The money market at pressure on the Danish krone and negative interest rates

Authors Andersen, Morten Fremmich; Kristoffersen, Mark Strøm; Risbjerg, Lars
Subject Monetary- and foreign-exchange; Monetary policy; Monetary-policy instrument; Monetary-policy transmission
Type Monetary Review  
Year 2015
Published 30 December 2015
Link to publication Monetary Review, 4th Quarter 2015
In a situation like the current one where the monetary policy counterparties’ need to place funds with Danmarks Nationalbank exceeds the overall current account limit, the rate of interest on certificates of deposit (the CD rate) is key to Danish money market rates. The CD rate’s move into negative territory has not affected its significance for the Danish krone, nor Danmarks Nationalbank’s ability to manage the exchange rate of the krone.