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Long-term view of the Danish economy

Type
Speech
Subtype
Central banker's speech
Date delivered
25 April 2017
Country
Denmark
Speech by Mr Lars Rohde, Governor of Danmarks Nationalbank, at Danske Bank Markets event, New York City, 20 April 2017.

Thank you for inviting me to speak.

Today, I will focus on a long-term view of the Danish economy. My key messages are:

1. As a result of a long history of reform-oriented policies, the Danish economy today stands strong with no major imbalances.

2. The fixed exchange rate regime has been a cornerstone in the Danish economy for more than 30 years - and this has not changed with negative interest rates.

3. The strategy for issuance of Danish government bonds is focused on supporting liquidity. Issuance is concentrated in 2- and 10-year nominal bonds.

35 years ago the Danish economy was in a miserable state. There were huge imbalances illustrated by a deficit of the public finances of almost 10 per cent of GDP and a long term interest rate of more than 20 per cent. This was partly a consequence of the shocks to the global economy in the 1970s but also a result of an inappropriate economic policy. The path to a turnaround began with the introduction of the fixed-exchange-rate policy in 1982.