The Systemic Risk Council

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

Meetings in 2021

  • Denmark

    Meeting of the Systemic Risk Council

    22 June 2021
    The current outlook with very loose financial conditions, increasing asset prices and prospects for a rapid economic recovery provides ground for risk build-up. Therefore, the Council recommends to the Minister for Industry, Business and Financial Affairs to reactivate the countercyclical capital buffer at a rate of 1.0 per cent from 30 September 2022. Unless risk build-up in the financial system slows down considerably, the Council expects to recommend a further increase of the buffer rate to 2.0 per cent by the end of 2021. There are also signs of risk build-up in the residential real estate market. The Council recommends to the government to restrict access to interest only mortgage loans.

     

  • Denmark

    Limitation of access to interest-only loans for highly indebted borrowers

    22 June 2021
    The Systemic Risk Council (the Council) recommends to the Government to restrict Danish homeowners' access to interest-only mortgage loans. The measure means that Danish homeowners cannot take out interest-only mortgage loans or mortgage-like bank loans secured upon real property if the loan-to-value ratio of their home exceeds 60 per cent. In 2020, just under half of the mortgage credit institutions' new lending to homeowners with a loan-to-value ratio above 60 per cent was with deferred amortisation. The initiative will entail that, in future, such homeowners would have to amortise on their loans or adjust the desired loan amount. The primary purpose of the initiative is to increase the resilience of homeowners – and the Danish economy – to falling house prices, increasing interest rates and other negative economic shocks that may impact the individual homeowner or Danish economy more generally.

    Read more here

  • Denmark

    Reactivation of the countercyclical capital buffer

    22 March 2021
    The Systemic Risk Council (the Council) recommends that the Minister for Industry, Business and Financial Affairs reactivate the countercyclical buffer at a rate of 1.0 per cent from 30 September 2022. The buffer was reduced from 1.0 to 0.0 per cent in March 2020 in response to covid-19. The Council finds that it is now time to rebuild the buffer.

    Read more here




Press release

Press release after the 33rd meeting

22 June 2021

The current outlook with very loose financial conditions, increasing asset prices and prospects for a rapid economic recovery provides ground for risk build-up. Therefore, the Council recommends to the Minister for Industry, Business and Financial Affairs to reactivate the countercyclical capital buffer at a rate of 1.0 per cent from 30 September 2022. Unless risk build-up in the financial system slows down considerably, the Council expects to recommend a further increase of the buffer rate to 2.0 per cent by the end of 2021. There are also signs of risk build-up in the residential real estate market. The Council recommends to the government to restrict access to interest only mortgage loans.

Recommendations

Limitation of access to interest-only loans for highly indebted borrowers

22 June 2021
The Systemic Risk Council (the Council) recommends to the Government to restrict Danish homeowners' access to interest-only mortgage loans. The measure means that Danish homeowners cannot take out interest-only mortgage loans or mortgage-like bank loans secured upon real property if the loan-to-value ratio of their home exceeds 60 per cent. In 2020, just under half of the mortgage credit institutions' new lending to homeowners with a loan-to-value ratio above 60 per cent was with deferred amortisation. The initiative will entail that, in future, such homeowners would have to amortise on their loans or adjust the desired loan amount. The primary purpose of the initiative is to increase the resilience of homeowners – and the Danish economy – to falling house prices, increasing interest rates and other negative economic shocks that may impact the individual homeowner or Danish economy more generally.

Reactivation of the countercyclical capital buffer

22 June 2021
The Systemic Risk Council (the Council) recommends that the Minister for Industry, Business and Financial Affairs reactivate the countercyclical buffer at a rate of 1.0 per cent from 30 September 2022.  The buffer was reduced from 1.0 to 0.0 per cent in March 2020 in response to covid-19. The Council finds that it is now time to rebuild the buffer.

Unless there is a significant slowdown in risk build-up, the Council expects to recommend a further increase in the buffer rate to 2.0 per cent by the end of 2021 with effect from the beginning of 2023. Phased buffer increases are in line with the Council's strategy of gradually increasing the buffer rate to a level of 2.5 per cent.

 

The Systemic Risk Council on Twitter

Members of the Council

By law, the Council consists of the following members:

  • Two representatives from Danmarks Nationalbank, one being the chairman of the Board of Governors of Danmarks Nationalbank and chairing the Council.
  • Two representatives from the Danish Financial Supervisory Authority.
  • One representative from each of the following economic ministries: Ministry of Industry, Business and Financial Affairs, Ministry for Economic Affairs and the Interior and Ministry of Finance.
  • Three independent experts with knowledge of financial matters.
Picture of the members of the Council