30 April 2021
Denmark was the first country to introduce negative monetary policy interest rates. This happened in 2012, and Switzerland, Sweden, Japan and the euro area have since followed suit. Negative interest rates regularly trigger discussions about causes and consequences.
There are several reasons why interest rates have fallen to the current low level internationally. Low interest rates reflect the fact that inflation has been subdued in many countries, but structural changes in household and corporate savings and investment behaviour are also part of the explanation.
Negative monetary policy interest rates were introduced by Danmarks Nationalbank to maintain the fixed exchange rate of the Danish krone against the euro.
"The low level of interest rates affects not only deposit rates, but also lending rates and other interest rates in society. For example, some homeowners have negative mortgage rates," says Lars Rohde, Governor of Danmarks Nationalbank.
Negative interest rates on household deposits above a certain threshold have become more widespread in recent years and have sparked discussions. It is important to stress that we have free formation of interest rates in Denmark. Free fixing of interest rates and pricing are essential to the efficiency of the financial system. It is important that the competition works and keeps prices in check.
"It’s understandable that negative interest rates on bank deposits can give rise to discussion, but the interest rates offered by the banks are a matter between them and their customers. It’s up to the banks themselves to set a reasonable threshold for negative interest on deposits which takes into account that their customers use their deposit accounts to make day-to-day payments," says Lars Rohde.
Enquiries can be directed to Press and Communications Officer Ole Mikkelsen on tel. +45 3363 6027.