Denmark: Financial System Stability Assessment-Press Release; and Statement by the Executive Director for Denmark
IMF Staff Country Reports, August 12, 2020
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- Denmark: Financial System Stability Assessment-Press Release; and Statement by the Executive Director for Denmark
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Bibliographic details
- Published: August 12, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513552965.002
Executive summary and context
- Much of the work of the Financial Sector Assessment Program (FSAP) was conducted prior to the COVID-19 pandemic.
- Given the FSAP’s focus on medium-term challenges and vulnerabilities, many findings and recommendations for strengthening policy and institutional frameworks remain pertinent.
- This report:
- reflects key developments and policy changes since the FSAP mission work was completed,
- includes illustrative scenarios to quantify the possible implications of the COVID-19 shock on the solvency of systemically important financial institutions (SIFIs).
- Prior to the COVID-19 pandemic, the Danish authorities took important steps to improve financial system resilience:
- active use of macroprudential tools to bolster the robustness of the financial system,
- improved supervision of the banking and insurance sectors,
- recent legislation strengthening anti-money laundering and combating the financing of terrorism (AML/CFT) supervision,
- major reforms including a new bank resolution framework that considerably improved Denmark’s financial safety net and crisis management frameworks.
Key findings and observations
- FSAP findings and recommendations remain relevant despite being based largely on pre-pandemic work.
- The report contains illustrative COVID-19 solvency scenarios for SIFIs to quantify potential implications of the shock.
- Authorities’ pre-pandemic reforms enhanced resilience through:
- macroprudential policy measures,
- strengthened supervisory practices for banks and insurers,
- legislative improvements to AML/CFT supervision,
- a new bank resolution framework improving crisis management.
Subject areas and keywords
- Subject: Banking, Covered bonds, Financial Sector Assessment Program, Insurance companies, Stress testing
- Keywords: CR, Danish authorities, financial system, FSAP solvency stress test analysis, ISCR, stress test endeavour, th e DFSA
Content in this bundle
- Executive Summary — IMF Financial Sector Assessment Program