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.
The secured money market is an integral part of financial markets
Every day, financial market participants exchange liquidity secured against bonds through repo agreements for around kr. 45 billion on the secured money market. The market is used daily by investment funds and insurance and pension companies for liquidity management and, for some, also to leverage investments. By the end of February 2025, the banks had outstanding loans in repo agreements totalling approximately kr. 440 billion net and are thus key players in the market. In addition, banks use the market to exchange Danish government and mortgage bonds with each other as part of market-making in the bonds.
Key messages
Why is it important?
A well-functioning secured money market in Danish kroner is an integral part of the financial markets in Denmark. Banks and other market participants use the secured money market to exchange liquidity and security in the form of bonds. A well-functioning secured money market also contributes to the transmission of Danmarks Nationalbank's monetary policy interest rates to money market rates.
Since January 2023, Danmarks Nationalbank has collected information on the daily transactions of secured money market loans, also known as repo agreements, from the nine banks with the largest presence in the Danish money and foreign exchange markets. The information is used by the bank to monitor the efficiency of the money market and analyse risks to financial stability in Denmark.
Main chart
Investment funds and insurance and pension are the largest borrowers in the secured money market
Note:
The chart shows the distribution of the reporting banks' counterparties in repo agreements in DKK excluding intra-group agreements. Insurance and pension comprises Danish insurance and pension companies.
Source:
Danmarks Nationalbank and own calculations.