Examples of specific tasks performed by Financial Stability:
Oversight of systemically important payment systems and payment solutions.
Contribution to development of payments infrastructure.
Analysis of banks, mortgage credit institutions, insurance and pension companies and their customers, including households and businesses.
Development and use of models for analysis of risks in the financial system.
Analysis of and development in financial sector digitalisation and central bank digital currency.
Analysis and policy in the retail payments area.
Regulation and pre-legislative work in the financial area.
Director and Head of Department Peter Ejler Storgaard answers three questions about the work in Financial Stability:
How do you contribute to Danmarks Nationalbank’s work to ensure a robust economy?
“One of Danmarks Nationalbank’s primary tasks is to ensure stability in the financial sector so that any problems for a single bank or financial institution do not spread and prevent the functioning of the financial system. In our department, we therefore continuously oversee and assess financial stability in Denmark, including through analyses of the financial sector and systemic risks.
In addition, we contribute to Danmarks Nationalbank’s work to ensure safe and efficient payment systems. Finally, we contribute to a robust economy through our work as secretariat for three of the councils and forums in which Danmarks Nationalbank participates: the Systemic Risk Council, the Danish Payments Council and the Financial Sector Forum for Operational Resilience (FSOR).”
What makes your area particularly exciting?
“Through our analyses and collaboration with the sector, we acquire in-depth knowledge of and insight into conditions and dynamics in the financial sector and how it interacts with the rest of the economy. Build-up of systemic risks, which is our focus area, is not something you can just look up in a table and predict down to three decimal places. Therefore, much of our work also involves exploring, understanding and discussing the possible significance of developments with our colleagues from other departments at Danmarks Nationalbank, with representatives of the financial sector and with both national and international authorities.
Another task that promotes job satisfaction among our staff is our work with the payment systems from which all Danes benefit every single day, with Danmarks Nationalbank running the very heart of the system: Kronos2. In our department, we are also responsible for the highly special and important task of increasing resilience against cyberattacks which, in a worst-case scenario, can threaten the stability of the financial sector.”
What opportunities and challenges are there in your area?
“At Danmarks Nationalbank, we work to ensure that we can handle the challenges of the future. This also applies to climate change, where we can see that, for example, droughts or floods can pose a risk to financial stability. At the same time, the transition to a greener economy may affect businesses through, for example, a drop in the value of energy-intensive assets, increased costs and poorer earnings. For the banks that have lent money to the affected businesses, this results in an increase in the risk on their loans to these businesses.
Digitalisation also entails new opportunities, for example in the way we pay for goods and transfer money to each other. Therefore, we also closely monitor developments in the area of new types of digital money and payment solutions. This is an exciting development that will be of significance to the Danish population and affect Danmarks Nationalbank’s tasks.”