Economist/Senior Economist/Adviser

Danmarks Nationalbank, the central bank of Denmark, has established in 2017 an independent research unit with the aim of conducting research in macroeconomics, finance and banking, monetary and international economics and macroeconometrics, and developing economic models and tools to support Danmarks Nationalbank's policy decisions.

Banks' credit standards are unchanged for corporate customers

In Danmarks Nationalbank's lending survey for 3rd quarter 2018, banks report that credit standards are unchanged for corporate customers. At the same time, prices are decreasing due to the level of competition.

Foreign Exchange and Liquidity and Monthly Balance Sheet, September 2018

​In September 2018, the foreign-exchange reserve decreased by kr. 29 million to kr. 467.9 billion.

The costs of payments have fallen

The Danish Payments Council has surveyed the social costs of payments in Denmark. The social costs of payments between households and businesses have almost halved in seven years. No methods of payment have become more expensive, neither in physical nor in non-physical trade , and Danish households have access to several methods of payment with low social costs. The aggregate social costs for all types of payment were kr. 15.6 billion in 2016.

Danes deselect bonds

Households deselected to invest directly in Danish bonds during the past decade. In August 2018 investments in bonds amounted to kr. 35 billion corresponding to 4 per cent of the total stock of securities.

The pension sector holds kr. 1,879 billion worth of shares and bonds abroad

The pension sector holds foreign portfolio investments in shares and bonds worth kr. 1,879 billion. This corresponds to around kr. 400,000 for every adult Dane. The foreign portfolio investments account for a little more than half of the sector's total holdings of securities.

From foreign debt to large wealth in ten years

Since the financial crisis ten years ago Denmark has built up a considerable international net wealth position which amounted to kr. 1.390 billion in the 2nd quarter of 2018. This corresponds to 65 per cent of GDP and places Denmark as one of Europe's creditor nations. In contrast, Denmark had a foreign net debt corresponding to 8 per cent of GDP in the 2nd quarter of 2008.

Savings-eager danes

The financial net worth of Danish households – the difference between their financial assets and debt – increased by kr. 46 billion in the 1st half of 2018. This corresponds to an increase of kr. 17,000 for the average household, which now has a financial net worth of approximately kr. 1.42 million.

Ten years of fall in interest rates on mortgage loans

Interest rates on Danish mortgage loans have fallen since 2008. From an average interest rate including administration fee of close to 6 per cent in 2008 to under 2.2 per cent in August 2018. This is the lowest level since the beginning of the statistics in 2003.

30 per cent of mortgage loans are now with fixed rate and repayments

The proportion of fixed rate mortgage loans with repayments for owner-occupied housing and vacation homes reached almost 30 per cent by the end of August 2018. This is the highest share for this mortgage type since 2009.

Payments between households and firms have become significantly cheaper

​In 2016, social costs of payments between households and firms made up approximately kr. 11 billion, corresponding to 0.5 per cent of GDP. This is almost a 50 per cent reduction compared to 2009.

A balanced Danish economy during the boom

The Danish economy is now experiencing one of the longest periods of continuous growth. The upswing has been healthier and more balanced than it was in the mid-2000s, where the economy overheated. Although labour market pressures currently exist, they are not as strong as then. The economy may continue to expand without any imbalances, but experience also shows that it can overheat suddenly and violently.

Outlook for the danish economy - Boom with no signs of imbalances

The boom in the Danish economy continues, with robust growth and rising employment. Average growth in real GDP in 2017-18 is forecast at 1.8 per cent, with similar levels the next two years. Labour market pressures are mounting, and wage growth has accelerated a little. There is room for this in the economy. In good times it is important to prepare for the period after a cyclical reversal. Fiscal policy should contribute to a continually balanced upswing and should not stimulate demand further. Dampening of growth towards the end of the boom does not call for special economic policy measures.

Monetary and financial trends - September 2018

The krone has been stable, and it is the longest period without interventions in the currency market since adopting the fixed exchange rate regime in 1982. The ECB continues to normalise its monetary policy and expects to end net purchases of bonds after December 2018. In recent years, Danish households have shifted to loans with lower interest rate risk and loans with amortisation. This makes their disposable income less sensitive to interest rate changes.

Financial conditions are supporting the upswing

Housing and equity prices have increased significantly in recent years, while interest rates are exceptionally low. Based on a structural vector autoregressive model, these factors, combined with credit growth, are overall estimated to have contributed 0.3-0.5 percentage points per year to year-on-year GDP growth since 2016. In recent years, the contribution has been at its highest level since prior to the financial crisis in 2008. Financial conditions are expected to continue to stimulate economic growth during the 2018-20 forecast period.

The Danish economy is growing without signs of considerable imbalances

​The Danish economy is now experiencing one of the longest periods of continuous growth, and it has taken place without considerable imbalances building up. Since the spring of 2013, month after month more people have entered the labour market and unemployment has fallen. This has reinforced labour market pressures. Overall, employment has risen by 200,000 people, helped by previously adopted reforms and an influx of foreign labour.

The labour market is slowly tightening

The Danish labour market is faced with mounting capacity pressures, but is still not showing signs of overheating. The impression, based on a broad range of indicators, is one of balanced labour market developments so far during the upswing. Viewed in isolation, a change in the demographics of the working age population has reduced the labour supply since 2008. This emphasises the need for foreign labour to support the labour demand of the upswing.

Speech by Governor Per Callesen at Finance Denmarks Executive Conference

Speech by Governor Per Callesen at Finance Denmarks Executive Conference, 3 September 2018.

Cyber resilience in the financial sector

​Most of the key players in the financial sector assess that they have raised their levels of cyber resilience since 2016. A Few have not improved their level. That is the conclusion of a questionnaire survey which follows up a similar survey conducted in 2016.

Cyber resilience in the financial sector

Most of the core financial sector participants report that their levels of cyber resilience have been raised compared to 2016. A few core participants have not improved their level. That is one of the findings of a questionnaire survey conducted by Danmarks Nationalbank.

Foreign Exchange and Liquidity and Monthly Balance Sheet, August 2018

​In August 2018, the foreign-exchange reserve decreased by kr. 174 million to kr. 467.9 billion.

Very low level of payment card fraud in shops, but change in pattern

In the 2nd quarter of 2018, the level of fraud with Danish payment cards in Danish shops was very low. The level has been low and stable over time. The number of frauds was 3,603 and amounted to kr. 3.2 million.

Today's delay of salary and transfer income payments

​The cause was a specific configuration setting in Danmarks Nationalbank's IT system Kronos.

Fixed rate mortgage bonds are attractive for foreigners

Foreign investors owned Danish fixed rate mortgage bonds for kr. 295 billion at the end of July 2018. This corresponds to 29 per cent of the total amount of the bonds. Foreign investors' interest in these bonds has been steadily increasing since the beginning of 2016 where they owned for kr. 154 billion, corresponding to 18 per cent.

Corporate bonds target foreign investors

In July 2018, Danish non-financial corporations had issued bonds for kr. 197 billion. Bonds issued in foreign currency amounted to 95 per cent and bonds issued in Danish kroner to 5 per cent. Compared to the total outstanding amount, bonds issued in euro have increased through the last decade. In July 2018, 65 per cent of the total amount was issued in euro compared to 50 per cent in July 2008.

MREL for mortgage banks reduces funding needs in times of crisis

Danmarks Nationalbank's calculations show that the mortgage banks' total funding need in periods of diving house prices will be smaller with an MREL than without an MREL. This is because an MREL will increase the mortgage banks' funding need in normal times, thereby ensuring that they are better prepared for periods of falling house prices and an increasing top-up collateral requirement. This will make the funding needs of the mortgage banks less sensitive to house price fluctuations.

How has Denmark managed since the financial crisis?

Growth in Danish real gross national product, GDP, has been low compared to several of our neighbouring countries since the financial crisis in 2008. This is not attributable to Denmark's fixed exchange rate policy vis-à-vis the euro. The Danish prosperity development has been in line with the countries we normally compare with.

Danmarks Nationalbank's new payment system for the financial sector has gone live

​This weekend Danmarks Nationalbank replaced the most critical payment system of the Danish financial infrastructure, and Monday 20 August is the first banking day with the new system.

Foreign Exchange and Liquidity and Monthly Balance Sheet, July 2018

​In July 2018, the foreign-exchange reserve decreased by kr. 60 million to kr. 468.1 billion.

Private investors own one third of the total UCITS market

By the end of June, Danish private investors held UCITS investment fund shares corresponding to kr. 338 billion, or one third of the total UCITS market value of kr. 958 billion.

Danish investors bought both foreign shares and bonds

Danish investors have for a rather long time increased their stock of foreign shares. Hence, in the first half of 2018 they bought foreign shares etc. for kr. 59 billion. Since the beginning of 2016, they have bought shares etc. worth kr. 232 billion.

No return on stock market in first half-year

Danish listed stocks generated a return, including dividends, of 0 per cent during the first half of 2018. Overall, stock prices have fallen by 1.8 per cent. In contrast, the stock market decline offsets by large dividends.

History of bank lending and deposit rates

Since the second half of the 19th century, the average bank deposit and lending rates have varied considerably. However, common for both rates is that they peaked in 1980 at 12 and 20 per cent, respectively. Today, the two interest rates are at a record low level at close to 0 and 3.5 per cent, respectively.

The foreign exchange reserve in 200 years

For 200 years, one of Danmarks Nationalbank's main objectives has been to ensure stable prices – an objective which has been fulfilled through the fixed exchange rate policy since the 1980's. Historically, the fulfilment of the objective is reflected in the composition of the foreign exchange reserve.

The pension sector in a historical perspective

The assets managed by Danish insurance and pension organisations are rapidly approaching 200 per cent of Denmark's gross domestic product, GDP. Over the last 40 years, pension funds have grown into a major role in the financial sector and the Danish economy. A role, that in a historical perspective has been dominated by banks and mortgage institutions.

Competitors' behaviour affects the banks' credit standard

In Danmarks Nationalbank's lending survey 2nd quarter 2018, 6 out of 17 responding banks report that the behaviour of competitors has contributed to an easing of their credit standards for corporate customers.

Denmark's international investment position at kr. 1,239 billion

Denmark's international investment position, IIP, was kr. 1,239 billion at the end of the 1st quarter of 2018. This corresponds to 57 per cent of GDP. The IIP is the value of Danish foreign assets worth kr. 6,713 billion less the value of Danes' external liabilities of kr. 5,474 billion.

Why is nominal wage growth so low?

Nominal wage growth has been low since 2010, albeit with decent real wage growth in recent years. This also applies to Denmark’s most important export markets, e.g. Germany. A lower average replacement ratio for unemployment benefits and weak inflation have been contributing to low nominal wage growth in Denmark since 2013.

Speech by Governor Lars Rohde at the 200th anniversary of Danmarks Nationalbank in 2018

Speech by Governor Lars Rohde at the 200th anniversary of Danmarks Nationalbank 4 July 2018.

Anniversary publication: Danmarks Nationalbank 1818-2018

Danmarks Nationalbank’s 200-year history has been characterised by long periods of a robust economy, but also by dramatic episodes during which the stability of prices, payment systems and the financial sector have been jeopardised. This anniversary book provides a brief overview of Danmarks Nationalbank’s 200-year history, stressing the elements that are particularly relevant for today’s readers.

Anniversary booklet: Danmarks Nationalbank 200 years

Danmarks Nationalbank is the central bank of Denmark. It was established 200 year ago. In this booklet you can read more about the main objectives of Danmarks Nationalbank. Back in 1818, it was a series of dramatic events that led to the establishment of Danmarks Nationalbank. The Napoleonic wars and the galloping inflation made it imperative to secure the currency system and place the responsibility for issuing banknotes with an independent institution. Today, Danmarks Nationalbank's tasks are mainly to ensure trust in the systems that enable the transfer of money between people. It is to oversee the stability of the financial sector and ensure stable prices via the fixed exchange rate policy. With the ultimate objective of ensuring a robust Danish economy.

Foreign Exchange and Liquidity and Monthly Balance Sheet, June 2018

​In June 2018, the foreign-exchange reserve decreased by kr. 3 million to kr. 468.1 billion.

Low interest rates boost bank deposits

Citizens' bank deposits have increased substantially since 2011, currently accounting for 60 per cent of GDP. This is a natural development in view of the growth of the Danish economy and the narrower spread between bond yields and bank deposit rates. This means that citizens suffer a small interest rate loss only by holding deposits with banks at low or zero interest rates rather than holding bonds.

Refinancing needs significantly reduced

Mortgage bonds totaling kr. 562 billion will be refinanced in 2018. This is a significant decline since 2013, where bonds worth kr. 1,029 billion were refinanced. The recurring refinancing needs arise from the popular adjustable-rate mortgages and mortgages covering loans with reference rates.

Danish investors sold German government bonds in May

In May 2018, Danish investors sold German government bonds worth kr. 15.5 billion, while they bought government bonds from other euro area countries totalling kr. 6.9 billion. They bought other bonds from euro area countries worth kr. 0.7 billion.

Business deposits for kr. 450 billion get negative interest

Deposits with negative interest have become common among Danish banks and for many of their financial and non-financial business customers. In April 2018, deposits with negative interest rates amounted to kr. 450 billion.

Record low interest rates on private customers' deposits

The average interest rate on ordinary bank deposits from Danish private customers is now 0.08 per cent – the lowest rate ever. Ordinary deposits characterise deposits which can be withdrawn without notice or used as a means of payment.

Capital requirements for banks - myths and facts

Capital requirements increase the banks' ability to absorb losses, thereby contributing to the robustness of the banking system. The first part of the analysis looks at the significance of equity capital to banks' weighted funding costs and their ability to meet increased capital requirements. The second part of the analysis describes three new requirements for the banks' composition of liabilities: the countercyclical capital buffer, the minimum requirement for own funds and eligible liabilities, and the completion of Basel III.

Increasing equity by one krone does not cost one krone

The banks should have larger buffers so that they are more resilient in an economic crisis, which typically leads to losses on lending. That is why the banks have been met by stricter capital requirements since the financial crisis. From time to time it has been indicated that higher capital requirements will cost the banks an equivalent sum. That is not correct, Danmarks Nationalbank points out.

Danmarks Nationalbank hosts exhibition about its first 200 years

PhD Thesis: Essays on Debt and Pensions

The dissertation constitutes three empirical studies on how household savings behaviour is affected by pension and mortgage systems. Specifically, the thesis investigates the effects of tax incentives for saving in retirement accounts, housing wealth effects on home equity extraction, and early withdrawals from pension schemes.

Central government borrowing strategy in the 2nd half of 2018

The targets for sales of government bonds and the outstanding volume of T-bills are maintained at kr. 65 billion and kr. 30 billion, respectively, in the 2nd half of 2018. The expected average sale of government bonds per auction is around kr. 2.5 billion at market value. The on-the-run issues will remain unchanged and focus will be on issuance in the 2-year and 10-year nominal bonds.

Speech by Governor Lars Rohde at the VL Summit 7 June 2018

Speech by Governor Lars Rohde at the VL Summit, 7 June 2018.

Foreign Exchange and Liquidity and Monthly Balance Sheet, May 2018

​In May 2018, the foreign-exchange reserve increased by kr. 0.7 billion to kr. 468.1 billion.

Payment app tech triggers drop in Danish e-commerce

Use of Danish payment cards in Denmark decreased by 0.1 per cent in the 1st quarter of 2018 compared to the 1st quarter of 2017. Behind this modest decrease is a sharp 20 per cent drop in the point of use category e-commerce, etc. A drop caused by technical changes in the processing of transactions through the Danish payment app MobilePay. However, nothing indicates a real drop in Danish e-commerce.

Lengthy period of increasing risk appetite in parts of the banking sector

The times are good for the financial sector and the risk appetite is high. Credit standards are under pressure and have been eased for quite a while. Especially the medium-sized banks have been easing credit standards and have started gaining market shares. It is essential that the competitive pressure does not ultimately affect the risk appetite of the banking system overall. This development underscores the importance of having well-capitalised banks and of building up the countercyclical capital buffer so that the institutions have funds to mitigate the effects when the economy reverses.

Danmarks Nationalbank's comments on the Danish Economic Council's discussion paper, spring 2018

Private investors count on large foreign companies

Since the beginning of 2017, Danish private investors have directly invested in selected foreign shares worth kr. 6 billion. Their ten largest investments in foreign companies amounted to almost half of their total investments.

Large dividend payments to banks' shareholders

Danish listed banks have paid out kr. 11.5 billion in dividends in the first four months of the year. This is more or less the same as for the corresponding period last year. The dividends relate to the financial year 2017 and are typically paid out in relation to the general assemblies in March and April 2018.

Strong pressure on banks' credit standards

The favourable developments in the financial sector continue, and the banks have significant capacity to increase lending. Combined with limited growth in demand for loans, this has intensified the banks’ competition for customers. This means that there is a basis for the banks to lower their credit quality and ease credit conditions.

Increasing risk appetite in parts of the banking sector

​The medium-sized banks have been easing credit standards for corporate customers for quite a while, and lending growth is high in some medium-sized banks. That is the conclusion in Danmarks Nationalbank's Financial Stability analysis.

The largest banks are close to buffer requirements in stress test

Danmarks Nationalbank's semiannual stress test of the banking sector shows that the largest banks generally satisfy their buffer requirements in a severe recession scenario. The mortgage banking sector is for the first time included in the stress test, which now focuses on the banks' capital adequacy at the group level.

A year and a half with unchanged administration fees

The administration fee on Danes' mortgage loans was, on average, 0.88 per cent in April 2018. It is slightly lower than when it peaked in October 2016, where the latest changes in the fees had an impact. The minor decrease since October 2016 has happened as more Danes have chosen loans with fixed interest rates and / or instalments.

Danes now have kr. 870 billion deposited in banks

The bank deposits placed by Danish private customers continue to increase. In March and April alone deposits increased by kr. 22 billion, among other things due to large pay-outs from dividends, excess tax, and holiday pay.

Working Paper: Can Central Banks Boost Corporate Investment: Evidence from the ECB Liquidity Injections

Can monetary stimulus boost corporate investment? We answer this question by studying ECB's 2011-2012 Longer-Term Refinancing Operations (LTROs). While we find that the LTROs helped to decelerate the declined in Eurozone firms' investment our results also show that banks' use of LTRO funds is negatively associated with their clients' investment. Overall, the paper highlights the difficulty of boosting investment by injecting liquidity into the banking system.

Assessment of the Danish retail payment systems

Danmarks Nationalbank oversees payment and settlement systems in Denmark in order to promote a safe and efficient financial infrastructure. Danmarks Nationalbank has performed an assessment of whether the Danish retail payment systems observe international standards for payment systems. The assessment shows that the systems extensively observe the security and efficiency requirements. Nevertheless, Danmarks Nationalbank recommends improvements in a number of areas.

Governor Lars Rohde's statement regarding the Danish FSA's decision concerning Danske Bank's management and control in the Estonian money laundering case

Foreign Exchange and Liquidity and Monthly Balance Sheet, April 2018

​In April 2018, the foreign-exchange reserve increased by kr. 0.6 billion to kr. 467.5 billion.

Small decline in foreign ownership of Danish government securities

Foreign investors owned 38 per cent of Danish government securities in March 2018. It is a decrease compared to February where the ownership share was 42 per cent. Over a longer period of time, foreign investors' ownership share of Danish government securities has been stable around 40 per cent.

Large share repurchases among listed companies

Share repurchase programmes are popular among large listed companies as means of distributing income to investors. Danish companies have repurchased shares worth kr. 42.6 billion since last year's annual general meetings in March and April. Over the past ten years kr. 260.1 billion have been returned to investors in share repurchases.

Oversight of the financial infrastructure

This report presents the conclusions of Danmarks Nationalbank's oversight in 2017 of the core payment and settlement systems in Denmark and the most important payment solutions. The core systems and solutions extensively comply with international standards for efficiency and security, though there is still room for improvement. Cyber risks and risks arising from interdependencies remain a focus of Danmarks Nationalbank's oversight. Not all systems have made the same headway in the work regarding cyber security. This work is also carried out at sector level.

Housing loans have never been cheaper

The average interest rate incl. administration fees on Danish housing loans declined to 2.19 per cent in March 2018. This is the lowest level ever recorded. Housing loans comprise credit from mortgage institutions and banks, primarily collateralized by real estate.

Fixed-rate loans are gaining ground

Danes' have moved further towards of fixed rate loans. In all 98 municipalities, the proportion of mortgage loans with fixed rate has increased in the recent year. The movement towards fixed rate has been most significant outside the larger cities.

Tighter credit standards for housing loans

Almost half of the credit institutions in the lending survey report tightening of credit standards for private customers in the 1st quarter of 2018.

Speech by Governor Lars Rohde at Finance and Consulting Club Aarhus

Speech by Governor Lars Rohde at Finance and Consulting Club Aarhus, 4 April 2018.

Foreign Exchange and Liquidity and Monthly Balance Sheet, March 2018

​In March 2018, the foreign-exchange reserve decreased by kr. 80 million to kr. 466.9 billion.

Increased interest rate sensitivity in the mortgage market

By the end of February, an interest rate increase of 1 per cent would result in an estimated depreciation of kr. 60 billion in the market of fixed mortgage bonds with an embedded option. This was the highest interest rate sensitivity in over two years.

Market fluctuations had large impact on the IIP in 2017

Denmark's international investment position, IIP, rose by kr. 31 billion in 2017 to kr. 1,169 billion. The balance of payments surplus of kr. 165 billion added to the IIP while negative value adjustments of kr. 134 billion exerted a drag.

Households' average financial net wealth is kr. 1.4 million

Danish households' financial net wealth – the difference between financial assets and liabilities – reached kr. 3,750 billion by the end of 2017. This corresponds to approximately kr. 1.4 million per household, which includes both sole proprietors and employees etc.

The Danish economy is well prepared for a boom

The Danish economy is well prepared for the boom that it is now entering. The economy may continue to expand without any imbalances, but experience also shows that it can overheat suddenly and violently.

Outlook for the Danish economy - Moderate boom in the coming years

The upswing continued in the 2nd half of 2017 and the Danish economy has entered a boom phase with mounting pressures on the labour market. The expansion has been balanced so far, partly supported by previous reforms that have increased the supply of labour. Growth in GDP is forecast at 1.9 per cent this year and slightly less in the next two years. The economy is well prepared for the boom, which may develop without the build-up of imbalances, but experience shows that the economy can overheat suddenly and violently. The government should be prepared to introduce preventive fiscal tightening with a view to dampening growth in demand if there are signs of overheating.

Monetary and financial trends – March 2018

The Danish krone has been stable, on the strong side of the central rate vis-à-vis the euro. Danmarks Nationalbank has not intervened in the foreign exchange market in the past eleven months up to the end of February. Government bond yields in Denmark increased towards the end of 2017 and at the beginning of 2018. Companies and households increased their borrowing at a stable, but subdued, rate.

Annual report 2017

Danmarks Nationalbank's accounts for 2017 show a loss of kr. 254 million, compared with a profit of kr. 3,928 million in 2016. Much of the loss is attributable to the fact that a large part of the foreign exchange reserve earns negative interest.

Danmarks Nationalbank's annual report and Committee of Directors

​Danmarks Nationalbank's accounts for 2017 show a loss of kr. 254 million, compared with a profit of kr. 3,928 million in 2016.

Moderate boom in the Danish economy - mounting labour market pressures

​The upswing continued in the 2nd half of 2017 and the Danish economy has now entered a boom phase. Labour market pressures have increased, but so far the upswing has been balanced.

Foreign Exchange and Liquidity and Monthly Balance Sheet, February 2018

​In February 2018, the foreign-exchange reserve increased by kr. 3.1 billion to kr. 467.0 billion.

Speech by Governor Lars Rohde at the National Asset-Liability Management Europe conference

Speech by Governor Lars Rohde at the National Asset-Liability Management Europe conference, 1 March 2018.

Danes adopt contactless payments

New technology embedded in payment cards is rapidly becoming popular. In the 4th quarter of 2017, the share of contactless card payments in shops and self-service checkouts was 44 per cent. In comparison, this share was merely 4 per cent in the 1st quarter of 2016.

Institutional investors assign more weight to foreign portfolio equity

Danish institutional investors – pension, insurance and investment funds – have purchased foreign portfolio equity and investment fund shares for kr. 168 billion since the beginning of 2016.

More mortgage loans are financed by 2 per cent bonds

Fixed rate, convertible mortgage bonds have gained ground over the recent years and the low interest rate level has made bonds with at low coupon rate more popular.

The new supplier of Danish banknotes has been chosen

Comments on the draft delegated act amending the commission delegated regulation on the Liquidity Coverage Ratio (LCR)

The European Commission has asked for comments on the proposed amendments to the short-term liquidity rules for EU banks known as Liquidity Coverage Ratio, LCR. Danmarks Nationalbank supports the amendments which solve the unwind problem for repos with central banks in a systemic crisis. Danmarks Nationalbank is still concerned about the framework for secured transactions, which can have some unintended consequences. Danmarks Nationalbank encourages the Commission to continue the work towards a general solution of the unwind problem for secured transactions.

Working Paper: Corporate debt maturity and investment over the business cycle

In this paper I study the business cycle dynamics of the maturity structure of the debt of U.S. non-financial firms. To account for the documented facts, I construct a quantitative dynamic equilibrium model in which firms optimally choose their debt maturity structure. The model can match stylized facts about the level and dynamics of the maturity structure of debt, both in the aggregate and along the firm size distribution.

Currency hedging of US dollars used for the purchase of new fighter aircrafts completed

​Shortly after the turn of the year, Danmarks Nationalbank began to hedge payments for the Danish Defense totalling 3.7 billion US dollars in connection with the purchase of 27 new fighter aircrafts. The hedging is now completed.

Danmarks Nationalbank and the financial sector are strengthening their cyber defences

​Danmarks Nationalbank wishes to increase cyber resilience in the most critical part of the Danish financial infrastructure in particular. Consequently, Danmarks Nationalbank and the financial sector have agreed to establish a Danish red team test programme.

Globalisation complicates current account interpretation

The analysis examines how globalisation can affect Denmark's current account. Globalisation implies that goods sold abroad by Danish firms to an increasing extent are completely or partially produced abroad. This complicates the interpretation of the developments in imports, exports, investment income and GDP, because they can be affected by the location of firms' head office and internal accounting structure.

Foreign Exchange and Liquidity and Monthly Balance Sheet, January 2018

​In January 2018, the foreign-exchange reserve increased by kr. 2.1 billion to kr. 463.9 billion.

Danish government borrowing and debt 2017

Denmark's central government debt was 21 per cent of GDP at the end of 2017. This is a decrease from 2016, attributable to a government budget surplus. In 2017, on average, the central government issued bonds at a yield to maturity of 0.2 per cent and a maturity of 7.5 years. Interest costs for the central government debt totalled 0.8 per cent of GDP. The yield spread to Germany narrowed, and liquidity improved further in the market for Danish government bonds in 2017, where the central government introduced a new primary dealer model.

Danish investment funds earn their highest return on Danish stocks

Investment funds, targeted towards both house-holds and institutional investors, received a return of 17 per cent from holding Danish stocks in 2017.

Households gain their largest return from stocks

In 2017, Danish households' investments in Danish listed stocks generated a combined return of kr. 51 billion from dividends and price gains.

Largest purchase of foreign portfolio equity since 2006

In 2017, Danish investors bought foreign portfolio shares for kr. 129 billion. This marks the largest yearly purchase of foreign portfolio equity since 2006.

Opening of 0.1 per cent inflation-linked bullet loan 2030

On 7 February 2018, 0.1 per cent inflation-linked bullet loan 2030 (ISIN: DK0009923724) will be opened. The government bond will be linked to the Danish consumer price index, CPI. The interest payment date will be 15 November and the bond will be repaid on 15 November 2030. The new bond will replace 0.1 per cent inflation-linked bullet loan 2023 as key on-the-run issue. After this the central government can conduct buy-backs in 0.1 per cent inflation-linked bullet loan 2023.

Fewer losses on bank and mortgage loans

11 of 23 credit institutions report decreasing impairment charges on corporate customer loans in the 4th quarter of 2017, compared to the preceding quarter. Only 3 respondents experience increasing write-offs. This corresponds to a net figure of -11 (on a scale from -100 to 100) when weighing each answer with the credit institutions' respective market share – indicating a small overall reduction in credit loss on outstanding loans.

Prosperity growth facing demographic headwinds

The analysis contributes to the discussion of how high economic growth rates we can expect to see in the future. The analysis shows that on the domestic front the rising average life expectancy in the coming years will curb prosperity growth. However, this development can be countered by reforms which increase labour supply. We conclude that Denmark is well-prepared for the economic challenges entailed by an ageing population because Denmark has built up considerable net foreign assets and the public finances are sustainable.

Foreign investors own 26 per cent of Danish mortgage bonds

In November 2017, foreign investors bought Danish mortgage bonds for kr. 3.0 billion. Thus the total foreign ownership of Danish mortgage bonds reached kr. 685 billion, equivalent to an ownership share of 26 per cent of the total outstanding amount.

The value of Danish listed equities is on a high level

The value of Danish listed equities was kr. 2,631 billion by end November 2017. In comparison, this is approximately the same size as the Danish mortgage market.

Foreign Exchange and Liquidity and Monthly Balance Sheet, December 2017

​In December 2017, the foreign-exchange reserve increased by kr. 4.2 billion to kr. 468.4 billion.

Working Paper: Fiscal tools at the zero lower bound

The paper analyses the effectiveness of fiscal tools at the zero lower bound (ZLB) in a non-linear New Keynesian DSGE model. Although the government spending multiplier increases at the ZLB, its size depends strongly on rational expectations to the liquidity trap length. In light of this finding, market expectations in the beginning of 2009 might indicate that expectations to the American Recovery and Reinvestment Act were too optimistic.

Denmark's IIP rose slightly in 3rd quarter 2017

Denmark's international investment position, IIP, i.e. Denmark's external assets subtracted liabilities, was kr. 1,119 billion at the end of the 3rd quarter of 2017.

Mortgage lending growth in 78 municipalities

Over the last 12 months, households' mortgage loans have increased in 78 of Denmark's 98 municipalities. The biggest increase – both in relative and absolute terms – has not surprisingly taken place in Copenhagen. Here, mortgage loans have increased by 10.7 per cent, corresponding to approximately kr. 12 billion.

Speech by Governor Per Callesen at the conference Investment and Investment Finance in Denmark

Speech by Governor Per Callesen at a panel discussion at the Danish FSA's conference "Investment and Investment Finance in Denmark", 15 December 2017.

Central bank digital currency would not result in better payment solutions

The potential benefits of introducing central bank digital currency in Denmark would not match the considerable challenges resulting from such a decision. Danmarks Nationalbank therefore has no plans to introduce central bank digital currency.

Central bank digital currency in Denmark?

The analysis concludes that central bank digital currency would not be an improvement of the existing payment solutions in Denmark. Central bank digital currency would fundamentally change Danmarks Nationalbank’s role in the financial system and make it a direct competitor to the commercial banks. The introduction would also lead to risks of financial instability. The potential benefits of introducing central bank digital currency for households and businesses in Denmark would not match the considerable challenges which this introduction would present. Danmarks Nationalbank therefore has no plans to issue central bank digital currency.

Working Paper: A cost-benefit analysis of capital requirements for the Danish economy

We analyze the costs and benefits of increasing capital requirements for Danish banks. Costs are low if banks suspend dividend payments for two years and if investors' required return falls as banks accumulate new capital. An increase of required capital ratio from its current level reduces the probability of financial crises and the long-lasting output costs associated with these. Based on Danish data and using models for the Danish economy, we thus confirm findings in studies for other economies: The benefits outweigh the social costs of increasing capital ratios.

Danish Government Debt Policy, Strategy 2018

The target for sales of domestic government bonds and T-bills in 2018 is kr. 65 billion and kr. 30 billion, respectively. This is unchanged from 2017. In 2018, a new index-linked bond will be opened, maturing in 2030. The focus will be on issuance in the existing 2-year and 10-year nominal bonds and in the new index-linked bond.

New primary dealer model continues in 2018

The central government's primary dealer model with enhanced requirements and payments has strengthened the market for Danish government securities. That is the background for maintaining the model with payments in 2018. The model has contributed to a more liquid market for government securities and hence to lower financing costs for the central government. Liquidity has been increased through narrower bid-ask spreads and a higher number of banks actively trading Danish government securities.

Danish households opt out of cash payments

Danes prefer digital payment solutions to cash. Digital payment solutions are chosen by the youngest Danes in particular, and many young Danes carry little or no cash. Thus, many Danes live more or less without using cash, and even more Danes are expected to live without using cash in the future. However, Denmark is not heading for a cashless society. Citizens who wish to hold cash will still have the option to do so in the future.

Speech by Governor Lars Rohde at the annual meeting of Finance Denmark 2017

Speech by Governor Lars Rohde at the annual meeting of Finance Denmark 4 December 2017.

Working Paper: The information content in contingent convertible bond prices

Credit institutions are to an increasing extent using Contingent Convertible Bonds, CoCos, to meet part of their capital requirements. This paper provides a thorough introduction to CoCos – the product, its use in capital regulation, the market and the specific risks faced by investors. A variety of models illustrate how the complexity of CoCos makes them difficult to use when assessing the soundness of the issuer; in addition to this, the many CoCo specific risks make it questionable whether the cost of CoCos constitutes a lower bound for the cost of equity.

Foreign Exchange and Liquidity and Monthly Balance Sheet, November 2017

​In November 2017, the foreign-exchange reserve decreased by kr. 114 million to kr. 464.2 billion.

Statement of Commitment to Foreign Exchange Global Code of Conduct

Several banks are stepping on the accelerator

The profits of banks and mortgage banks are increasing. This has contributed to a boost in optimism in the financial sector and an increase in the institutions' risk appetite, which is reflected in easing of credit standards. Several credit institutions have increased lending to cyclical industries. The aggregate trend in bank lending in combination with other factors indicates that the risks are building up in the financial system. Danmarks Nationalbank assesses that the conditions for activating the countercyclical capital buffer are in place.

Risks are building up in the financial sector

There is a sentiment of optimism in the financial sector. Profits of the credit institutions are rising, and a considerable lending capacity has been built up. This increases credit institutions’ risk appetite, which is reflected in easing of credit standards. Several credit institutions are increasing lending to cyclical industries and to vulnerable households with high debt ratios. At the same time, rising house prices mean that credit growth may take off suddenly.

A few banks have capital shortfall in severe recession scenario

Danmarks Nationalbank's semiannual stress test of the banking sector shows that the largest banks are close to, and in some cases tap into, their buffer requirements in a severe recession scenario. The stress test focuses on market risk and the losses banks suffer due to falling stock prices, changes in interest rates and increasing credit spreads.

Risks are building up in the financial sector

The pension sector holds a stable share in foreign portfolio investments

The Danish insurance and pension sector has placed kr. 1,779 billion in foreign portfolio investments by the end of October 2017.

By end-2017 interest rates of loans for kr. 1,157 billion will have been reset

During 2017 interest rates of mortgage loans for kr. 1,157 billion will be reset. The loans in question are loans with reference rate for kr. 698 billion and adjustable-rate loans for kr. 460 billion.

Households continue to move away from F1 and F2 mortgage type loans

Danish households continue to choose mortgage loans with a fixed interest rate instead of variable-rate loans. Over the last three years, the outstanding amount of variable-rate mortgage loans has been reduced by 7 per cent.

Private depositors continue to avoid negative interest rates

Private depositors continue to avoid negative interest rates on deposits in Danish commercial banks. In comparison, 53 per cent of bank deposits placed by non-financial corporations and 94 per cent of deposits from insurance and pension funds accrue negative interests. These distributions are some of the results from a semi-annual survey conducted by Danmarks Nationalbank, which as of September covered 94 per cent of all deposits in Danish banks, excluding pooling schemes.

Speech by Governor Lars Rohde at Nordic Cyber Conference

Speech by Governor Lars Rohde at Nordic Cyber Conference in Copenhagen, 21 November 2017.

Nordic cyber conference aims to ensure knowledge sharing

​Cyberattacks can threaten the stability of the financial system, so the fight against cybercrime is a pivotal task for Danmarks Nationalbank. Danmarks Nationalbank, in collaboration with the other Nordic central banks, increases its focus on the critical financial infrastructure with a new yearly cyber conference – held for the first time on 21 November.

Recommendation for handling failing SIFI groups

Recommendation for resolution plans for systemically important financial groups

​In a recommendation, Danmarks Nationalbank states that principles for resolution of SIFIs must be laid down by applying a single point of entry, SPE, strategy for SIFI groups.

Denmark's large surplus is temporary

Denmark has had a current account surplus for almost 27 consecutive years. In recent years, the high current account surplus reflects consolidation among households and firms in the wake of the financial crisis. As concluded by Danmarks Nationalbank in an analysis, a part of the extraordinarily high surplus is assessed to be temporary.

Extraordinarily high current account surplus is temporary

It appears from the analysis that the very high current account surplus is temporary. The surplus has been extraordinarily high since 2010 – also in comparison to the current business cycle. Corporations' net lending rose sharply in the wake of the financial crisis. Today the surplus mainly reflects high household savings. They save in order to reduce their debt. As consumption and investment increase, the current account surplus will be reduced.

PhD Resident Student Program

Danmarks Nationalbank offers several fellowships to support students enrolled in a Ph.D. program. Resident students are hosted at Danmarks Nationalbank for the duration of their Ph.D. program and collaborate with economists on research projects. Visiting students join the Research Unit for shorter periods and are expected to be at an advanced stage in the completion of their Ph.D. thesis.

PhD Short-term Visiting Student Program

Danmarks Nationalbank invites applications for PhD students wishing to be hosted by the Research Unit and currently conducting their research in one of the areas of interest to the bank within Economics or Finance. The fellowships offer support for 6 to 12 months.

Speech by Governor Lars Rohde at Central Bank Communications Conference

Speech by Governor Lars Rohde at Central Bank Communications Conference at ECB, 15 November 2017.

Banks from more than 100 countries send payments via Kronos

The analysis describes how banks from all over the world safely and efficiently send Danish krone payments to each other via Danmarks Nationalbank's payment system, Kronos. Most Danish banks have an account at Danmarks Nationalbank and participate directly in Kronos, while many foreign banks participate indirectly through an account holder. It is important that the individual bank considers the risks that both direct and indirect participation entails.

Speech by Governor Lars Rohde at Aarhus Symposium

Speech by Governor Lars Rohde at Aarhus Symposium, 3 November 2017.

Foreign Exchange and Liquidity and Monthly Balance Sheet, October 2017

​In October 2017, the foreign-exchange reserve decreased by kr. 24 million to kr. 464.3 billion.

Working Paper The Global FDI Network: Searching for Ultimate Investors

This paper addresses three types of geographical decoupling in foreign direct investment (FDI), i.e., challenges when using traditional FDI data as a proxy for real economic integration between economies: (i) large bilateral asymmetries between inward and outward FDI, (ii) the role of special purpose entities (SPEs), and (iii) the effect of moving from immediate counterpart economy to ultimate investing economy (UIE). A unique global FDI network is estimated, where SPEs are removed and FDI positions are broken down by the UIE.

Speech by Governor Lars Rohde at European Economics and Financial Centre Seminar

Speech by Governor Lars Rohde at European Economics and Financial Centre Seminar, 31 October 2017.

Interest in mixed investment funds in Denmark is growing

Danish households have invested kr. 33 billion in mixed investment funds during the past 12 months.

Speech by Governor Per Callesen at CBS' 100 years celebration event

Speech by Governor Per Callesen at CBS' 100 years celebration event.

Speech by Governor Hugo Frey Jensen at the Official Monetary and Financial Institutions Forum

Speech by Governor Hugo Frey Jensen at the Official Monetary and Financial Institutions Forum, 30 October 2017.

Broader ownership in mortgage bonds

The mortgage bonds for financing fixed-rate loans have a broader ownership base than earlier. In September 2017 the concentration of owners was low for about 80 per cent of the bond series.

Foreign investors buy long-term Danish mortgage bonds

There is a solid international interest in Danish mortgage bonds. Since January 2015, foreign portfolio investors have invested kr. 128 billion, of which kr. 18 billion in September 2017 alone.

Instalments on mortgage loans continue to increase

Instalments on households' mortgage loans have increased since the financial crisis. In the first three quarters of 2017 the total instalments were DKK 24.3 bn.

Lending to private customers increases for medium-sized banks

In September 2017 the largest Danish banks' decreased their lending to private customers by DKK 24 bn (10 pct.) compared with the previous year. In contrast, the medium-sized banks increased their lending to private customers by DKK 9 bn (8 pct.).

Economist/Senior Economist/Adviser

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