Engelsk

This paper studies Danish firms' debt financing decisions during covid-19 with a focus on the impact of government support measures. Credit growth has been modest during the pandemic. Public liquidity measures such as deferred tax and VAT payments served as a substitute for more traditional debt funding sources.

We analyse the role of nonbank lenders in corporate and consumer credit markets in Denmark and show that they affect the transmission of monetary policy to financial and real outcomes. Nonbanks increase their share of credit supply after an interest rate hike in both the consumer and corporate credit markets.

Foreign investors' holdings of 30-year fixed-rate callable mortgage bonds have declined from 41 per cent to 37 per cent since mid-2020. The decline is counteracted by the fact that their ownership share of other fixed-rate callable mortgage bonds has increased from 17 per cent to 20 per cent in the same period.

At the end of October, Danish companies had deposits for kr. 467 billion in the banks. At the same time, they had bank debt for kr. 435 billion. The deposits thereby exceed the debt by kr. 32 billion. This continues the trend since May 2020, where the deposits exceeded the debt for the first time.

At the conference convened by the European Economics and Financial Centre on 23 November 2021, Governor Lars Rohde shared his thoughts on why the Danish economy has fared relatively well through the pandemic so far. The Danish economy is now operating above its potential, and is expected to find a balanced trajectory over the coming years, as current pressures are believed to be partly transitory.

On 23 November, Assistant Governor Thomas Harr participated in a panel discussion on the covid-19 recovery, fiscal and monetary policy and the outlook for inflation. In the presentation, it is argued that there are large differences between the US and the euro area, while Denmark is a special case. Inflation expectations and wage developments will be the key determinants of inflation in the coming years – both in Denmark and abroad.

On 22 November, Governor Lars Rohde gave a presentation at the PwC banking seminar (PricewaterhouseCoopers) 2021. The presentation was about the current state of the Danish economy and the Danish banking sector. The Governor also pointed out signs of risk build-up in the financial system and the need to improve the resilience of the housing market. Moreover, the Governor addressed the European Commission's proposal for revised capital requirements, which offers several improvements.

The Faroe Islands are experiencing widespread labour shortages, due to very low unemployment and an already high labour market participation rate. At the same time, the continued boom is supported by improved export prospects. Long-term fiscal planning will improve the resilience of the Faroese economy. Capital should be set aside in good times to draw upon in bad. With the ageing of the Faroese population, balance between expenditure and revenue is also important.