COPENHAGEN: Danish bankers are surprised by the Negative interest rates for which meetings are being held in concern. As they did not previously thought to allow for the risk of negative interests rates, the omission is now proving problematic for the financial industry in Denmark.
The central bank’s battle against currency speculators has forced it to drive the benchmark deposit rate to a record low of minus 0.75 percent.
The monetary climate, which punishes savers and rewards borrowers, has challenged a number of assumptions at banks ranging from taxation to how quickly market rates should feed through to customers. In response, Denmark’s financial industry and government have created a committee which convened for the first time this month to discuss what banks should do when interest rates drop below zero.
“This isn’t the first time central bank rates have turned negative and it may happen again, so the committee needs to complete its work even if rates normalize,” Karsten Beltoft, head of the Danish Mortgage Banks’ Federation, said in an interview.
Aside from the mortgage industry, the committee includes representatives from the central bank, the Danish Bankers’ Association, the Business Ministry and the Financial Supervisory Authority.
