Denmark's government reached a broad agreement with parliament on Sunday evening on a move to safe-guard the financial stability of the country. The main plank of the deal is a safety net that fully guarantees the claims of simple creditors on financial institutions in Denmark. In practice this means that all ordinary bank deposits are secure - not just amounts of up to DKK 300,000, as was previously the case. Thus, cus-tomers will enjoy the ultimate security for their deposits in Danish banks. As well as deposits, all simple creditors are protected, meaning that in practice money market loans are also covered by the government guarantee. With the Danish government guaranteeing money market loans, the banks' options for securing liquidity should be considerably improved, as the Danish government has a top-flight rating of AAA and last year had a surplus of 4.9% of GDP. Government debts add up to just 26% of GDP.
Flash Comment
Denmark: Safeguarding financial stability supports Danish economy
Mon, Oct 6 2008, 14:27 GMT
by
Steen Bocian
- Danske Bank A/S
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