Analysis

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16-03-2022

Outlook for the Danish economy - War in Ukraine dampens growth and increases inflation

War in Ukraine has in short time become a new and destabilising factor in Danish and global economy. It dampens growth and increase inflation at a time, when inflation and capacity utilisation is already high. Danish economy is in general robust and able to handle new challenges, and is expected to enter a pause in growth. However, there are risks of a fall in activity.

16-03-2022

Monetary and financial trends - Rising inflation and Russian invasion have increased volatility

Rising inflation and Russia’s invasion of Ukraine have led to increased volatility in the financial markets over the past six months. Both short-term and long-term mortgage rates have increased significantly, and equity prices have fallen, leading to tighter financial conditions. (Released in Danish March, 16)

03-03-2022

The use of cash in society

Danmarks Nationalbank has conducted a survey of the use of cash in Denmark. Danes are relying less and less on cash when paying for goods and services in stores, but cash is still used as a store of value and for person-to-person payments. For instance, more than one in three Danes hold cash savings.

22-02-2022

Denmark is among the most digitalised countries when it comes to payments

Danmarks Nationalbank has conducted a survey of the payment behaviour of Danish households. In Denmark, most payments in physical trade and person to person are digital. Digital behaviour is broadly anchored in the population, and the digital behaviour of senior citizens is a key element in making Denmark one of the most digitalised countries when it comes to payments.

27-01-2022

Investors pay a premium for green equities

This analysis examines whether investors are willing to pay a higher price for a company with low CO2e emissions relative to a corresponding company with higher emissions. The analysis finds, other things being equal, that companies with lower emissions have a higher equity price. The reason for the higher price is found to be that their future earnings are connected with lower risks than comparable companies with higher emissions e.g. due to the prospect of a future carbon tax.

22-12-2021

New inflation-linked bond helps to ensure a broad investor base

In the 2nd half of 2022, the Danish central government opens a new inflation-linked bond maturing in 2034. Inflation-linked bonds issued by the Danish central government enable investors to invest in a safe asset whose return tracks Danish consumer price inflation. The main reason why the central government continues to issue inflation-linked bonds is to ensure a broad and stable investor base.

22-12-2021

Strategy announcement - Central government borrowing strategy 2022

The target for sales of domestic government bonds and short-term loan programmes in 2022 is kr. 65 billion and kr. 35 billion, respectively. On 19 January, a green 10-year bond with maturity in 2031 will be opened. A new inflation-linked bond with maturity in 2034 will also be opened in the 2nd half of the year. Issuance will be focused in the 2-year and 10-year maturity segments.

02-12-2021

Financial stability - Increased risks in credit institutions' housing lending

Credit institutions are granting more housing loans to highly indebted homeowners. High loan-to-value ratios may cause vulnerabilities to a sub-sequent fall in house prices. A general requirement for higher down payments and instalments on loans to homeowners with a high loan-to-value ratio may contribute to a more resilient housing market.

02-12-2021

A few of the largest banks are close to buffer requirements under stress

The stress test shows that the banks have sufficient capital to withstand a severe recession scenario, but a few of the systemic banks are close to their buffer requirements. However, the situation would be different for several of the systemic banks if their capital was on a par with their capital target on commencement of the stress test. In this case, several banks would experience significant breaches of the buffer requirements under stress.

18-11-2021

The Faroese Economy – The boom has regained momentum

The Faroe Islands are experiencing widespread labour shortages, due to very low unemployment and an already high labour market participation rate. At the same time, the continued boom is supported by improved export prospects. Long-term fiscal planning will improve the resilience of the Faroese economy. Capital should be set aside in good times to draw upon in bad. With the ageing of the Faroese population, balance between expenditure and revenue is also important.

03-11-2021

Greenlandic economy - Booming economy and severe labour shortages

Greenland has fared better than most countries in weathering the covid-19 pandemic. Labour shortages are severe, and the risk of overheating of the economy has increased. Nuuk is experiencing the strongest labour market pressures, while South and East Greenland are experiencing the lowest. Large-scale infrastructure investments will cause debts of the government of Greenland, local government and government-owned companies to grow considerably over the coming years.

12-10-2021

Danmarks Nationalbank's gold – a historical overview

There is still public interest in Danmarks Nationalbank's gold stock, although it has been many years since gold played an important role in the cash system and more generally in monetary and foreign exchange policies. The analysis provides an overview of the historical background of the gold stock based on source material from Danmarks Nationalbank's archives at the Danish National Archives.

22-09-2021

Outlook for the Danish economy - The economy heading back towards a moderate boom

Rapid recovery after the lockdowns has resulted in recruitment difficulties for companies. Economic growth is expected to continue, with the economy moving into a moderate boom. Bottlenecks are not expected to develop into an actual overheating of the economy, but several prerequisites are present for a scenario with significantly stronger growth. The Government should therefore be prepared to tighten its economic policy more than planned.

22-09-2021

Monetary and financial trends - Accommodative financial conditions strengthen the upswing

The recovery of the western economies has contributed to higher corporate earnings in Denmark and higher equity prices. Danish long-term bond yields have edged up slightly since March, but remain low. Overall, financial conditions are accommodative for the growth in GDP.

15-09-2021

The pension sector's alternative investments

The pension sectors alternative investments of kr. 500 billion have provided diversification and stable returns. Most companies have room to invest even more in alternatives if deemed appropriate in terms of risk and return. An increased share of alternatives can impact both solvency and liquidity, where especially liquidity can become tight if e.g. interest rates increase. Strong management of short- and long-term risks is thus important.

06-09-2021

New ECB strategy and the Danish economy

The ECB's new monetary policy strategy was published on 8 July 2021. The analysis presents the changes and their potential impacts on the Danish economy. ECB's new monetary policy strategy does not influence the way in which Danmarks Nationalbank conducts monetary policy. Overall, the changes are assessed to have small potential positive impacts on the Danish economy.

01-09-2021

How cyber resilient is the Danish financial sector?

Key financial sector participants have strong external defences and have improved their capability to detect and respond to cyber attacks. Increased focus is required on the protection of critical data and the capability for safe and effective recovery of core systems. This is demonstrated by Danmarks Nationalbank's cyber resilience surveys.

02-07-2021

Housing market robustness should be strengthened

The pandemic has led to high trading activity and house price increases. This creates extraordinary uncertainty about future house prices. By the end of 2023, house prices are expected to have risen significantly. Measures are needed now, such as increased amortisation requirements and lower interest deductions that can strengthen the robustness of the Danish economy – both now and in the future.

01-07-2021

Climate change and the role of central banks

For the first time, Danmarks Nationalbank takes an overall stand on its role in relation to climate change and the transition to a green economy. Climate change and the transition may pose challenges to the objectives of price and financial stability. Central banks have a task in adapting to the new challenges.

30-06-2021

Consistent recovery and resolution of small and large banks in Europe

In 2014, the EU adopted a new framework for recovery and resolution in order to sever the tie between banks and government, so that the taxpayers no longer had to pick up the tab for failing banks. In Denmark, the framework for recovery and resolution constituted a minor innovation because Denmark already had a framework ensuring that the creditors of failing banks absorbed losses. The European framework is still evolving. The Danish experiences are useful in a European context.

25-06-2021

Female company owners pay higher interest rates

Using microdata, the analysis demonstrates that female company owners pay higher interest rates on corporate loans than their male counterparts. The interest rate differential is both economically and statistically significant, and does not disappear when adjusting for relevant company and loan characteristics using sophisticated statistical methods.

23-06-2021

Outlook for the Danish economy - Danish economy is heading for a mild boom

The reopening of the Danish society is in full swing characterised by high private demand. Growth is expected to continue, and there are already large price increases in the housing market as well as signs of bottlenecks building up. The Government should prepare tightening fiscal policy more than planned, and there is a need for measures to strengthen robustness in the housing market.

17-06-2021

Strategy Announcement - Central government borrowing strategy in the 2nd half of 2021

The target for sales of domestic government bonds in 2021 is lowered to kr. 110 billion from kr. 125 billion. The on-the-run issues remain unchanged and focus will continue to be on issuance in the 2-year and 10-year nominal bonds. Issuance of short-term papers is increased and the total outstanding amount of T-bills and commercial papers is expected to be kr. 95 billion by the end of 2021, of which up to kr. 60 billion in T-bills.

10-06-2021

Flood risk can potentially affect a large share of credit institutions' exposure

Danish credit institutions have substantial exposures collateralised by real estate at risk of flooding in future climate scenarios. These exposures could amount to kr. 200 billion by the end of this century. Some credit institutions have a large share of the exposures at risk concentrated in the same geographical area.

27-05-2021

Financial stability - Build-up of risks in credit institutions

The banks are ready for the ongoing economic recovery: Their lending to hard-hit corporations is limited, and provisions have been made to handle losses. But the booming housing market gives cause for concern. Higher down payment requirement and amortisation requirement for highly indebted homeowners are among the measures that should be considered in order to limit vulnerability in connection with a subsequent drop in house prices.

27-05-2021

A few systemic banks have capital shortfall in severe recession

A stress test of the banking sector shows that a few systemic banks fall short of their risk-based capital requirements in a severe recession scenario. Most banks are generally better capitalised than previously, but they are challenged in the stress test by weaker earnings, which means they are less resilient under stress. The stress test also shows that the banks must continuously ensure sufficient surplus relative to the MREL.