Most banks in Denmark, including all the major banks and mortgage credit institutions, hold accounts with Danmarks Nationalbank in the same way that private individuals hold accounts with retail banks. In other words, Danmarks Nationalbank serves as banker to the banks for payments in Danish kroner, where Kronos2 functions as the banks’ online bank.
Payments in euro are not settled via Kronos2, but via the pan-European system T2 (previously named Target2). From 2025, payments in Danish kroner will also be handled via T2 – a project called TargetDKK.
The average number of transactions per banking day in Kronos2 has been steadily increasing in recent years.
When measured by value, customer payments represent a growing proportion of the average interbank payments carried out in Kronos2.
Direct or indirect participation in Kronos2
Some banks choose to participate indirectly in Kronos2 instead of having an account with Danmarks Nationalbank. This means that they send their payments via a bank that is a direct participant.
Almost all Danish banks and mortgage credit institutions participate directly in Kronos2. In addition, the direct participants include several branches of foreign banks and a few other participants. In total, there are 73 direct participants in Kronos2. In 2023, approx. 2,400 banks from 140 different countries participated indirectly.
Citizens and businesses do not have direct access to accounts at Danmarks Nationalbank, and therefore cannot participate in Kronos2, either directly or indirectly.
Banks can participate either directly or indirectly in Kronos2. Citizens and businesses cannot participate.
Liquidity stress test of Kronos2
Danmarks Nationalbank carries out liquidity stress testing to examine whether payment settlement in Kronos2 is robust against liquidity issues among the participants. The stress test provides insights into the potential consequences of disruptions in settlement of payments, the behavior of the actors and how they use the system.
In Danmarks Nationalbank's liquidity stress test, it is tested how the payment settlement in Kronos2 is affected in different scenarios if some participants do not make their planned payments. Unsent payments can potentially cause a liquidity shortage for the participants who expect to receive the payments.
For example, an operational failure at one bank, which results in the bank being unable to send payments, could potentially lead to other banks experiencing a liquidity shortage and therefore also being unable to complete their payments (see illustration). This could ultimately result in businesses and individuals not receiving payments on time.
Illustration of a failure at participant 1, which affects teh other participants in the payment network.
The liquidity stress test scenarios are simulated on historical data and is compared with the actual settled payments for the period. In 2024, the scenarios included, among others, that the unsecured overnight money market was inaccessible to the participants, and that a large participant (tested for each of the five largest participants) was unable to send payments for an entire day.
Results of the latest liquidity stress test
The 2024 liquidity stress test showed that the settlement of payments in the system in general is resilient to stress. However, the stress test identified some days with notable effects in the scenarios where the largest participants in the system were unable to send payments.
The stress test also demonstrated that the existing emergency procedures are effective in reducing the negative liquidity effects of an operational failure lasting 1-2 days. This assumes that participants experiencing failures have ensured access to the necessary information to identify critical payments during the failure.
Additionally, the stress test indicated that the upcoming TARGET DKK system's built-in queue functionality enhances robustness. This implies that payments are not rejected by the system due to insufficient liquidity but are settled once liquidity becomes available again.
Information for Kronos2 participants
All current account holders at Danmarks Nationalbank must participate in Kronos2. The rules and regulations for the account holders are set out in the terms and conditions for accounts.
Kronos2 opening hours
Kronos2 is open for payments on all Danish banking days between 7:00 and 16:45. The new monetary policy day opens at 17:30 for transfers to settlement accounts for the night-time Sum Clearing and VP settlement.
Prices
According to Danmarks Nationalbank’s price policy for Kronos2, Danmarks Nationalbank passes on its external costs etc. for running Kronos2 to the participants, while Danmarks Nationalbank bears its internal costs.
Guidelines and forms
Guidelines for Kronos2 can be found on Danmarks Nationalbank’s extranet on Microsoft Teams.
User administration
Danmarks Nationalbank carries out liquidity stress testing to examine whether payment settlement in Kronos2 is robust against liquidity issues among the participants. The stress test provides insights into the poten-tial consequences of disruptions in settlement of payments, the behavior of the actors and how they use the system.