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 Banking crisis
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During the boom in the first years of the 20th century Copenhagen was subject to major speculative expansion in the building sector. To a great extent the investments were financed with short-term foreign loans. In 1907 financial turbulence abroad led to the revocation of the loans and a currency shortage, and several Copenhagen banks began to flounder. At the same time Danmarks Nationalbank had to raise the discount rate significantly from 6 to 8 per cent. This led to a serious banking crisis in 1908, when Danmarks Nationalbank and the state embarked on a prolonged reconstruction. The crisis led to the appointment of a commission in 1910 to prepare proposals for regulation of the banks. However, the Banking Act was not implemented until 1919.
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