Denmark: Financial System Stability Assessment
IMF Staff Country Reports, December 9, 2014
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- Denmark: Financial System Stability Assessment
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Bibliographic details
- Published: December 9, 2014
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498353120.002
Overview
- The report discusses findings of the Financial System Stability Assessment for Denmark.
- The Danish authorities have taken important steps to improve financial system resilience.
- Although stress tests suggest that financial stability risks are contained, the financial system’s large size and interconnectedness call for additional measures to further strengthen resilience.
Main findings
- Financial regulation and supervision have been strengthened.
- A new bank resolution framework that includes bail-in of creditors has been adopted and deployed to resolve small- and medium-sized banks.
- An institutional framework for macroprudential policy has been adopted.
- Recent legislation requires maturity extension of covered bonds in stress situations, with the aim of reducing refinancing risk in the mortgage finance system.
Stress testing and risks
- Stress tests suggest that financial stability risks are contained.
- Key systemic concerns stem from the financial system’s large size and interconnectedness, which imply potential spillovers and the need for further resilience measures.
Policy measures adopted
- Adoption and deployment of a bank resolution framework that includes bail-in of creditors for small- and medium-sized banks.
- Strengthening of financial regulation and supervision.
- Adoption of an institutional framework for macroprudential policy.
- Legislation requiring maturity extension of covered bonds in stress situations to reduce refinancing risk in the mortgage finance system.
Policy implications and recommended additional measures
- Given the system’s large size and interconnectedness, authorities should consider additional measures to further strengthen resilience (specific additional measures are not detailed in the provided content).
- Continue using stress testing to monitor vulnerabilities and inform macroprudential and resolution planning.
Denmark: Financial System Stability Assessment — IMF Staff Country Reports
Content in this bundle
- Denmark: Financial System Stability Assessment; IMF Country Report 14/336; November 12, 2014