Vulnerabilities and Risks in Denmark’s Nonbank Financial Institutions: Denmark
Selected Issues Papers, December 24, 2024
Source details
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- Vulnerabilities and Risks in Denmark’s Nonbank Financial Institutions: Denmark
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Bibliographic details
- Authors: Burcu Hacibedel, Mariusz Jarmuzek
- Published: December 24, 2024
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798400296628.018
Summary
- Denmark’s nonbank financial institutions (NBFI) sector has substantially increased in size since the Global Financial Crisis (GFC), becoming an important part of the financial system.
- Systemic risk associated with NBFIs have been contained but warrants close monitoring, especially regarding leverage, liquidity buffers, and interconnectedness.
- There are important mitigating factors that reduce systemic risk stemming from NBFIs in Denmark.
- Strengthening of systemic risk assessment and policy framework for NBFIs is warranted and could include developing a systemic risk assessment framework covering both banks and NBFIs and an ensuing system-wide stress testing framework.
Key findings and risks
- NBFI sector growth: substantial increase in size since the GFC, now an important part of the financial system.
- Main vulnerabilities to monitor:
- Leverage
- Liquidity buffers
- Interconnectedness
- Current systemic risk: contained but requires close monitoring.
Mitigating factors
- The source notes the existence of important mitigating factors that reduce systemic risk stemming from NBFIs in Denmark (details as described in the publication).
Policy recommendations
- Strengthen systemic risk assessment and policy framework for NBFIs.
- Develop a systemic risk assessment framework covering both banks and NBFIs.
- Establish a system-wide stress testing framework that includes both banks and NBFIs.
Metadata and classification
- Authors: Burcu Hacibedel, Mariusz Jarmuzek
- Publication date: December 24, 2024
- Series: Selected Issues Paper No. 2024/044
- Issue: 044
- Volume: 2024
- Pages: 21
- DOI: https://doi.org/10.5089/9798400296628.018
- Stock No: SIPEA2024044
- ISBN: 9798400296628
- ISSN: 2958-7875
- Subjects: Covered bonds, Financial institutions, Financial sector policy and analysis, Mutual funds, Nonbank financial institutions, Systemic risk, Systemic risk assessment
- Keywords: asset liability management risk, balance sheet analysis, covered bond bond market, Covered bonds, D. mitigating factor, Denmark, Denmark's nonbank financial institutions, Global, Mutual funds, NBFI sector, non-bank financial institutions, Nonbank financial institutions, Systemic risk, systemic risk assessment
Source: Vulnerabilities and Risks in Denmark’s Nonbank Financial Institutions: Denmark (Selected Issues Papers), Burcu Hacibedel and Mariusz Jarmuzek, December 24, 2024.
Content in this bundle
- An Overview of the Danish Covered Bond Market