12 March 2020
MONETARY POLICY
The European Central Bank maintains its monetary policy rates following the meeting of the Governing Council. Danmarks Nationalbank also keeps the policy rates unchanged. The lending rate is unchanged at 0.05 per cent, Rate on Certificates of Deposits at -0.75 per cent, current account rate at 0.00 per cent and the discount rate at 0.00 per cent.
Although Danmarks Nationalbank doesn't see any signs of strains in the money market, an extraordinary lending facility will be launched. The lending facility makes it possible for monetary policy counterparts to take 1-week loans against collateral with an interest rate of -0.50 per cent. The new lending facility will ensure the banking sectors access to liquidity at favorable terms, should the effects of the spread of Coronavirus have an impact on the liquidity situation in the Danish banking sector.
The facility will remain available as long as Danmarks Nationalbank deems it necessary.
The new loans follow the other monetary policy instruments with maturity on the last banking day of each week. Monetary policy counterparts have access to the new lending facility via Kronos2. The facility will be available for the first time Friday 20th March 2020.
THE COUNTERCYCLICAL CAPITAL BUFFER
The Danish Government has decided to release the countercyclical capital buffer and cancel the planned increases meant to take effect later. Danmarks Nationalbank agrees. It is a sensible decision at a time with a prospect of a significant weakening in the economic activity. This will help the credit institutions to continue providing an adequate level of lending.
It's important that the credit institutions use the provided flexibility to extend their lending capacity and not to pay additional dividends or conduct share buybacks.
Enquiries can be directed to press advicer Ole Mikkelsen on tel. +45 3363 6027.