The International Monetary Fund's (IMF) 2006 Financial System Stability Assessment describes Denmark's monetary policy framework as transparent. The foundational legislation underlying the creation and governance of the Danish National Bank (DNB) is the Act of the DNB, first passed in 1936 and amended four times since. Although not a member of the European Monetary Union (EMU), Denmark nonetheless complies with some of the articles of the Statutes of the European System of Central Banks, which have contributed to the strength of its autonomous status. The DNB website makes available to the public a variety of documents that spell out its mandate, including access to the text of relevant legislation. Denmark has long been a subscriber to the IMF's Special Data Dissemination Standard (SDDS), and the SDDS website discloses that Denmark publishes advance release calendars for its data reports, releases its data simultaneously to interested users, and maintains high standards of coverage, timeliness, and periodicity in its statistical reporting. The DNB's 2007 Report and Accounts publication notes a commitment to international comparability of its reporting on monetary data. User access to data has recently been facilitated by the fact that the DNB has transitioned its data reporting to the Statistics Denmark database, StatsBank.

General Overview

According to the International Monetary Fund's (IMF) 2006 Financial System Stability Assessment, the monetary policy framework is "transparent" (p. 22). The National Bank of Denmark (NBD) Act of 1936 provides the foundational legislation for the monetary policy regime, and has been amended four times since its inception. Denmark is not a member of the European Monetary Union (EMU), but it has included some of the EMU Statutes of the European Central Banks (ECB) in its own NBD legislation with the effect of strengthening its overall autonomy. The NBD's board of governors has sole authority to determine key interest rates to support its peg to the euro, and although the Ministry of Economic and Business Affairs (Økonomi- og Erhvervsministeriets, or OEM) does have final authority regarding the exchange rate regime, the Act on Foreign Exchange requires that this be coordinated with the NBD. The mandates governing the NBD are publicly available in several published sources. The IMF 2006 report adds that Danish monetary policy observes the EMU convergence criteria for membership, and its policy interest rates are generally in line with those of the ECB.

The "Statistical Issues" annex (Annex II) to the 2006 IMF Article IV report stated that Danish authorities had brought its data on monetary financial institutions into conformity with the European Standard of Accounts, 1995 edition. It had also expanded the number of financial institutions that are reported on in the NBD's Statistical Bulletin. These changes have facilitated a more thorough examination of financial sector institutions and provide an enhanced source for the national accounts data. The report adds that "data for the central bank and other depository corporations are reported on a timely and regular basis" (p. 34) further noting that the use of the ECB framework for NBD monetary reporting has enhanced the international comparability of monetary statistics.

The DNB's "Reports and Accounts" for 2007 (published in 2008) notes that the DNB was first created in 1919. It became self-governing in 1936, with the passage of its foundational legislation, the DNB Act of 1936. This law establishes the DNB's core mission, which is "to maintain a safe and secure currency system in Denmark and to facilitate and regulate the traffic in money and the extension of credit" (p. 5). The Act renders the DNB independent of both the Executive and the Parliament in formulating monetary policy. This report is an annual publication which reports on trends in international cooperation, the international economy, and monetary and foreign exchange policy. It includes a copy of the Report of the Board of Governors. In addition to this annual publication, the DNB publishes quarterly monetary reviews along with working papers on DNB-related research and development activities and special publications that provide in-depth coverage of the DNB's broad areas of activity. The 2007 Reports and Accounts confirms that the DNB applies the European Exchange Rate Mechanism (ERM-II) as its formal fixed-exchange rate policy framework. Given the current international environment of economic uncertainty, the ECB has made certain interest rate policy decisions which the DNB has followed, thus keeping the DNB rates in conformity with those for the euro area. The DNB has not found it necessary to take extraordinary action with regard to krone-liquidity in response to the recent turmoil in international financial markets, even though there has been some sign of dollar-liquidity shortage. The DNB announced (pg. 19) its transition to publishing its financial statistics through the StatBank Denmark in order to improve user access. It also announced a new project it has undertaken with the Danish Financial Supervisory Authority by which a new reporting system will be developed for use by investment associations. In this system, the DNB will collect all such reporting and then forward it to the DFSA. This will remove the dual problems of duplicate reporting and overlapping reporting requirements.

Denmark became a subscriber to the IMF's Special Data Dissemination Standard (SDDS) in 1966 and first met SDDS specifications in 2000. According to the website, it meets or exceed SDDS requirements for timeliness, flexibility, and periodicity of most data, publishes summary methodologies for all datasets, and issues advance-release calendars for all required datasets.

The Principles

Clarity of roles, responsibilities and objectives of central banks.

FC

The IMF's 2006 Financial System Stability Assessment describes Denmark's the monetary policy framework as "transparent" (p. 22). The NBD Act of 1936 provides the foundational legislation for the monetary policy regime, and has been amended four times since its inception. Denmark is not a member of the EMU, but it has included some of the EMU Statutes of the ECB in its own NBD legislation, with the effect of strengthening its overall autonomy. The NBD's board of governor has sole authority to determine key interest rates to support its peg to the euro, and although the OEM does have final authority regarding the exchange rate regime, the Act on Foreign Exchange requires that this be coordinated with the NBD.

The DNB's "Reports and Accounts" for 2007 (published in 2008) notes that the DNB was first created in 1919. It became self-governing in 1936, with the passage of its foundational legislation, the DNB Act of 1936. This law establishes the DNB's core mission, which is "to maintain a safe and secure currency system in Denmark and to facilitate and regulate the traffic in money and the extension of credit" (p. 5). The Act renders the DNB independent of both the Executive and the Parliament in formulating monetary policy.

Open process for formulating and reporting monetary policy decisions.

FC

The IMF's 2006 Financial System Stability Assessment, the monetary policy framework as "transparent" (p. 22). Although Denmark is not a member of the EMU, it does incorporate some of the Articles of the Statutes of the ECB in its own monetary policy legislation. Sole responsibility for determining the key interest rates that support the euro peg lies with the DNB. In addition, although the OEM has final authority on the exchange rate regime, the Act on Foreign Exchange requires that this be done in coordination with the DNB. The DNB makes the terms and conditions established by its legal mandates available to the public in several of its publications. The DNB's Reports and Accounts, an annual publication, offers a description of the central bank's accounts and includes a report on recent economic, monetary, and foreign exchange rate policies. The DNB website offers an outline of the central bank's primary monetary policy objectives and sets out the principal policy instruments used to implement that policy.

Public availability of information on monetary policy.

FC

The IMF's 2006 Financial System Stability Assessment describes Denmark's monetary policy framework as "transparent" (p. 22). It makes available to the public the rules and regulations that govern its monetary policy activities through a number of publications available on the DNB website. Among the publications offered by the DNB online are the quarterly Monetary Review, which includes monetary policy details and comments on recent domestic and international trends in finance and the domestic credit industry. The website also offers the text of press releases and speeches by members of the board of governors that touch on DNB monetary policy and other activities. The DNB also publishes an annual "Report and Accounts" document, most recently in 2008 for the year 2007. The current Report and Accounts makes special mention of a recent move to publish its financial and monetary data on StatsBank, the Statistics Denmark database, in an attempt to further improve facilitate user access to statistical data.

According to the Statistics Denmark website, the agency was founded in 1850, with the introduction of democracy into the country. Its mission is "to produce and disseminate trustworthy statistics on social and economic trends in society, which are an essential condition for its democracy and economy to work" (p. 4). The legal foundation for Statistics Denmark is the Act on Statistics Denmark, which requires that the agency be a professional and independent institution. It is led by a board of governors which prioritizes its tasks. At the management level, the National Statistician provides day-to-day administrative and professional leadership.

According to the IMF's SDDS website, Denmark provides comprehensive economic data coverage. It publishes advance-release calendars and summary methodologies for all required datasets. It meets or exceeds all requirements of timeliness and periodicity for its monetary data. Simultaneous access to data is granted to all interested parties.

Accountability and assurances of integrity by the central bank.

FC

According to the IMF's 2006 Financial System Stability Assessment, Denmark's monetary policy framework is "transparent" (p. 22). The "Statistical Issues" annex (Annex II) to the 2006 IMF Article IV report stated that Danish authorities had brought its data on monetary financial institutions into conformity with the European Standard of Accounts, 1995 edition. It had also expanded the number of financial institutions that are reported on in the NBD's Statistical Bulletin. These changes have facilitated a more thorough examination of financial sector institutions and provide an enhanced source for the national accounts data. The report adds that "data for the central bank and other depository corporations are reported on a timely and regular basis" (p. 34) further noting that the use of the ECB framework for NBD monetary reporting has enhanced the international comparability of monetary statistics.

According to the Statistics Denmark publication of 2004, trustworthiness of Denmark's statistical data is ensured in part by the institution's compliance with "the UN's 10 fundamental principles for official statistics as well as with the 15 principles that make up the European Statistics Code of Practice" (p. 4). The document asserts official acceptance of the need that statistics must be compiled "on a methodologically sound and nonpartisan basis" (p. 4). All data is released simultaneously to all interested parties. Confidentiality of individual responses is protected as a matter of public policy, although such protection is not codified in law, according to the SDDS website.