Analyses focus on current issues of particular relevance to Danmarks Nationalbank’s objectives. The analyses may also contain Danmarks Nationalbank’s recommendations. They include our projections for the Danish economy and our assessment of financial stability. Analyses are targeted at people with a broad interest in economic and financial matters.
Systemic risks in credit institutions and the economy
Systemic risks are vulnerabilities or imbalances in financial and non-financial companies and households that can have serious consequences for society if they develop without being addressed. If systemic risks materialise, households and businesses may not be able to get loans to finance property or investments, which can exacerbate an economic downturn. The analysis describes what systemic risks are, what consequences they can have and how they can be identified.
Key messages
Why is it important?
Systemic financial crises are associated with high costs to society. This can be reflected in significant losses in the financial sector, a sharp decline in investment and consumption, and rising unemployment. Since the financial crisis, there has been increased focus in Denmark and abroad on limiting systemic risks and the risk of financial crises. To fulfil this task, it is important to understand which risks can have serious consequences for the financial sector and society – and thus constitute a systemic risk. If authorities can identify systemic risks early enough, they are better placed to address them – ensuring financial stability and a robust economy.
Main chart
Systemic risks can build up over time, with significant consequences for the economy
