245	436	1 058	485	1 550	3 538	5 193	13	13 581	1989
1990	332	3 711	921	557	1 097	466	3 330	2 241	1 613	–	11 692	1990
1991	78	4 441	247	382	3 340	655	3 461	1 069	1 226	166	11 097	1991
1992	129	2 746	446	314	978	205	1 757	628	916	173	6 556	1992
1993	473	3 242	359	966	1 776	767	3 932	258	2 879	74	11 629	1993
1994	112	2 530	588	71	1 713	262	8 942	450	4 243	367	16 906	1994
1995	35	2 325	883	207	570	1 169	3 274	1 679	10 601	363	19 445	1995
1996	963	2 999	361	394	1 229	543	2 072	971	2 866	562	10 977	1996
1997	539	3 246	634	220	1 632	1 077	1 891	727	2 639	194	10 314	1997
To abroad						To abroad
1988	77	326	64	71	169	14	1 020	732	203	–	2 371	1988
1989	39	1 206	124	522	111	67	380	1 400	2 567	–	5 660	1989
1990	11	336	82	40	44	9	1 464	1 479	928	–	4 227	1990
1991	–	718	37	54	79	10	120	822	70	24	1 764	1991
1992	–	2 185	236	16	1 631	535	572	779	384	14	4 469	1992
1993	9	439	3	7	424	3	181	293	305	–	1 230	1993
1994	67	486	224	40	72	281	227	35	416	0	1 513	1994
1995	5	938	2	2	857	21	571	690	285	0	2 510	1995
1996	87	3 552	25	109	2 313	357	6 371	240	549	61	11 216	1996
1997	406	150	136	••	13	59	351	39	1 561	9	2 574	1997
Note: Reference is made to the note to the previous table. As from 1996 the sectoral distribution of direct investments abroad is based on the sector of the Danish investor. Before 1996 the distribution is based on the sector in which the investment is made. The sectoral distribution of direct investments in Denmark is based on the sector of the enterprise in which the investment is made in Denmark. In contrast to previously the sectoral distribution is structured according to the principles of Statistics Denmark’s group of 9. However, it should be noted that in certain cases the sectoral distribution is based on estimates for 1988, and that in the period from 1988 to 1994 "Trade, hotels General reference is made to the note to the preceding Table. The distribution by sector concerns the company in which the investment is made, and not the sector of the investor. In certain cases the distribution by sector is estimated for the period 1986 to estimates for 1988, and that in the period from 1988 to 1994 "Trade, hotels and restaurants, etc," includes certain sectors which as from 1995 are included under either "Financiel enterprises, etc. and business service" or "Other sectors and undistributed".
1) Including holding companies.

---

Table 34
Denmark's foreign assets and liabilities

End of period	Public sector		Private sector		Public and private sectors, total	The National- bank	Total
	The central government	Other public sector1)	The banks2)	Other private sector
	Kr. billion
Assets
1991	16	1	291	271	579	49	628
1992	17	4	290	292	603	73	676
1993	16	4	392	298	710	76	786
1994	17	6	310	310	642	56	698
1995	14	9	318	311	651	66	717
1996	13	15	377	399	803	87	890
1997	13	22	451	481	967	131	1 098
Liabilities
1991	223	18	289	426	956	4	960
1992	290	18	236	416	960	28	988
1993	442	14	192	428	1 076	1	1 077
1994	299	19	193	444	955	2	957
1995	331	16	195	440	981	2	983
1996	368	16	260	498	1 141	2	1 143
1997	398	14	383	570	1 365	1	1 366
Net liabilities
1991	207	17	- 2	155	377	- 45	332
1992	273	14	- 54	124	557	- 45	312
1993	426	10	- 200	130	366	- 75	291
1994	282	13	- 117	134	313	- 54	259
1995	317	7	- 123	129	330	- 64	266
1996	355	1	- 117	99	338	- 85	253
1997	385	- 8	- 68	89	398	- 130	268
Note: The statistics for 1991, 1994 and 1996 are based on questionnaire surveys, whereas the figures for 1992, 1993, 1995 and 1997 have been calculated on the basis of the foreign-exchange statistics and value adjustments. A current-acount surplus of kr.6.2 billion is used as the calculation basis for 1997. 1) In contrast to previously the Employees' Capital Pension Fund is included under Other private sector instead of Other public sector as before. 2) Includes non-residents' holdings of shares issued by Danish banks and thus diviates from the compilation of the banks' external position, shown in Table 29.

---

Table 35
Denmark's foreign assets and liabilities: portfolio investments

End of period	Residents' holdings of foreign securities1)			Non-residents' holdings of Danish securities
	Total	Of which Heraf:		Total	Of which
		Bonds and money- market securities	Shares		Krone denom- inated central-government securities issued in Denmark2)	Mortgage-credit bonds	Other bonds and money-market securities3)	Shares
	Kr. billion
1991	117	78	38	349	132	25	175	17
1992	104	64	40	407	186	22	184	15
1993	122	68	54	569	278	34	235	22
1994	106	51	55	442	169	23	209	41
1995	127	67	60	487	225	35	181	46
1996	177	82	95	605	266	42	222	75
1997	256	106	150	719	294	51	244	130
1)Excluding the holdings of Danmarks Nationalbank. 2) Based on statistics from the Danish Securities Centre excluding residents' holdings of central-government securities in safe-keeping accounts abroad and including non-residents' repo transactions. 3) Including the central government's ECU-denominated bonds issued in Denmark. At end-1997 kr.5.3 billion of these bonds were held by non-residents.

---

Table 36
Denmark's account with the International Monetary Fund

End of period	Denmark's quota in the Fund		The Fund's holdings of Danish kroner		Denmark's reserve position in the Fund1)		Allocated SDRs (accumulated)		Denmark's holdings of SDRs
	SDR million	Kr. million	SDR million	Kr. million	SDR million	Kr. million	SDR million	Kr. million	SDR million	Kr. million
1987	711	6 147	588	5 082	123	1 065	179	1 547	151	1 301
1988	711	6 566	476	4 399	235	2 167	179	1 652	167	1 542
1989	711	6 173	456	3 960	255	2 213	179	1 553	213	1 850
1990	711	5 844	491	4 037	220	1 807	179	1 470	152	1 246
1991	711	6 018	456	3 863	255	2 155	179	1 514	169	1 430
1992	1 070	9 208	724	6 233	346	2 975	179	1 539	61	528
1993	1 070	9 953	761	7 077	309	2 876	179	1 664	62	580
1994	1 070	9 502	775	6 886	295	2 616	179	1 589	125	1 107
1995	1 070	8 818	670	5 521	400	3 297	179	1 474	107	880
1996	1 070	9 134	648	5 533	422	3 601	179	1 527	117	997
1997	1 070	9 856	602	5 545	468	4 311	179	1 648	249	2 291
Note: Conversion from SDRs to Danish kroner is made at the year-end SDR rate. 1) Denmark's reserve position in the IMF is determined as the difference between the quota and the Fund's holdings of Danish kroner.

---

Table 37
Denmark's ECU account with the European Monetary Institute (EMI)

End of period	Allocation1)	Holdings	Net position	Net position as a percentage of allocation1)
	ECU million			Percentage
1987	824	476	- 348	- 42
1988	1 302	1 302	_	_
1989	740	590	- 150	- 20
1990	807	657	- 150	- 19
1991	807	356	- 452	- 56
1992	385	365	- 20	- 5
1993	655	655	_	_
1994	464	464	_	_
1995	636	636	_	_
1996	674	674	_	_
1997	636	636	_	_
Note: Until end-1993 the European Monetary Co-operation Fund. 1) Allocation on deposit of 20 per cent of the gold and dollar holdings.

---

Table 38
Composition of SDR and ECU currency baskets and implied weightings

SDR
	Base weightings in the 1986 basket	Number of national currency units in the SDR basket as from 1986 until end-1990	Base weightings in the 1996 basket	Number of national currency units in the SDR basket as from January 1, 1996		Actual weights as of December 31, 19971)
	Percentage		Percentage			Percentage
US dollars	42	0.452	39	0.582		43
D-marks	19	0.527	21	0.446		18
Japanese yen	15	33.4	18	27.2		16
French francs	12	1.02	11	0.813		10
Pounds sterling	12	0.0893	11	0.105		13
ECU
					Number of national currency units2)		Actual weights as of December 31, 1997
							Percentage
D-marks					0.6242		31.6
French francs					1.332		20.1
Pounds sterling					0.08784		13.2
Italian lire					151.8		7.8
Dutch guilders					0.2198		9.9
Belgian francs					3.301		8.1
Lux. francs					0.130		0.3
Spanish pesetas					6.885		4.1
Danish kroner					0.1976		2.6
Irish pounds					0.008552		1.1
Greek drachmas					1.440		0.5
Portuguese escudos					1.393		0.7
							100
Note: The SDR basket is composed of a fixed number of units of the five currencies included. The composition, which is changed every five years, in principle reflects the importance of the respective currencies in international trade, etc. On revision of the composition, the weight (base weight) of the individual currency is calculated on the basis of the relevant country's exports of goods and services, as well as the use of the currency in the global official reserves. From the base weights the number of currency units is fixed so that the SDR basket's value calculated on the basis of the market rates does not change on the revision. 1) As a consequence of continuous fluctuation in exchange rates the market values of the individual currency shares, and thereby the currencies' actual weight in the basket, are changed. 2) From September 21, 1989. The composition of the ECU basket was fixed irrevocably on the entry into force of the Maas-tricht Treaty.

---

Tabel 39
Realignments in the European Monetary System (EMS)

With effect from

D-marks (DEM)

French francs (FRF)

Dutch guilders (NLG)

Belgian francs (BEF)

Italian lire (ITL)

Irish pounds (IEP)

Spanish pesetas (ESP)

Pounds sterling (GBP)

Portu- guese escudos (PTE)

Austrian schillings (ATS)

Finnish markka (FIM)

Danish kroner (DKK)

With effect from

Realignment percentage 1)

Realignment percentage1)

1979 sept. 24.

+ 5,0

+ 3,0

+ 3,0

+ 3,0

+ 3,0

+ 3,0

•

•

•

•

•

–

1979 sept. 24.

nov. 30.

+ 5,0

+ 5,0

+ 5,0

+ 5,0

+ 5,0

+ 5,0

•

•

•

•

•

–

nov. 30.

1981 march 23.

–

–

–

–

- 6,0

–

•

•

•

•

•

–

1981 march 23.

oct. 5.

+ 5,5

- 3,0

+ 5,5

–

- 3,0

–

•

•

•

•

•

–

oct. 5.

1982 feb. 22.

–

–

–

- 8,5

–

–

•

•

•

•

•

- 3,0

1982 feb. 22.

june 14.

+ 4,25

- 5,75

+ 4,25

–

- 2,75

–

•

•

•

•

•

–

june 14.

1983 march 21.2)

+ 5,5

- 2,5

+ 3,5

+ 1,5

- 2,5

- 3,5

•

•

•

•

•

+ 2,5

1983 march 21.2)

1985 july 22.

+ 2,0

+ 2,0

+ 2,0

+ 2,0

- 6,0

+ 2,0

•

•

•

•

•

+ 2,0

1985 july 22.

1986 april 7.

+ 3,0

- 3,0

+ 3,0

+ 1,0

–

–

•

•

•

•

•

+ 1,0

1986 april 7.

aug. 4.

–

–

–

–

–

- 8,0

•

•

•

•

•

–

aug. 4.

1987 jan. 12.

+ 3,0

–

+ 3,0

+ 2,0

–

–

•

•

•

•

•

–

1987 jan. 12.

1990 jan. 8.

–

–

–

–

4)

–

–

•

•

•

•

–

1990 jan. 8.

1992 sept. 14.

+ 3,5

+ 3,5

+ 3,5

+ 3,5

- 3,5

+ 3,5

+ 3,5

+ 3,5

+ 3,5

•

•

+ 3,5

1992 sept. 14.

sept. 17.

–

–

–

–

•

–

- 5,0

•

–

•

•

–

sept. 17.

nov. 23.

–

–

–

–

•

–

- 6,0

•

- 6,0

•

•

–

nov. 23.

1993 feb. 1.

–

–

–

–

•

- 10,0

–

•

–

•

•

–

1993 feb. 1.

may 14.

–

–

–

–

•

–

- 8,0

•

- 6,5

•

•

–

may 14.

1995 march 6.

–

–

–

–

•

–

- 7,0

•

- 3,5

–

•

–

1995 march 6.

Development in bilateral parties against DKK

Development in bilateral parties against DKK

1979 march 13.

282,237

122,207

260,439

17,9581

0,617160

1069,35

•

•

•

•

•

1979 march 13.

sept. 24.

296,348

125,801

268,098

18,4862

0,635312

1100,81

•

•

•

•

•

sept. 24.

nov. 30.

311,165

132,091

281,503

19,4105

0,667078

1155,84

•

•

•

•

•

nov. 30.

1981 march 23.

–

–

–

–

0,627052

–

•

•

•

•

•

1981 march 23.

oct. 5.

328,279

128,128

296,986

–

0,608240

–

•

•

•

•

•

oct. 5.

1982 feb. 22.

338,433

132,090

306,171

18,3098

0,627050

1191,59

•

•

•

•

•

1982 feb. 22.

june. 14.

352,817

124,496

319,183

–

0,609804

–

•

•

•

•

•

june. 14.

1983 march 21.2)

363,141

118,423

322,297

18,1312

0,580057

1121,84

•

•

•

•

•

1983 march 21.2)

1985 juli 22.

–

–

–

–

0,534563

–

•

•

•

•

•

1985 juli 22.

1986 april 7.

370,332

113,732

328,676

–

0,529268

1110,72

•

•

•

•

•

1986 april 7.

aug. 4.

–

–

–

–

–

1021,86

•

•

•

•

•

aug. 4.

1987 jan. 12.

381,443

–

338,537

18,4938

–

–

•

•

•

•

•

1987 jan. 12.

1989 juni 19.3)

–

–

–

–

–

–

5,86837

•

•

•

•

1989 juni 19.3)

1990 jan. 8.

–

–

–

–

0,509803

–

–

•

•

•

•

1990 jan. 8.

okt. 8. 3))

–

–

–

–

–

–

–

1125,26

•

•

•

okt. 8. 3)

1992 april 6.3)

–

–

–

–

–

–

–

–

4,38747

•

•

1992 april 6.3)

sept. 14.

–

–

–

–

0,475325

–

–

–

–

•

•

sept. 14.

sept. 17.5)

–

–

–

–

•

–

5,57496

•

–

•

•

sept. 17.5)

nov. 23.

–

–

–

–

•

–

5,24047

•

4,12423

•

•

nov. 23.

1993 feb. 1.

–

–

–

–

•

919,676

–

•

–

•

•

1993 feb. 1.

may 14.

–

–

–

–

•

–

4,82126

•

3,85618

•

•

may 14.

aug. 2.6)

–

–

–

–

•

–

–

•

–

•

•

aug. 2.6)

1995 jan. 9.

–

–

–

–

•

–

–

•

–

54,2170

•

1995 jan. 9.

march 6.

–

–

–

–

•

–

4,48376

•

3,72119

–

•

march 6.

1996 oct. 14.

–

–

–

–

•

–

–

•

–

–

125,474

1996 oct. 14.

nov. 25.

–

–

–

–

0,385294

–

–

•

–

–

–

nov. 25.

Total adjustment in the period, per cent

+ 35,15

- 6,93

+ 29,99

+ 2,98

- 37,6

- 14,00

- 23,59

–

- 15,19

–

–

Total adjustment in the period, per cent

Note: The European Monetary System (EMS) was established on March 13, 1979.

1)Corresponding to the official wording of the press communiqués issued.

2) As the sterling rate rose strongly after the realignment on March 21, 1983, it was decided in May 1983 to carry out a formal EMS realignment designed to place sterling in the ECU at the market rate of May 13, 1983 at the same time as the agricultural price agreement. Bilateral parities and intervention rates remained unchanged.

3) Spain, the UK and Portugal joined the ERM with a fluctuation limit of +/-6 per cent. The other bilateral parities and intervention rates remained unchanged.

4) On January 8, 1990 the fluctuation limits for the Italian lira were narrowed from +/-6 per cent to +/-2¼ per cent around the bilateral central rates. In connection with the narrowing of the fluctuation limits the intervention rates for the lira were altered vis-à-vis the other ERM currencies. The alteration was made so that the lower limit for the lira vis-à-vis the other currencies remained unchanged, whereas the upper limit was altered.

5) Intervention obligation for the pound sterling and the Italian lira suspended and intervention rates for Spanish peseta written down by 5 per cent.

6) The central rates remained unchanged, but the fluctuation margins for all currencies were widened to +/- 15 per cent. (However, the German and Dutch authorities agreed that the previous intervention rates between the D-mark and the Dutch guilder should continue to apply.)

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Tabel 40
Intervention rates

Date effective	D-marks (DEM)	French francs (FRF)	Dutch guilders (NLG)	Belgian francs (BEF)	Italian lire (ITL)	Irish pounds (IEP)	Spanish pesetas (ESP)	Pounds sterling (GBP)	Portu- guese escudos (PTE)	Austrian schillings (ATS)	Finnish markka (FIM)	Date effective
	Kroner per. 100 units
1979 march 13.	288,660	124,985	266,365	18,3665	0,65530	1093,65	•	•	•	•	•	1979 march 13.
	275,960	119,490	254,645	17,5585	0,58130	1045,55	•	•	•	•	•
sept. 24.	303,090	128,660	274,195	18,9065	0,67450	1125,85	•	•	•	•	•	sept. 24.
	289,760	123,000	262,140	18,0750	0,59840	1076,35	•	•	•	•	•
nov. 30.	318,260	135,095	287,900	19,8520	0,70830	1182,14	•	•	•	•	•	nov. 30.
	304,230	129,150	275,245	18,9785	0,62825	1130,13	•	•	•	•	•
1981 march 23.	318,260	135,095	287,900	19,8520	0,66580	1182,14	•	•	•	•	•	1981 march 23.
	304,230	129,150	275,245	18,9785	0,59056	1130,13	•	•	•	•	•
oct. 5.	335,740	131,040	303,740	19,8520	0,64580	1182,14	•	•	•	•	•	oct. 5.
	320,980	125,280	290,380	18,9785	0,57285	1130,13	•	•	•	•	•
1982 feb. 22.	346,130	135,090	313,140	18,7260	0,66580	1218,70	•	•	•	•	•	1982 feb. 22.
	330,910	129,160	299,360	17,9030	0,59056	1165,09	•	•	•	•	•
june 14.	360,830	127,330	326,450	18,7260	0,64750	1218,70	•	•	•	•	•	june 14.
	344,970	121,730	312,080	17,9030	0,57430	1165,09	•	•	•	•	•
1983 march 21.	371,400	121,110	329,630	18,5430	0,61590	1147,35	•	•	•	•	•	1983 march 21.
	355,060	115,780	315,130	17,7270	0,54630	1096,87	•	•	•	•	•
1985 july 22.	371,400	121,110	329,630	18,5430	0,56760	1147,35	•	•	•	•	•	1985 july 22.
	355,060	115,780	315,130	17,7270	0,50350	1096,87	•	•	•	•	•
1986 april 7.	378,760	116,320	336,160	18,5430	0,56200	1135,99	•	•	•	•	•	1986 april 7.
	362,090	111,200	321,360	17,7270	0,49850	1086,01	•	•	•	•	•
aug. 4.	378,760	116,320	336,160	18,5430	0,56200	1045,11	•	•	•	•	•	aug. 4.
	362,090	111,200	321,360	17,7270	0,49850	999,13	•	•	•	•	•
1987 jan. 12.	390,160	116,320	346,240	18,9143	0,56200	1045,11	•	•	•	•	•	1987 jan. 12.
	373,000	111,200	331,020	18,0831	0,49850	999,13	•	•	•	•	•
1989 june 19.	390,160	116,320	346,240	18,9143	0,56200	1045,11	6,231	•	•	•	•	1989 june 19.
	373,000	111,200	331,020	18,0831	0,49850	999,13	5,526	•	•	•	•
1990 jan. 8.	390,160	116,320	346,240	18,9143	0,52140	1045,11	6,231	•	•	•	•	1990 jan. 8.
	373,000	111,200	331,020	18,0831	0,49850	999,13	5,526	•	•	•	•
oct. 8.	390,160	116,320	346,240	18,9143	0,52140	1045,11	6,231	1194,79	•	•	•	oct. 8.
	373,000	111,200	331,020	18,0831	0,49850	999,13	5,526	1059,76	•	•	•
1992 april 6.	390,160	116,320	346,240	18,9143	0,52140	1045,11	6,231	1194,79	4,6586	•	•	1992 april 6.
	373,000	111,200	331,020	18,0831	0,49850	999,13	5,526	1059,76	4,1321	•	•
sept. 14.	390,160	116,320	346,240	18,9143	0,48614	1045,11	6,231	1194,79	4,6586	•	•	sept. 14.
	373,000	111,200	331,020	18,0831	0,46475	999,13	5,526	1059,76	4,1321	•	•
sept. 17.	390,160	116,320	346,240	18,9143	•	1045,11	5,9196	•	4,6586	•	•	sept. 17.
	373,000	111,200	331,020	18,0831	•	999,13	5,2504	•	4,1321	•	•
nov. 23.	390,160	116,320	346,240	18,9143	•	1045,11	5,5645	•	4,3791	•	•	nov. 23.
	373,000	111,200	331,020	18,0831	•	999,13	4,9354	•	3,8842	•	•
1993 feb. 1.	390,160	116,320	346,240	18,9143	•	940,60	5,5645	•	4,3791	•	•	1993 feb. 1.
	373,000	111,200	331,020	18,0831	•	899,22	4,9354	•	3,8842	•	•
may 14.	390,160	116,320	346,240	18,9143	•	940,60	5,1193	•	4,0945	•	•	may 14.
	373,000	111,200	331,020	18,0831	•	899,22	4,5407	•	3,6317	•	•
aug. 2.	442,968	132,066	393,105	21,4747	•	1067,92	5,5985	•	4,4777	•	•	aug. 2.
	328,461	97,943	291,544	15,9266	•	792,014	4,1519	•	3,3209	•	•
1995 jan. 9.	442,968	132,066	393,105	21,4747	•	1067,92	5,5985	•	4,4777	62,9561	•	1995 jan. 9.
	328,461	97,943	291,544	15,9266	•	792,014	4,1519	•	3,3209	46,6910	•
march 6.	442,968	132,066	393,105	21,4747	•	1067,92	5,2064	•	4,3210	62,9561	•	march 6.
	328,461	97,943	291,544	15,9266	•	792,014	3,8614	•	3,2046	46,6910	•
1996 oct. 14.	442,968	132,066	393,105	21,4747	•	1067,92	5,2064	•	4,3210	62,9561	145,699	1996 oct. 14.
	328,461	97,943	291,544	15,9266	•	792,014	3,8614	•	3,2046	46,6910	108,057
nov. 25.	442,968	132,066	393,105	21,4747	0,44740	1067,92	5,2064	•	4,3210	62,9561	145,699	nov. 25.
	328,461	97,943	291,544	15,9266	0,33181	792,014	3,8614	•	3,2046	46,6910	108,057
Note: The rates listed are those at which Danmarks Nationalbank is under an obligation to sell and buy the respective currencies.

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Tabel 41
Exchange rates

Average	US- dollars (USD)	Pounds sterling (GBP)	D-marks (DEM)	Swedish kronor (SEK)	Nor- wegian kroner (NOK)	French francs (FRF)	Belgian francs (BEF)	Swiss francs (CHF)	Dutch guilders (NLG)	Italian lire (ITL)	Finnish markka (FIM)	Icelandic kroner (ISK)	Austrian schillings (ATS)	Spanish pesetas (ESP)	Por- tuguese escudos (PTE)	Canadian dollars (CAD)	Japanese yen (JPY)	Irish pounds (IEP)	Greek drachmar (GRD)	Australian dollars (AUD)	New Zealand dollars (NZD)	ECUs (XEU)	SDRs (XDR)	Nominel effective krone rate (1980=100)
	Kroner per. 100 units
1988	674 19	1197 70	383 34	109 84	103 29	113 02	18 315	460 23	340 61	0 5173	160 88	15 76	54 526	5 782	4 677	548 54	5 2567	1025 41	4 752	•	•	795 25	904 56	92 34
1989	731 51	1197 53	388 84	113 40	105 87	114 61	18 559	447 24	344 71	0 5330	170 46	12 92	55 257	6 177	4 645	617 96	5 3079	1036 38	4 506	•	•	804 55	936 69	90 23
1990	618 53	1102 04	382 89	104 50	98 85	113 65	18 523	446 16	339 84	0 5163	161 89	10 65	54 420	6 074	4 341	530 19	4 2846	1023 56	3 907	•	•	787 37	838 80	96 26
1991	640 34	1128 13	385 67	105 72	98 64	113 41	18 734	446 30	342 26	0 5158	158 32	10 87	54 811	6 157	4 429	559 29	4 7604	1030 27	3 514	•	•	791 55	874 70	94 56
1992	602 73	1062 91	386 53	103 94	97 15	114 02	18 775	429 85	343 29	0 4911	135 08	10 47	54 928	5 905	4 471	499 19	4 7606	1026 49	3 167	443 10	324 29	779 97	848 77	96 86
1993	649 45	974 42	392 31	83 33	91 38	114 47	18 760	439 43	349 23	0 4126	113 54	9 59	55 760	5 102	4 037	503 09	5 8736	949 92	2 828	440 77	351 63	758 19	906 68	99 90
1994	635 23	972 32	391 94	82 32	90 07	114 59	19 020	465 26	349 50	0 3939	121 96	9 08	55 711	4 746	3 831	465 51	6 2171	950 44	2 619	464 62	377 06	752 22	909 23	99 88
1995	560 53	884 61	391 13	78 65	88 45	112 30	19 010	474 22	349 17	0 3444	128 39	8 65	55 596	4 495	3 737	408 39	5 9799	898 54	2 420	415 80	367 64	724 60	849 63	103 90
1996	579 59	905 17	385 42	86 47	89 79	113 34	18 728	469 65	343 95	0 3758	126 31	8 69	54 783	4 578	3 759	425 08	5 3316	927 87	2 409	453 67	398 76	726 24	841 42	102 86
1997	660 86	1082 32	380 96	86 54	93 36	113 17	18 463	455 35	338 51	0 3879	127 27	9 31	54 135	4 511	3 769	477 44	5 4761	1001 55	2 419	490 90	437 20	746 26	909 13	99 78
1996 Jan.	565 25	864 75	386 83	84 08	88 10	112 97	18 819	479 37	345 43	0 3569	127 26	8 55	55 003	4 588	3 729	413 58	5 3513	894 80	2 351	418 95	373 91	713 63	829 70	104 12
Feb.	567 21	871 20	386 84	82 40	88 56	112 50	18 811	474 40	345 46	0 3606	124 61	8 56	55 006	4 591	3 722	412 24	5 3648	897 27	2 341	428 59	383 03	710 80	831 51	104 29
March	570 78	871 47	386 27	84 77	88 80	112 82	18 794	477 13	345 09	0 3651	124 05	8 60	54 924	4 587	3 731	417 99	5 3909	897 41	2 363	440 09	388 73	715 93	834 33	103 77
April	581 39	880 56	385 84	86 46	89 45	113 72	18 781	476 28	345 04	0 3712	122 72	8 70	54 862	4 626	3 758	427 87	5 4184	909 47	2 401	457 25	396 82	722 25	842 75	103 05
May	591 64	896 31	385 99	87 09	89 99	114 08	18 778	471 87	345 22	0 3800	124 37	8 79	54 856	4 626	3 757	432 20	5 5651	924 91	2 433	471 56	405 71	726 82	854 71	102 19
June	588 83	907 94	385 61	88 19	90 16	113 77	18 745	468 57	344 23	0 3819	126 13	8 76	54 794	4 572	3 745	431 24	5 4101	932 79	2 438	465 95	398 30	729 56	849 67	102 17
July	580 20	901 28	385 57	87 35	89 94	113 87	18 717	470 12	343 55	0 3800	126 47	8 70	54 789	4 566	3 749	423 86	5 3103	929 92	2 440	457 94	400 03	728 57	841 29	102 70
Aug.	573 00	888 28	386 58	86 57	89 39	113 22	18 762	476 39	344 62	0 3777	127 96	8 64	54 936	4 558	3 765	417 51	5 3128	923 13	2 419	448 79	394 80	727 16	835 72	102 98
Sept.	579 91	904 08	385 18	87 34	89 82	113 12	18 706	471 02	343 58	0 3814	127 79	8 68	54 742	4 569	3 771	423 40	5 2794	933 94	2 423	459 74	403 93	730 15	839 80	102 69
Oct.	585 85	928 47	383 41	88 76	90 34	113 37	18 614	465 71	341 77	0 3843	128 16	8 74	54 499	4 555	3 794	433 54	5 2172	942 26	2 443	463 86	410 61	734 52	843 53	102 31
Nov.	580 40	965 51	384 06	87 62	91 36	113 49	18 637	455 49	342 41	0 3835	127 57	8 76	54 577	4 562	3 799	433 68	5 1694	966 36	2 436	462 32	412 23	737 68	843 33	102 16
Dec.	593 93	988 45	382 70	87 05	91 84	113 26	18 568	447 55	341 07	0 3886	128 06	8 86	54 387	4 545	3 794	436 38	5 2184	986 56	2 423	473 78	419 19	738 49	854 16	101 81
1997 Jan.	611 71	1015 62	381 38	86 71	94 86	113 01	18 500	439 65	339 63	0 3904	128 23	8 96	54 208	4 544	3 815	453 19	5 1906	998 67	2 434	475 68	429 07	740 47	865 81	101 36
Feb.	638 25	1037 69	381 41	86 23	96 31	112 97	18 485	439 50	339 56	0 3858	128 32	9 06	54 198	4 503	3 797	470 97	5 1935	1013 06	2 434	489 76	441 08	740 47	883 64	100 76
March	647 60	1038 89	381 48	84 52	94 93	113 08	18 490	441 79	338 97	0 3819	127 60	9 11	54 202	4 497	3 796	472 67	5 2859	1012 24	2 425	510 42	451 76	740 49	891 84	100 87
April	651 44	1061 70	380 95	84 82	93 46	113 11	18 464	445 70	338 75	0 3848	127 04	9 15	54 126	4 512	3 797	467 46	5 1890	1010 87	2 410	507 36	451 08	743 29	893 62	100 73
May	648 62	1059 00	380 81	84 46	91 78	112 92	18 450	453 13	338 59	0 3854	126 26	9 21	54 106	4 512	3 781	469 89	5 4566	982 27	2 388	502 40	448 56	742 29	898 76	100 59
June	657 42	1081 21	380 79	84 87	91 14	112 81	18 453	456 10	338 46	0 3879	127 10	9 34	54 109	4 507	3 770	474 78	5 7574	991 68	2 403	495 40	451 93	744 15	914 29	99 82
July	682 04	1139 99	380 85	87 33	91 64	112 88	18 449	460 52	338 24	0 3911	128 50	9 59	54 128	4 515	3 772	495 37	5 9222	1020 92	2 428	506 30	451 80	751 17	939 36	98 25
Aug.	701 77	1125 18	380 95	87 79	91 97	113 03	18 449	463 39	338 22	0 3900	127 40	9 66	54 137	4 509	3 760	505 39	5 9510	1018 85	2 431	520 20	450 62	749 72	950 24	98 06
Sept.	681 36	1089 99	380 75	88 42	93 07	113 26	18 445	462 62	338 07	0 3901	127 20	9 51	54 104	4 513	3 748	491 23	5 6427	1008 84	2 415	493 03	433 23	746 95	926 37	98 89
Oct.	669 02	1091 57	380 77	88 38	94 51	113 50	18 459	460 74	337 97	0 3887	127 02	9 36	54 100	4 511	3 739	482 75	5 5296	982 89	2 418	482 57	425 36	748 32	916 48	99 20
Nov.	659 45	1112 61	380 62	87 19	93 41	113 67	18 453	468 58	337 71	0 3885	126 31	9 28	54 080	4 507	3 729	466 91	5 2696	990 71	2 425	458 70	411 71	753 06	906 13	99 68
Dec.	677 16	1124 82	380 89	86 96	93 42	113 78	18 462	470 50	337 99	0 3885	126 05	9 44	54 132	4 504	3 727	474 93	5 2341	986 83	2 422	448 94	401 13	753 65	916 96	99 40
Note: Apart from SDRs, the exchange rates listed are fixed on the basis of market rates at 11.30 a.m. Until end-1991 the exchange rates listed are middle rates quoted in Copenhagen. The SDR rate is calculated on the basis of the market rates of the currencies included in the basket.

 

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Footnotes

¹⁾ The Austrian schilling has only participated in the EU's exchange-rate system since 1995. Before 1995 it was pegged to the D-mark.

²⁾ The development in interest and exchange rates in the UK and Sweden is described in "International Capital Markets".

³⁾ Reasons for the yield differential between government and mortgage-credit bonds are described in an article in the Monetary Review - 4th Quarter 1997.

⁴⁾ Excluding 5-, 10- and 20-krone notes and Faroese banknotes.

⁵⁾ The new exchange-rate mechanism differs from the existing ERM in that bilateral central rates and fluctuation bands are fixed only between the participating currencies and the euro, whereas in the existing ERM mutual central rates and fluctuation bands are fixed between all the participating currencies.

⁶⁾ The deposit will constitute between 0.2 and 0.5 per cent of a country's GDP.

⁷⁾ The monetary-policy strategies are described in the article "Policy Strategy in the Third Stage of EMU" in the Monetary Review, November 1996, and in the EMI report "The Single Monetary Policy in Stage Three. Elements of the monetary strategy of the ESCB", February 1997.

⁸⁾ A description of the monetary-policy instruments is given in the EMI report "The Single Monetary Policy in Stage Three. General documentation on ESCB monetary policy instruments and procedures", September 1997.

⁹⁾ The EEA comprises the EU member states and Norway, Iceland and Liechtenstein.

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	Version 1.0 May 1998 Nationalbanken. Published by Danmarks Nationalbank May 1998, http://www.nationalbanken.dk