Roles and cooperation on financial stability


Several other authorities and organisations than Danmarks Nationalbank contribute to promoting financial stability in Denmark. Therefore, Danmarks Nationalbank works closely with other national and international authorities and organisations on financial stability and management of financial crises.

Stability in the financial sector is crucial to the overall economy. One of Danmarks Nationalbank's main tasks is to monitor and assess financial stability in Denmark with focus on the overall financial system. It is not Danmarks Nationalbank's task to supervise individual financial institutions. In Denmark, this task is undertaken by the Danish Financial Supervisory Authority.

Cooperation

Some of Danmarks Nationalbank's key cooperation partners on financial stability in Denmark are the Ministry of Business and Growth, the Ministry of Finance and the Danish Financial Supervisory Authority. Add to this the Financial Stability Company, which was established for the purpose of handling distressed banks. In future, the Financial Stability Company, in an adjusted form, will undertake the task of national resolution authority. Danmarks Nationalbank's cooperation with other authorities on financial stability is i.a. under the auspices of the Systemic Risk Council and the Coordination Committee on Financial Stability.

The Systemic Risk Council has according to legislation 10 members: two from Danmarks Nationalbank, two from the Danish Financial Supervisory Authority, three from the economic ministries as well as three independent experts with knowledge of financial matters. Danmarks Nationalbank chairs the Systemic Risk Council and, together with other national authorities, acts as secretariat for the council. It is the task of the Systemic Risk Council to monitor, identify and contribute to limiting systemic risks.

The Coordination Committee on Financial Stability consists of representatives from the Ministry of Business and Growth, the Ministry of Finance, the Danish Financial Supervisory Authority and Danmarks Nationalbank, and the Prime Minister's Office and the Financial Stability Company often participate. The Ministry of Business and Growth chairs the committee. The cooperation aims to maintain financial stability and coordinates the partners' management of any financial crises.

Together, Danmarks Nationalbank, the Danish Financial Supervisory Authority, the Danish Bankers Association and the Association of Danish Mortgage Banks have established the Financial Sector Emergency Communication System. In addition to the founding members a number of banks and mortgage banks as well as VP Securities and Nets Denmark A/S participate in the emergency communication system. Danmarks Nationalbank chairs the Financial Sector Emergency Communication System. The purpose of the emergency system is to coordinate communication in the event of a major operational disruption with threatening collapse of the financial system.

Cooperation with international authorities
Danmarks Nationalbank collaborates on financial stability with the authorities in other countries. Cross-border banking activities and establishment of banks entail the risk that a financial crisis in one banking group may affect financial stability in several countries. Consequently, the Nordic and Baltic authorities have signed cooperation agreements. Likewise, agreements on cross-border financial stability have been signed by the authorities in the EU member states. The agreements define the framework for Danmarks Nationalbank's cooperation with these authorities on financial stability and crisis management.

Danmarks Nationalbank is a member of the European Systemic Risk Board, ESRB. It is the task of the ESRB to monitor, identify and contribute to limiting systemic risks across EU. Danmarks Nationalbank contributes to the work of the ESRB through active participation in relevant committees and working groups. In addition, Danmarks Nationalbank participates as an observer in the main decision-making body of the European Banking Authority, EBA.

KEY COOPERATION PARTNERS

Danmarks Nationalbank is a member of:

The Systemic Risk Council
The European Systemic Risk Board, ESRB
The European Banking Authority, EBA
 

In addition, Danmarks Nationalbank collaborates with the following authorities on issues of relevance to financial stability and financial crisis management:

Danish Financial Supervisory Authority
Ministry of Business and Growth
Ministry of Finance
The Financial Stability Company