Lower Turnover in the Danish Money Market - Part 1

Monetary review, 4th Quarter 2013

Authors Mindested, Palle Bach Nielsen; Toftdahl, Martin Wagner; Risbjerg, Lars
Subject Danish Economy
Type Monetary Review  
Year 2013
Published 15 January 2014
Turnover in the money market has declined in 2013 relative to 2012. This is evident from Danmarks Nationalbank's annual money-market survey, which is described in more detail in the article. The decline in activity in the money market is mainly attributable to lower turnover in uncollateralised overnight money-market loans. This should be viewed in the light of Danmarks Nationalbank's introduction of a negative rate of interest on certificates of deposit in July 2012, and the simultaneous increase of the current-account limits. Irrespective of the lower turnover in the money market, the monetary-policy transmission to the overnight interest rate remains intact. The higher currentaccount deposits have reduced the impact of changes in liquidity conditions on the interest-rate formation in the overnight market, compared with previously. The article illustrates the transmission to the overnight interest rate.