The work of the Council seeks to prevent and reduce systemic financial risks that may put the economic development under stress.

Press release after 40th meeting

21 March 2023

The risk outlook is still characterised by high inflation, higher interest rates and expectations of lower economic growth, both globally and in Denmark. At the same time, substantial financial market turmoil has emerged, which may pose challenges for issuance of capital and debt instruments. The Council finds that the Danish banking sector in general is in a good position to withstand the deteriation of the financial market conditions. 

High price increases combined with higher borrowing costs weaken the debt servicing ability of households and companies. However, this has not led to significant impairments on the loan portfolios of credit institutions. At the same time, high earnings create an opportunity to build up capital to absorb losses and maintain lending.

Read more here   

The growing prevalence of variable-rate mortgages with deferred amortisation contributes to the build-up of risk

27 September 2022

The Systemic Risk Council (the Council) observes that Danish homeowners are increasingly taking out variable-rate mortgages with deferred amortisation. These homeowners are taking on a risk of their loan payments rising significantly in the event of rising interest rates. This would result in substantially reduced disposable amounts and increased risk of loan default. The development contributes to build-up of risk and may add to losses in credit institutions from an economic downturn.

The Council has published an observation, which is available here.

Increase of countercyclical capital buffer

29 March 2022

The Systemic Risk Council (the Council) recommends to the Minister for Industry, Business and Financial Affairs that the countercyclical capital buffer be increased to a rate of 2.5 per cent from 31 March 2023. The Council assesses that risks are still building up in the financial sector, and that the buffer should therefore be increased. The war in Ukraine has resulted in increased uncertainty about the future development of the economy and financial conditions. The Council is ready to recommend a reduction of the buffer rate with immediate effect if stress occurs in the financial system and there is a risk of severe tightening of credit granting to households and companies.

The minister of Industry, Business and Financial affairs has 30 March 2022 decided to increase the counter cyclical capital buffer in Denmark to a rate of 2.5 pct. from 31 March 2023.

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Activation of countercyclical capital buffer on the Faroe Islands

14 December 2021

The Systemic Risk Council recommends that the Minister for Industry, Business and Financial Affairs activates a countercyclical capital buffer at a rate of 1 per cent for Faroese exposures from 31 March 2023. The countercyclical capital buffer requirement will take effect 12 months after the Minister has announced an increase. The institutions thus have time to adjust. The Government is required, within a period of three months, either to comply with the recommendation or to present a statement explaining why the recommendation will not be complied with.

The minister of Industry, Business and Financial affairs has decided to activate the counter cyclical capital buffer on the Faroe Islands at 1 pct. for Faroese exposures for the 1st quarter of 2022. The activation is inforced as of 31st of March 2023.

Read more here