DANMARKS NATIONALBANK Annual Report 2020 2 ANNUAL REPORT 2020 DANMARKS NATIONALBANK Annual Report 2020

DANMARKS NATIONALBANK ANNUAL REPORT 2020 3 Annual Report 2020

This report is based on information available up to 8 March 2021

See also www.nationalbanken.dk

Explanation of symbols: - Magnitude nil 0 Less than one half of unit employed • Category not applicable … Data not available Details may not add up because of rounding.

ISSN (Online) 2446-3019

4 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Contents

7 Foreword

Report of the Board of Governors

Report of the Board of Governors on the activities of Danmarks Nationalbank 10 , financial markets and the real economy 12 The stability of the financial system 13 The Systemic Risk Council 14 Secure payments 16 Result for the year 2020

Organisation 20 Staff 22 Danmarks Nationalbank’s representation on committees, in international organisations, etc. 23 Organisation chart

Risk management 24 Financial portfolios 26 Risks on loans to banks and mortgage credit institutions 26 Collateral basis and lending 28 Operational risk 29 Insurance strategy

Accounts of the year 2020

33 Accounts

DANMARKS NATIONALBANK ANNUAL REPORT 2020 5 Per Callesen Lars Rohde Signe Krogstrup Governor Chairman Governor

6 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Foreword

Danmarks Nationalbank was established for the Danish economy. These include models for nowcast- specific purpose of restoring the monetary system ing gross domestic product (GDP) growth. in following the Danish state bankruptcy in 1813. In 1936, Danmarks Nationalbank became In the autumn, Danmarks Nationalbank moved from an independent, self-governing institution, laying its headquarters in Havnegade 5 to Langelinie Allé down monetary policy independently of the Danish 47 in to make way for an extensive res- Government and the Danish Parliament (the Folke­ toration and renovation of the listed building in the ting). The of Denmark Act from 1936 centre of Copenhagen. The building in Havnegade 5 still applies. was designed by Danish architect and is part of the cultural heritage of Denmark. As the Danmarks Nationalbank’s three main objectives are owner of the building, Danmarks Nationalbank has a laid down in the Act: Firstly, Danmarks Nationalbank responsibility to protect the architecture of the build- is to ensure stable prices and low inflation. The fixed ing and preserve the cultural heritage for posterity. exchange rate against the euro contributes to creating the framework for this. Secondly, Danmarks In addition to the financial statements, Annual Re- Nationalbank issues and coins of a high port 2020 presents an overall description of Dan- quality and contributes to the secure settlement of marks Nationalbank’s activities within its three areas electronic payments. Thirdly, Danmarks Nationalbank of activity. monitors the stability of the financial system, making recommendations to the relevant authorities. A more detailed description of Danmarks National- bank’s activities can be found on Danmarks National- In 2020, the coronavirus pandemic has affected large bank’s website. The website also contains all publica- parts of Danish society and obviously also Danmarks tions and reports published during the year. Nationalbank. In this connection, new tools have been implemented in the ongoing monitoring of the

Copenhagen 8 March 2021

Lars Rohde Per Callesen Signe Krogstrup Chairman

DANMARKS NATIONALBANK ANNUAL REPORT 2020 7 8 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Report of the Board of Governors

DANMARKS NATIONALBANK ANNUAL REPORT 2020 9 Report of the Board of Governors on the activities of Danmarks Nationalbank

Monetary policy, financial markets and the real economy

The object of Denmark’s monetary policy is to Danish money market interest rates increased by ensure a fixed exchange rate against the euro. approximately 0.25 percentage points in 2020. The The formal basis for the Danish fixed exchange increase must be seen in the light of Danmarks rate policy is the European Exchange Rate Nationalbank’s increase and a decrease Mechanism 2 (ERM2). The fixed exchange rate in the net position of approximately kr. 100 billion in policy is a cornerstone of the Danish economy March 2020. The net position was kr. 164 billion at and contributes to ensuring stable prices. the end of 2020. The central rate of the krone against the euro – and previously the German D-mark – has Danmarks Nationalbank set up an extraordinary been unchanged since 1987. lending facility in March to offer the monetary policy counterparties financing on attractive terms if needed. The facility gave the monetary policy In 2020, the rate of the krone against the euro counterparties an opportunity to borrow funds for was stable around the central rate, see Chart 1. In seven days and three months, respectively, against March, there was briefly turmoil on the financial collateral at an interest rate of -0.35 per cent. markets following the outbreak of covid-19. One Danmarks Nationalbank also entered into agree­ effect thereof was a currency outflow, resulting in ments on swap lines with the European Central increased pressure on the krone towards a weak­ Bank (ECB) and the (Fed) in March ening against the euro. Danmarks Nationalbank to ensure access to euro and dollar liquidity for followed its usual reaction pattern, and, after prior banks. interventions in the foreign exchange market, the interest rate on certificates of deposit was increased Interest rates on government bonds and mortgage by 0.15 percentage points to -0.60 per cent on 19 bonds rose in the wake of the outbreak of covid-19 March 2020, see Chart 2. The interest rate increase in March, see Chart 3. Interest rates have subse- meant that the monetary policy yield spread to quently fallen, one reason being that several central the euro area was narrowed from -0.25 to -0.10 banks, including the ECB, introduced significant percentage points. Danmarks Nationalbank sold monetary policy measures in the form of large asset currency totalling kr. 78 billion in connection with purchase programmes and liquidity measures. foreign exchange market interventions in the first These measures helped stabilise the development three months of 2020. This contributed to reducing in the financial markets. At the end of the year, the the foreign exchange reserve. The foreign exchange yield on a 30-year mortgage bond was around 0.7 reserve was kr. 439 billion at the end of 2020. per cent, see Chart 3.

10 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Stable krone close to the central rate Chart 1

Kroner per euro

7.25

7.35

Market rate 7.45 Central rate

7.55

Fluctuation limits 7.65 (+/- 2.25 per cent) 00 02 04 06 08 10 12 14 16 18 20

Note: An increase in the chart means that the krone’s value has strengthened against the euro. Source: Danmarks Nationalbank.

Interest rate on certificates of deposit increased in 2020 Chart 2

Per cent

1.0

0.5

Lending rate 0.0 Current account rate

-0.5 Cita swap interest rate Interest rate on -1.0 certificates of deposit 15 16 17 18 19 20

Note: 1-month Cita swap rate. Source: Thomson Reuters Datastream, Danmarks Nationalbank.

Following the outbreak of covid-19 in March interest rates increased Chart 3

Per cent

3

2

1 Mortgage yield, 0 30-year Government bond yield, -1 10-year Government bond yield, -2 2-year 15 16 17 18 19 20

Note: Government bond yields are par yields. The mortgage yield is based on the benchmark bond. Source: Nordea Analytics, Thomson Reuters Datastream. During March, the 2-year and 10-year yield spreads goods was more moderate. Overall, exports fell by 8 between Danish and German government bonds per cent and imports also saw a decrease. The cur- widened by 0.2 percentage points. The yield spreads rent account surplus decreased to around 8 per cent have subsequently narrowed, and the yields on of GDP from 9.5 per cent of GDP in 2019. Danish and German government bonds have large- ly followed each other. At the end of the year, the Employment followed production with a drop in the 2-year Danish government bond yield was 0,6 per second quarter and with a subsequent recovery at a cent, while the 10-year government bond yield was declining pace during the rest of the year. The great- 0,4 per cent. est fluctuations were in the service industries. Government relief packages, including wage com- Danish equity prices (OMXC25) were characterised pensation, cushioned employment. At the end of by large fluctuations in 2020. In connection with the the year, the number of employed persons was still outbreak of covid-19 in March, Danish equity prices 15,000 below the level at the beginning of 2020. The dropped approximately 25 per cent. Equity prices number of unemployed persons increase by more have since risen as a result of, among other factors, than 21,000. global monetary policy measures, relief packages and greater clarity about macroeconomic trends. The wage growth was moderate. Consumer prices Overall, Danish equity prices increased by 36 per rose by 0.3 per cent in 2020, which was below the cent in 2020. decline seen in the preceding years and on a level with the rate of price increases in the euro area. In The Danish economy entered 2020 riding on a the medium term, consumer prices in Denmark and moderate boom and without any major imbalances. the euro area follow each other, but differences However, the coronavirus, which caused a worldwide may be seen in the short term. Real wages contin- pandemic in spring, resulted in a lockdown of large ued to grow. parts of society in many countries. This hit the econ­ omy hard. Demand for Danish goods and services fell The housing market was briefly affected by the pan- both domestically and in export markets. Gross do- demic. House prices continued to rise, and the sup- mestic product (GDP) fell more than 7 per cent in the ply of homes for sale was lower than for many years. second quarter. There was a partial recovery during House prices increased in line with the increase in the summer, but growth flattened out again towards preceding years. The building and construction sec- the end of the year in the wake of a resurgence of tor hardly felt the economic downturn, and employ- the coronavirus. Based on this highly uneven growth ment remained high in this sector. trajectory, the overall result for the year was a decline in GDP of around 3.5 per cent. Fiscal policy was eased significantly to mitigate the consequences of the economic downturn. The eased Private consumption also fell by 3.5 per cent in 2020 fiscal policy took the form of government subsidies as a whole. The lockdown of parts of the economy to corporations, general fiscal policy stimulus and a resulted in a very uneven development in consump- number of liquidity measures, including extension tion across industries. Hotels, restaurants, tourism of payment deadlines for VAT and taxes etc. The and the experience industry saw marked declines, government budget deficit ended at more than 4 per while other parts of the economy benefitted from cent of GDP. Danmarks Nationalbank supported the a shift in consumption towards areas that were not fiscal policy pursued, but stressed the importance of subject to restrictions. the measures being temporary, to avoid creating a static business structure. In an attempt to cushion private consumption, em- ployees were given the opportunity of having part of their frozen holiday pay funds disbursed. The stability of the financial system All export markets were hit by the pandemic, and many countries shut down large parts of their econ- omy. Food products and pharmaceuticals constitute Danmarks Nationalbank contributes to ensuring a significant part of Danish exports. These are items the stability of the financial system by analysing that are typically less cyclical than other goods. Ex- the financial sector, monitoring and assessing ports of services decreased by 14 per cent. Tourism systemic risks and making recommendations in was particularly hard hit. The decline in exports of this area. In addition, Danmarks Nationalbank

12 DANMARKS NATIONALBANK ANNUAL REPORT 2020 monitors the payments infra­structure, produces financial statistics and acts as secretariat for the The Systemic Risk Council Systemic Risk Council (DSRR).

Danmarks Nationalbank chairs and provides So far, the banks have come through the coronavirus secretariat services for the Systemic Risk crisis without incurring significant losses. However, Council (DSRR). The Council monitors the outbreak of the coronavirus has resulted in a systemic risks in the financial system and may significant deterioration in credit quality among that recommend policy measures to address these part of the banks’ customers which were hardest hit risks. by restrictions. The deteriorated credit quality and expectations of a further deterioration in the fu­ ture have resulted in the banks making impairment On 12 March 2020, the Minister for Industry, Business ­charges on parts of their lending. and Financial Affairs decided to release the counter- cyclical capital buffer in response to the covid-19 sit- There have been large fluctuations in credit institu­ uation. At that time, the buffer rate was 1.0 per cent, tions’ earnings since the outbreak of the corona­ and a decision had been made on a gradual increase virus, one reason being significant impairment to 2.0 per cent from 30 December 2020. The buffer ­charges for expected bad debts. Earnings have was released to discourage banks and mortgage been declining since 2017, and this trend is also credit institutions from being too cautious in their expected for 2020. The reasons for the decrease lending due to insufficient capital. ­include lower interest margins due to competi­ tion on lending and sluggishness in the reduction In June, the Systemic Risk Council announced that of deposit rates. Current earnings still constitute it did not expect to recommend an increase in the reasonable initial protection against losses. How­ buffer until in 2021 at the earliest. This announcement ever, further declines may weaken credit institution was further specified in December, when the Systemic resilience in the long term. Risk Council stated that it does not expect to recom- mend an increase in the buffer rate until in mid-2021 The gap between capital requirements and capital at the earliest. The timing of the recommendation and base has largely widened, primarily as a result of the pace of rebuilding the buffer will depend on how the release of the countercyclical capital buffer. The speedy the economic recovery is. The development big banks cancelled dividend payments and their and behaviour in the financial sector will also have an ­planned­ and existing share buy-back programmes. impact on the rebuilding of the buffer. This has allowed the institutions to build up additi- onal loss-absorbing capital, which has also contri- The Systemic Risk Council is also macroprudential buted to the higher excess capital adequacy in the authority for the Faroe Islands and . This banking sector relative to 2019. In a longer-term means that the Systemic Risk Council also here perspective, banks are generally better capitalised monitors systemic risks and recommends macropru- today than, for example, in the run-up to the 2008-09 dential policy measures aimed at promoting good financial crisis. practice and limiting risk-taking.

Danmarks Nationalbank’s stress test from December In March 2020, the Systemic Risk Council recom- shows that individual systemic credit institutions will mended to the Minister for Industry, Business and exceed the requirements for their capital buffers in Financial Affairs that a lower limit be introduced for a severe and early recession. None of the systemic when credit institutions on the Faroe Islands can credit institutions fail to comply with their minimum be designated as systemically important financial capital adequacy requirements. institutions. The Systemic Risk Council also recom- mended that the general systemic buffer rate on the In 2020, Danmarks Nationalbank continued its work Faroe Islands be temporarily reduced to 2 per cent. to analyse how climate change may affect economic The Minister for Industry, Business and Financial and financial stability. Danmarks Nationalbank pub- Affairs decided to follow both recommendations. In lished a climate stress test that examines how the September, the Systemic Risk Council decided that banking sector may be impacted by the risks that it will not recommend increasing the systemic risk may occur when moving towards a greener econo- buffer on the Faroe Islands to 3 per cent until in 2021 my – the so-called transition risks. at the earliest.

DANMARKS NATIONALBANK ANNUAL REPORT 2020 13 Secure payments tant payment solutions. In 2020, Danmarks National- bank worked with assessment of Kronos2 according to international standards. Conclusions from the oversight are reported in the annual publication on Danmarks Nationalbank contributes to the oversight of the financial infrastructure. secure and efficient settlement of electronic payments in Denmark, among other things There was still focus on cybersecurity in the pay- by ensuring that the banks can settle their ments infrastructure oversight in 2020. Danmarks inter-bank transactions, and by overseeing Nationalbank has, for example, made an assess- systemically important payment and settlement ment of VP Securities’ compliance with international systems. In addition, Danmarks Nationalbank guidelines for handling of cybersecurity risks. chairs the Danish Payments Council and the Financial Sector Forum for Operational Since the beginning of 2019, a special unit in Dan- Resilience. marks Nationalbank has coordinated testing of the cyber resilience of the largest financial institutions Danmarks Nationalbank is banker to the banks for through so-called threat-based red team testing payments in Danish kroner handled in Danmarks ­(TIBER-DK), which involves an ethical hacker team Nationalbank’s payment and settlement system, trying to access pre-specified functionalities and Kronos2. data of critical importance to society in the institu­ tions’ IT systems by simulating real cyber attacks. Since 2018, securities transactions in Danish kro- The goal is to pinpoint weaknesses in the cyber ner have primarily been settled on the European defence, after which they can be addressed in order payment and securities settlement platform Target to increase cyber resilience. Services. From and including November 2022, Target Services will be able to settle payments Financial Sector Forum for Operational Resilience between banks. Therefore, Danmarks Nationalbank Danmarks Nationalbank chairs and provides sec­ intends to gather the settlement of the banks’ pay- retariat services for the Financial Sector Forum for ments and securities transactions in Danish kroner Operational Resilience (FSOR), which is a partnership on Target Services. In addition, Danish kroner will between 25 key private financial sector participants also be connected to a European settlement system and the supervisory authorities in the financial sector. for instant payments called Target Instant Payment Settlement (TIPS). In 2020, FSOR updated the analysis of systemic risks that may pose a threat to the financial sector. Migrating to a new platform paves the way for closer Based on the identified risks, measures are prepared collaboration with other central banks in Europe, which can reduce the likelihood and impact of the including in the area of cyber threats. The use of a risks. Danmarks Nationalbank published the analysis joint IT platform also results in economies of scale. ­methodology on its website in 2020. The migration is expected to be implemented during 2024/25. During 2020, the insurance and pension industry has also prepared a risk analysis based on the same A number of Nordic banks collaborate on the estab- methodology as the rest of the financial sector. The lishment of a joint Nordic infrastructure for clearing risks faced by the overall financial sector have thus and settling retail payments in Denmark, Sweden now been identified through a risk analysis. and Finland. The collaboration is called P27 with reference to the approximately 27 million inhabitants During the summer, Danmarks Nationalbank con- in the Nordic region. Danmarks Nationalbank is in ducted the third survey on cyber resilience among dialogue with P27, one object being to ensure that, the participants in FSOR. Similar surveys were con- also in future, there will be appropriate monitoring ducted in 2016 and 2018. However, the bar is raised of retail payments in Danish kroner. in the surveys in line with the current development in risks. Based on the organisations’ self-assessment, Danmarks Nationalbank is responsible for oversee- the survey provides an overview of cyber maturity in ing that the Danish payments infrastructure is secure the financial sector. The survey for 2020 indicates a and efficient and in compliance with international significant improvement relative to the previous sur- standards. The oversight comprises the Danish pay- veys, but also highlights specific areas in which the ment and settlement systems and the most impor­ level can still be raised both individually and jointly.

14 DANMARKS NATIONALBANK ANNUAL REPORT 2020 The Danish Payments Council series, and the update of the banknote The object of the Danish Payments Council is to series includes new security features. promote the efficiency and security of payments for citizens, corporations and banks. Danmarks Na­ The previous framework agreement with Mint of tionalbank chairs and provides secretariat services Finland on supply of Danish coins expired in spring for the Danish Payments Council. Nine member 2020, and, following a new public procurement pro- organisations are represented on the Council. cedure, Danmarks Nationalbank entered into a new framework agreement with Mint of Finland on the The Danish Payments Council continuously follows embossing of Danish coins. the developments in the retail payments area, including the implementation of new legislation Danmarks Nationalbank issues a commemorative and developments in third-party service providers. coin to mark special events in the Royal Family. On New statutory requirements for, for example, higher the occasion of the 80th birthday of Her Majesty security standards for online payments were an Queen Margrethe II on 16 April 2020, Danmarks important issue in the payments area in 2020, as Nationalbank therefore issued a commemorative payments that are not linked to strong customer coin. The coin was minted as a silver 500-krone coin, authentication generally will not be completed after a 20-krone circulation coin and a 20-krone coin in a 1 January 2021. proof version with a more sharply embossed motif. There was particularly great demand for this com­ As part of the Council’s work, the members have mem­orative coin. The coins are legal tender and can also discussed developments in the European be exchanged at Danmarks Nationalbank at face payments market and the impact of the coronavirus value. pandemic on the payment habits of citizens and corporations. Since the beginning of 2020, Dan- Restoration and renovation of Havnegade 5 marks Nationalbank has published three analyses Danmarks Nationalbank’s building at Havnegade in on citizens’ payment habits, which are available on Copenhagen will be undergoing major and necessa- Danmarks Nationalbank’s website. ry restoration and renovation work.

Banknotes and coins in circulation The construction period is expected to run over Danmarks Nationalbank is the banknote and coin several years, and the majority of Danmarks Na­ issuing authority in Denmark. tionalbank’s employees have moved to a temporary domicile at Langelinie Allé in Copenhagen. The value of banknotes and coins in circulation was kr. 74.5 billion at the end of 2020. This was kr. The building in Havnegade, in the centre of Copen- 4.0 billion up on the previous year and equal to an hagen, is part of our cultural heritage, and as the increase of 5.6 per cent. The value of banknotes owner of the building, Danmarks Nationalbank has a in circulation was kr. 68.4 billion, of which Faroese responsibility to protect the architecture and pre­ banknotes in circulation constituted kr. 0.5 billion. serve the cultural heritage for posterity. The building The total value of coins in circulation was un­ was listed by the then Danish Agency for Culture changed at kr. 6.1 billion. and Palaces in 2009 because of its architectural and cultural historical values. Counterfeiting of Danish banknotes remains very limited. The number of registered counterfeit The restoration and renovation include replacement banknotes rose from 672 in 2019 to 727 in 2020. Of of marble and glass façades, PCB clean-up and im- these, 409 were found in circulation. The counterfeit provement of fire safety, interior design and indoor banknotes registered were mainly kr. 1000 bank­ climate. At the same time, the interiors must be notes. Registered counterfeit banknotes account for updated to meet the requirements of a modern and less than four banknotes per million in circulation, flexible workplace. The adaptations are being made based on a total number of banknotes in circulation with respect for Arne Jacobsen’s architecture and in of 187.8 million. This is a very limited number in an close dialogue with the Danish Agency for Culture international context. and Palaces.

On 17 November 2020, Danmarks Nationalbank put Settlement of shareholdings an updated kr. 500 banknote into circulation. This is The role of Danmarks Nationalbank is to act as the first banknote denomination in the new 2009A authority, including in relation to supervision of the

DANMARKS NATIONALBANK ANNUAL REPORT 2020 15 financial sector. A couple of years ago, Danmarks The renovation of the Danmarks Nationalbank build- Nationalbank therefore initiated a process aimed ing in Havnegade will cost considerably in the next at the gradual sale of its interests in commercial few years. corporations exposed to competition. In 2020, VP Securities was acquired by Euronext, and Danmarks Allocation of profit for the year Nationalbank’s interest of 24.2 per cent was thus The result basis for the transfer to the central sold. Danmarks Nationalbank is consequently no government is calculated as the average of the finan- longer a co-owner of any joint corporations in the cial results of the last five years, excluding gold price financial sector. adjustments. If the result basis is negative, Danmarks Nationalbank’s net capital absorbs the deficit.

If the result basis is positive, a decision is made on Result for the year 2020 any transfer based on the development in net capi- tal. The determination of the transfer rate takes into account that, over time, Danmarks Nationalbank’s Danmarks Nationalbank posted a profit of kr. 1,616 net capital should increase at the same rate as million in 2020 against a profit of kr. 6,096 million in nominal GDP – unless there is an extraordinary need 2019. for consolidation, in which case the medium-term transfer rate may be deviated from. This is based on The profit for the year was driven by the factors a projection of Danmarks Nationalbank’s earnings. presented in Chart 4. No transfer is made to the central government for Gold stock, equity exposure and bond holdings all the 2020 financial year. Interest rates are expected to contributed significantly to the profit for the year. remain low, and Danmarks Nationalbank is therefore The value of Danmarks Nationalbank’s gold stock expected to post very low earnings or even a loss in rose by kr. 2.9 billion in 2020, while capital gains on the coming years, while net capital is expected to fall equities contributed kr. 1.0 billion. The bond portfo- relative to the development in nominal GDP. lio contributed kr. 0.7 billion. The profit of kr. 1,616 million for the year will be Interest costs totalled kr. 2.2 billion, primarily due transferred to the General Reserves. The net capital to a large share of the foreign exchange reserve subsequently amounts to kr. 81,402 million. being held at negative interest rates. Conversely, interest on deposits generated income of kr. 1.5 billion.

The profit for the year does not change the fact that Danmarks Nationalbank’s earnings remain structurally low due to low interest rates. The more stable earnings share normally comes from seignorage and the return on net capital. When interest rates are negative, their earnings contribu- tion is also negative. This puts pressure on Dan- marks Nationalbank’s earnings. This is also reflect- ed in the profit for the year. Disregarding the high capital gain on gold in 2020, the result would have been a loss for the year.

Costs, depreciation and amortisation totalled kr. 1.1 billion, which is an increase of 15 per cent on 2019. The development is due to a combination of several factors, but is primarily the result of an increase in costs due to operation and maintenance of sever- al new locations as well as relocation costs and IT costs.

16 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Profit for 2020 Chart 4

Kr. billion

6.0

4.0 2.9

2.0 -0.9 -2.2 1.0 0.0 1.5 -1.4 0.7 -2.0

-4.0

-6.0

Costs, Money market, Exchange rate Bonds Interest on Equity Gold etc.1 etc.2 adjustments domestic deposits3 exposure

Source: Danmarks Nationalbank.

1. Costs, dividend and profit margins from financial fixed assets, etc.

2. Including currency hedging costs.

3. Interest from banks and central government, etc.

DANMARKS NATIONALBANK ANNUAL REPORT 2020 17 Financial ratios

PROFIT FOREIGN EXCHANGE RESERVE

Kr. 1,616 million Kr. 439 billion Kr. 4,480 million Kr. 2.2 billion

The result for the year was a profit of kr. 1,616 Danmarks Nationalbank sold currency for a million, compared with kr. 6,096 million in total amount of kr. 78 billion during the first 2019. Gold stock, equity exposure and bond three months of the year. This contributed to holdings all contributed significantly to the a reduction in the foreign exchange reserve. profit for the year. Interest costs totalled kr. 2.2 billion, primarily due to a large share of the foreign exchange reserve being held at negative interest rates.

CERTIFICATES OF DEPOSIT VALUE OF THE GOLD STOCK

-0.60 per cent Kr. 25 billion 0.15 basis points 13 per cent

Danmarks Nationalbank changed the Danmarks Nationalbank’s gold stock was an monetary policy interest rate once in 2020, unchanged 66.5 tonnes, and constitutes only lowering the interest rate on certificates of a small part of its foreign exchange reserve. deposit by 0.15 percentage points to -0.60 The price of gold measured in kroner per cent in March. increased by kr. 3 billion.

18 DANMARKS NATIONALBANK ANNUAL REPORT 2020 CIRCULATION OF BANKNOTES AND COINS

The value of banknotes and coins in circulation was kr. 74.5 billion.

At the end of 2020, the value of banknotes in circulation was kr. 68.4 billion, while the total value of coins in circulation was kr. 6.1 Banknotes billion. The value of Faroese Coins banknotes in circulation Faroe Islands amounted to kr. 0.5 billion. banknotes

10-YEAR GOVERNMENT BONDS

The Danish government Per cent bond yield fell by about 0.2 1.0 percentage points during Denmark 2020 to -0.4 per cent at 0.5 the end of the year. Danish government bond yields 0.0 have generally followed the Germany equivalent German yields -0.5 very closely.

-1.0 The chart shows par yields 2015 2016 2017 2018 2019 2020 in Denmark and Germany in the ten-year maturity segment.

DANMARKS NATIONALBANK ANNUAL REPORT 2020 19 Organisation

Staff

Danmarks Nationalbank had 432 full-time employees vey on well-being was conducted in April 2020, and at the end of 2020, of whom 219 were employed in the the annual Employee Engagement Survey (MTU) economic departments. This is roughly unchanged rel­ was conducted in October, with the focus being on ative to the previous year. Staff turnover fell in 2020 to the changing working conditions resulting from the 14.5 per cent from 15.3 per cent in 2019. A total of 68 coronavirus situation. employees left Danmarks Nationalbank during 2020, and 69 new employees were appointed. Most of the Both surveys showed that the employees were new appointments were jobs being refilled following largely satisfied with good remote leadership in terminations of employment. There was also a slight the difficult situation triggered by the coronavirus increase in human resources in economic research. pandemic. The MTU thus showed that job satisfac­ tion only fell by one index point relative to last year, In 2020, total absence due to illness decreased to 5.0 although many employees in the survey responded days per employee against 6.8 days per employee in that they miss interacting socially with their man­ 2019. Excluding long-term absence due to illness, ab- agers and colleagues. sence due to illness decreased to 2.7 days per employ- ee against 4.1 days per employee in 2019. After 36 years with Danmarks Nationalbank, Gover- nor Hugo Frey Jensen decided to retire. After an Remote leadership open and wide recruitment process, Signe Krog- The coronavirus also made its mark on the leadership strup, former Assistant Governor of Danmarks Na­ of Danmarks Nationalbank in 2020, which was largely tionalbank, was appointed by the Board of Directors virtual and remote, as the vast majority of employees to take over the position as Governor of Danmarks worked from home for much of the year. A mini-sur- Nationalbank with effect from 1 November 2020.

DEVELOPMENT IN FULL-TIME EQUIVALENTS

Women Men

500

400 300 41 % 200 59 %

100

0 2015 2016 2017 2018 2019 2020 2019 and 2020

20 DANMARKS NATIONALBANK ANNUAL REPORT 2020 5.0 days a year in absence due to illness

WORK SATISFACTION ABSENCE DUE TO ILLNESS

In 2020, work satisfaction was almost unchanged Total Excluding long-term absence compared to the previous year

76 76 77 76 5.4 4.2 8.1 5.4 5.6 3.9 5.0 4.1 6.8 4.1 5.0 2.7

2017 2018 2019 2020 2015 2016 2017 2018 2019 2020

DANMARKS NATIONALBANK ANNUAL REPORT 2020 21 Danmarks Nationalbank’s ...continued representation on committees, Elected by the Folketing in international organisations, etc. for the period ending 31 March 2022: , MP Jacob Jensen, MP As at 1 March 2021, Danmarks Nationalbank is represented , MP on the following committees, international organisations etc.: , MP , MP The (EU) Jesper Petersen, MP The European Systemic Risk Board (ESRB) , MP Governor Lars Rohde is a member. , MP

The Economic and Financial Committee Appointed by the Minister for Industry, Business and Governor Signe Krogstrup is a member. Financial Affairs for the period ending 31 March 2022: Michael Dithmer, Permanent Secretary of State The European (ECB) for Industry, Business and Financial Affairs The General Council Johan Legarth, Permanent Secretary of State for Justice Governor Lars Rohde is a member. Elected by the for the period The International Monetary Fund (IMF) Board of Directors ending 31 March: Board of Governors Peter Gæmelke, Farmer, Governor Lars Rohde is the Danish member. former Chairman of Danish Agriculture 2021 Claus Jensen, President 2021 The Nordic/Baltic Monetary and Financial Committee Lizette Risgaard, President 2021 Governor Signe Krogstrup is a member. Asger Enggaard, Managing Director 2022 Kristian Hundebøll, CEO 2022 Bank for International Settlements (BIS) Anja Philip, Meeting of Governors, Global Economy Meeting President of the Danish Consumer Council 2022 Governor Lars Rohde represents Danmarks Nationalbank. Jens Bjørn Andersen, CEO 2023 Professor Christian Schultz 2023 The Organisation for Economic Cooperation Anne Hedensted Steffensen, Managing Director 2023 and Development (OECD) Bent Jensen, CEO 2024 The Economic Policy Committee Professor Philipp Schröder 2024 Governor Signe Krogstrup is a member. Gitte Pugholm Aabo, CEO 2024 Per Bank, CEO 2025 Nordic-Baltic Macroprudential Forum Eva Berneke, CEO 2025 Governor Lars Rohde is a member. Grete Christensen, President of Danish Nurses Organization (DNO) 2025 The Danish Payments Council Governor Per Callesen is the Chairman.

The Systemic Risk Council (DSRR) Danmarks Nationalbank’s Committee of Box 2 Governor Lars Rohde is the Chairman. Directors as at 1 March 2021 Governor Per Callesen is a member.

The Economic Council Chairman: Professor Christian Schultz Governor Signe Krogstrup is a member. Deputy Chairman: Michael Dithmer, Permanent Secretary of State for Industry, Business and Financial Affairs The Governing Board of the Danish Financial Supervisory Authority Elected by the Board of Directors Assistant Governor Karsten Biltoft is a member. for the period ending 31 March 2021: Per Bank, CEO The Coordination Committee on Financial Stability Grete Christensen, Governor Per Callesen is a member. President of Danish Nurses Organization (DNO) Kristian Thulesen Dahl, MP Christian Rabjerg Madsen, MP Danmarks Nationalbank’s Box 1 Professor Christian Schultz Board of Directors as at 1 March 2021 Appointed by the Minister for Industry, Business and Financial Affairs for the period ending 31 March 2022: Chairman: Professor Christian Schultz Michael Dithmer, Permanent Secretary of State for Indu- Deputy Chairman: Anne Hedensted Steffensen, stry, Business and Financial Affairs Managing Director To be continued... Johan Legarth, Permanent Secretary of State for Justice

22 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Organisation chart 1 March 2021

Board of Directors

Committee of Directors

Audit Bethina Hamann

Board of Governors

Governor by Governor Royal Appointment, Governor Signe Krogstrup Chairman Per Callesen Lars Rohde

Banking Secretariat and Financial Stability and Markets Communications Karsten Biltoft Lars Mayland Nielsen Camilla Penn

Statistics Economics and Bent Christiansen Monetary Policy Thomas Harr From 1 May 2021 Cash Supply Bolette Møller

Research Federico Ravenna Corporate Services Lone Mortensen

DANMARKS NATIONALBANK ANNUAL REPORT 2020 23 Risk management

Financial portfolios

Danmarks Nationalbank’s financial portfolios In addition to ensuring a sufficiently liquid foreign comprise its foreign exchange reserve of kr. 439 exchange reserve, Danmarks Nationalbank has the billion and its holding of domestic bonds of kr. secondary objective of realising the highest possible 33 billion. returns while keeping the level of risk low. Conse- quently, Danmarks Nationalbank is also exposed to, for example, equities and corporate bonds, which The primary purpose of the foreign exchange re- contributes to increasing projected earnings and serve is to ensure that Danmarks Nationalbank will diversifying risk. The aggregate risk is 10 per cent of be able to intervene in the foreign exchange markets the net capital1, see Table 1. at short notice to support the fixed exchange rate policy. Moreover, the foreign exchange reserve must Danmarks Nationalbank’s stock of gold and claim on be able to support financial stability and finance the IMF are included in the foreign exchange reserve. loans to the International Monetary Fund (IMF). Under the National Bank of Denmark Act, Danmarks In the first quarter of 2020, the foreign exchange Nationalbank must hold a stock of gold. The gold reserve decreased as a result of Danmarks Nation- stock is 66.5 tonnes and has been virtually constant albank’s intervention sales of currency of kr. 78 in size since 1970. The value was kr. 25 billion at the billion. The foreign exchange reserve subsequently end of 2020. increased again because the central government raised foreign loans. The IMF lends money to countries in economic difficulties and finances these loans via the member The purpose of the foreign exchange reserve re- countries’ quotas and loan commitments, including quires deposits and investments with high liquidity via Danmarks Nationalbank. Danmarks National- and credit standings. Most of the foreign exchange bank’s total claim against the IMF was kr. 22 billion at reserve is placed in accounts at central banks, as the end of 2020. Danmarks Nationalbank has made secured deposits with commercial banks (reverse additional commitments totalling kr. 106 billion. repos) and in government bonds that can be sold or While the commitments are significant, the draw is pledged as collateral within a short time horizon. expected to be low.

1 Compiled on the basis of an expected shortfall of 95 per cent, which is the average loss in the 5 per cent worst-case scenarios in Danmarks Nationalbank’s risk model.

24 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Danmarks Nationalbank’s financial portfolios Table 1

Kr. billion 2020 2019

Foreign bonds 131 138

Government bonds with a credit rating of AA- or higher 67 62

Government bonds with credit ratings of BBB- to A+ 24 25

Other bonds with a credit rating of AA- or higher¹ 40 51

Domestic bonds 33 32

Money market products (central bank deposits, reverse repo transactions etc.) 249 254

Other holdings and exposures

Gold 25 22

Exposure to equities 11 10

Exposure to corporate bonds 3 3

IMF2 22 19

Selected risk measures/financial ratios

95 per cent expected shortfall3 as a percentage of net capital 10 10

Krone duration 2.4 2.3

Combined average rating of the portfolio4 AA+ AA+

Foreign exchange exposure (before FX hedge in brackets)

EUR 394 (310) 405 (324)

USD 0 (42) 0 (43)

Other 0 (40) 0 (38)

Note: The table shows the lowest credit ratings given by Fitch, Moody’s and Standard & Poor’s, respectively. Rounded figures. Source: Danmarks Nationalbank, Fitch, Moody’s and Standard & Poor’s.

1. Including securities issued by the Bank for International Settlements (BIS) which are not subject to credit rating.

2. Debt to the IMF as a consequence of the allocation of Special Drawing Rights totals kr. 13 billion.

3. The 95 per cent expected shortfall has been calculated for a one-year horizon. The underlying risk factors are estimated on the basis of obser- vations from 1999 onwards.

4. The average credit rating is weighted by the market values of the holdings. Holdings without credit ratings (primarily BIS) are not included.

DANMARKS NATIONALBANK ANNUAL REPORT 2020 25 Risks on loans to banks and mortgage credit institutions Collateral basis and lending

Danmarks Nationalbank provides monetary policy In 2020, the use of ordinary monetary policy loans loans with a term of one week to monetary policy was very limited, as in previous years. By contrast, counterparties based on traditional pledging of the extraordinary facilities in both kroner and dollars securities, while intraday credit is also provided to were widely used, especially in the first part of the facilitate the settlement of payments.2 period, see Chart 5. The extraordinary facilities were drawn on occasionally during the rest of the year. Due to uncertainty about the impact of the corona­ Danmarks Nationalbank did not receive bids at the virus pandemic on the liquidity situation of the sec- euro auctions. tor, Danmarks Nationalbank established an extraor- dinary lending facility in Danish kroner for monetary At the end of 2020, no ordinary monetary policy policy counterparties in March. The facility has been loans or extraordinary loans had been granted in offered with terms of one week and three months at kroner, but there were loans in dollars equal to ap- a favourable interest rate compared with traditional proximately kr. 2 billion. monetary policy 1-week loans. In addition, Danmarks Nationalbank established dollar and euro auctions The collateral basis for traditional pledging of for monetary policy counterparties based on swap collateral consists of Danish government securities, agreements with the Fed and the ECB, respective- bonds guaranteed by the Danish government, mort- ly.3 All extraordinary facilities have been provided gage bonds and bonds issued by Kommune­Kredit against traditional pledging of securities. and ­Føroya Landsstýri. The collateral value – i.e. ­ the market value less the haircut of the securities No ceiling has been imposed on the amounts that pledged by the counterparties to Danmarks Natio- the counterparties may borrow from Danmarks Na- nalbank – amounted to approximately kr. 114 billion tionalbank, but adequate collateral must always be at the end of 2020, see Chart 6. pledged. Only if two events occur simultaneously will Danmarks Nationalbank suffer losses on lending: the Within each monetary policy day, the institutions can default by a counterparty combined with the realisa- use a drawing right in connection with the settle- tion value of the collateral pledged being lower than ment of payments, securities and currencies as well the credit provided. A deduction, a so-called haircut, as interbank payments. The size of the credit line is is used in the calculation of the collateral value. The determined by the institutions’ pledging of securities risk of credit loss is very low. to Danmarks Nationalbank as collateral, their hold­

2 Intraday credit is used by the institutions mainly in connection with the settlement of securities and payments, where Danmarks National­ bank guarantees the institutions’ payment obligations on a fully secured basis. Finally, Danmarks Nationalbank provides loans to cash centres.

3 The interest rate on the foreign exchange facilities was determined per auction based on the participants’ bids and a minimum bid rate set by the Fed and the ECB, respectively.

26 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Loans to monetary policy counterparties Chart 5

Kr. billion, end-of-month

120

100

80

60

40

20

0 Dec 19 Feb 20 Apr 20 Jun 20 Aug 20 Oct 20 Dec 20

Extraordinary lending facility, 1 week Extraordinary lending facility, 3 months USD loans

Source: Danmarks Nationalbank.

Collateral value of pledged securities Chart 6

Kr. billion, end-2020

100 11 3

Mortgage bonds Danish government securities Other bonds

Note: Mortgage bonds comprise both specially covered bonds (SDOs), specially covered mortgage bonds (SDROs) and mortgage bonds (ROs). Other bonds consist of bonds issued by KommuneKredit and Føroya Landsstýri or guaranteed by the Danish central government. Rounded figures. Source: Danmarks Nationalbank. ings of certificates of deposit issued by Danmarks Danmarks Nationalbank has a constant focus on risk Nationalbank, their account deposits with Danmarks management and seeks to identify, assess, man- Nationalbank (Kronos2) and the facilities of the auto- age and follow up on significant operational risks. matic collateralisation arrangement with VP Securi­ Danmarks Nationalbank also works continuously ties and auto-collateralisation with Target2Securities to strengthen crisis response plans and business (T2S).4 The credit must be redeemed before the end continuity plans in the event of critical situations. The of the monetary policy day. work also involves continuous development of and participation in the financial sector’s crisis response under the Financial Sector Forum for Operational Resilience (FSOR). Operational risk Risk management in connection with covid-19 In connection with the spread of covid-19 in Den- Operational risk is the risk of direct or indirect losses mark, Danmarks Nationalbank has actively assessed due to inadequate or failed internal processes, the situation in relation to risks to the organisation ­human errors and actions, system errors or losses and necessary precautions. Danmarks National- due to external events. Operational risk also com­ bank’s internal crisis response has been activated prises business, compliance and reputational risks. since the beginning of February. As indicated by the definition, operational risk is often associated with specific individual events. Danmarks Nationalbank’s internal crisis response has had three main focus areas: Maintaining and developing a high risk-based security level is considered to be a precondition for • Keeping the risk of infection among staff as low as maintaining Danmarks Nationalbank’s credibility, possible. and a robust Danish economy. Risk management is • Minimising the risk of failures of critical functions based on Danmarks Nationalbank’s risk strategy and and those functions where physical attendance is appetite, which determine the overall requirements necessary. and formulate the risk handling tolerance levels. • Ensuring a balance between covid-19 measures and the need for stable operations aimed at mini­ As a consequence of Danmarks Nationalbank’s activ­ mising the impact on Danmarks Nationalbank’s ities, the organisation is exposed to a broad range other tasks. of different risks. Risk management focuses on the following areas, in particular: Due to the risk of infection, a large part of Dan- marks Nationalbank’s staff have worked from home • Physical security throughout the period, and, in terms of physical • IT security attendance, Danmarks Nationalbank has only had • Cyber threats minimum manning in certain periods. Since Febru- • Manual errors and process errors. ary, the critical functions have worked in a split team structure, in which the functions are shared between

4 The collateral basis under the automatic collateralisation arrange- ment and the T2S auto-collateralisation is the same as for Danmarks Nationalbank’s monetary policy lending.

28 DANMARKS NATIONALBANK ANNUAL REPORT 2020 two teams that take turns working onsite and from home.

Regarding crisis response, Danmarks Nationalbank has also participated in coordination as an ad hoc member of the National Operative Staff (NOST) and has handled the crisis response focus on the finan- cial sector through the leadership of FSOR’s crisis response.

Insurance strategy

Danmarks Nationalbank’s insurance policies and insurance strategy are reviewed annually in col- laboration with an external insurance broker. The composition of Danmarks Nationalbank’s insurance portfolio is anchored in a risk-based assessment of possible losses, and thus the continuous evaluation of areas to be insured and the extent to which they are to be covered.

DANMARKS NATIONALBANK ANNUAL REPORT 2020 29 30 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Accounts of the year 2020

DANMARKS NATIONALBANK ANNUAL REPORT 2020 31

KeyKEY FIGURES figures AND andFINA NCIALfinancial RATIOS 2016-20 ratios 2016-20

Income statement (kr. million) 2020 2019 2018 2017 2016

Net income from interest, etc. -628 -22 -315 -851 -51 Value adjustment of gold 2,863 3,832 621 -271 2,001 Other value adjustments 236 3,178 520 1,621 1,723 Income from financial fixed assets, etc. 213 19 18 39 957 Other income 2 2 1 19 4 Expenses, including depreciation and amortisation -1,051 -913 -869 -792 -707 Other expenses -19 - - -19 -

Net profit/loss for the year 1,616 6,096 -24 -254 3,928

Allocated as follows: Allocation to/from net capital 1,616 6,096 -24 -254 3,083 Payable to the central government - - - - 845

1,616 6,096 -24 -254 3,928

Balance sheet (kr. million) 2020 2019 2018 2017 2016

Assets Foreign exchange reserve assets 440,328 444,317 461,314 465,333 459,040 Monetary policy lending - - - - - Other lending 3,900 2,091 1,185 2,094 3,530 Domestic bonds 32,906 32,099 32,579 32,935 32,926 Other assets, etc. 4,235 2,429 1,963 2,856 2,444

Total assets 481,369 480,936 497,041 503,218 497,940

Liabilities Banknotes and coins in circulation 74,524 70,552 70,793 70,997 70,923 Monetary policy deposits 164,003 230,566 210,849 189,967 201,796 Central government 136,875 70,411 111,674 134,689 111,772 Foreign exchange reserve debt 1,342 3,101 2,279 3,540 3,004 Other liabilities 23,223 26,521 27,757 30,312 36,478

Total creditors 399,967 401,151 423,352 429,505 423,973

Total net capital 81,402 79,785 73,689 73,713 73,967

Total liabilities 481,369 480,936 497,041 503,218 497,940

Key figures and financial ratios 2020 2019 2018 2017 2016

Foreign exchange reserve (kr. million) 438,986 441,216 459,035 461,793 456,036 Net position of banks and mortgage credit institutions vis-à-vis Danmarks Nationalbank (kr. million) 164,003 230,566 210,849 189,967 201,796 Change in banknotes and coins in circulation (per cent) 5.6 -0.3 -0.3 0.1 1.1 Change in net capital (per cent) 2.0 8.3 0.0 -0.3 4.3

Average no. of staff (full-time equivalents) 424 425 420 395 451

DANMARKS NATIONALBANK ANNUAL REPORT 2020 33 3 27-01-2021 Board of Governors’ report on Danmarks Nationalbank’s Accounts

The result for the year was a profit of kr. 1,616 million, In connection with the sale of VP Securities A/S against a profit of kr. 6,096 million in 2019. to Euronext in 2020, Danmarks Nationalbank ­achieved a net profit of kr. 209 million on the sale The development in the profit for the year relative to of its holdings. last year is ascribable, in particular, to a decline in the result from financial portfolios of kr. 4,517 million to kr. Danmarks Nationalbank’s total operating expenses 2,471 million against kr. 6,988 million in 2019. increased by kr. 128 million to kr. 965 million in 2020 against kr. 837 million in 2019. The changes are due The value adjustment of gold represents a gain of kr. to a combination of several factors, including an 2,863 million in 2020 as a result of an increase in the increase in expenses connected with relocation to as gold price converted into Danish kroner of 13 per cent, well as operation and maintenance of new premises. which is a decline in income of kr. 969 million relative Furthermore, there was an increase in IT operating to 2019. Market value adjustments of foreign ex­ expenses of kr. 55 million. change­ positions resulted in a decline in income of kr. 1,359 million to a total of kr. 1,598 million. In addition, Expenses for procurement of banknotes and coins the Danish krone was strengthened against the euro increased by kr. 15 million to kr. 34 million in 2020. during 2020, generating a loss from exchange rate The increase is primarily due to procurement and adjustments of kr. 1,417 million in 2020 against a gain delivery of new 500-krone bank­notes. of kr. 131 million at the end of 2019. Depreciation, amortisation and impairment charges The financial result has also been negatively affected totalled kr. 86 million, which is an increase of kr. 10 by the development in net income from interest, etc. In million relative to 2019. The increase is due to the 2020, Danmarks Nationalbank had net expenses of kr. capitalisation of a number of major IT and renova­ 628 million against net expenses of kr. 22 million in 2019. tion projects in recent years. The change is primarily due to income from interest on issued certificates of deposit decreasing by kr. 506 In 2020, Danmarks Nationalbank had other expenses million as a result of lower average deposits. In turn, of kr. 19 million for the payment of seigniorage on Danmarks Nationalbank generated additional income of the commemorative coin “Queen Margrethe’s 80th kr. 110 million from interest on the balance of the central birthday”. government’s account, primarily as a result of the ave­ rage deposits increasing to kr. 146 billion in 2020. Allocation of profit/cover of loss for the year The profit for the year of kr. 1,616 million is trans­ No credit losses were registered on Danmarks Na­ ferred to Danmarks Nationalbank’s General Reserves. tionalbank’s commitments in 2020, and it is not deemed No transfer is made to the central government for to be necessary to make provisions for such losses at the 2020 financial year. The net capital subsequently year-end. amounts to kr. 81,402 million.

34 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Statement by the Board of Governors

The Board of Governors has today considered and approved the financial statements of Danmarks Nationalbank for the financial year 1 January - 31 December 2020.

The annual report has been prepared in accordance with the National Bank of Denmark Act.

In our opinion, the financial statements give a true and fair view of Danmarks Nationalbank’s assets, liabilities and financial position as at 31 December 2020 and of the result of Danmarks Nationalbank’s activities for the financial year 1 January - 31 Decem- ber 2020.

In our opinion, the Board of Governors’ report pro- vides a true and fair view of the matters described in the report.

Copenhagen, 23 February 2021

Board of Governors

Lars Rohde Per Callesen Signe Krogstrup Chairman

DANMARKS NATIONALBANK ANNUAL REPORT 2020 35 Internal Audit’s report

To the Board of Directors have gained during the audit, or otherwise seems to contain any material misstatement.

Opinion In our opinion and based on the work performed, In our opinion, the financial statements give a true the Board of Governors’ report on the activities and fair view of Danmarks Nationalbank’s assets, of Danmarks Nationalbank is in accordance with liabilities and financial position as at 31 December the financial statements and has been prepared in 2020 and of the result of Danmarks Nationalbank’s accordance with the requirements laid down in the activities for the financial year 1 January - 31 Decem- National Bank of Denmark Act. We have not found ber 2020 in accordance with the National Bank of any material misstatements in the Board of Gover- Denmark Act. nors report.

What we have audited Danmarks Nationalbank’s Committee The financial statements of Danmarks Nationalbank of Directors and Board of Directors’ responsibility for the financial year 1 January - 31 December 2020 for the financial statements comprise the income statement, balance sheet, The Committee of Directors and the Board of Direc­ notes and accounting policies (the ‘financial state- tors are responsible for the preparation and fair ments’). presentation of financial statements in accordance with the National Bank of Denmark Act. The Commit- Statement on the Board of Governors’ report on the tee of Directors and the Board of Directors are also activities of Danmarks Nationalbank responsible for internal controls considered neces- The Board of Governors is responsible for the Board sary by the Committee of Directors and the Board of of Governors’ report on the activities of Danmarks Directors for preparing financial statements that are Nationalbank. free of material misstatement, whether due to fraud or error. Our opinion on the financial statements does not include the Board of Governors’ report on the ac- Basis of opinion tivities of Danmarks Nationalbank, and we do not We have conducted our audit in accordance with In- express any opinion with certainty about the report. ternational Standards on Auditing. Those standards require that we plan and perform the audit with a In connection with our audit of the financial state­ view to obtaining reasonable assurance that the fi- ments, it is our responsibility to read the Board of nancial statements are free of material misstatement. Governors’ report on the activities of Danmarks Nationalbank and in that connection to consider Our audit included an assessment of the Committee whether the report is materially inconsistent with of Directors’ and the Board of Directors’ established the financial statements or with the knowledge we procedures and internal controls that are relevant

36 DANMARKS NATIONALBANK ANNUAL REPORT 2020 to Danmarks Nationalbank’s preparation and fair presentation of the financial statements, including an assessment of the risk of material misstatement. The audit also included evaluating the appropriate­ ness of the accounting policies applied and the reason­ableness of accounting estimates made by the Committee of Directors and the Board of Directors, as well as evaluating the overall presentation of the financial statements.

The audit comprised the most significant areas and risk areas, and we believe that the audit evidence we have obtained is sufficient and appropriate to pro­ vide a basis for our audit opinion.

Copenhagen, 23 February 2021

Bethina Hamann State-Authorised Public Accountant

DANMARKS NATIONALBANK ANNUAL REPORT 2020 37 Independent auditors’ report

To the Board of Directors

Opinion Statement on the Board of Governors’ report In our opinion, the financial statements give a true on the activities of Danmarks Nationalbank and fair view of Danmarks Nationalbank’s assets, The Board of Governors is responsible for the liabilities and financial position as at 31 December Board of Governors’ report on the activities of 2020 and of the result of Danmarks Nationalbank’s Danmarks Nationalbank. Our opinion on the activities for the financial year 1 January - 31 Decem- financial statements does not include the Board ber 2020 in accordance with the National Bank of of Governors’ report on the activities of Dan- Denmark Act. marks Nationalbank, and we do not express any opinion with certainty about the report. What we have audited In connection with our audit of the financial The financial statements of Danmarks Nationalbank statements, it is our responsibility to read the for the financial year 1 January - 31 December 2020 Board of Governors’ report on the activities of comprise the income statement, balance sheet, Danmarks Nationalbank and in that connection notes and accounting policies (the ‘financial state- to consider whether the report is materially in- ments’). consistent with the financial statements or with the knowledge we have gained during the audit, Basis of opinion or otherwise seems to contain any material We conducted our audit in accordance with Inter- misstatement. national Standards on Auditing (ISA) and additional requirements applying in Denmark. Our responsibil­ In addition, it is our responsibility to consider ity according to these standards and requirements whether the Board of Governors’ report on is described in more detail in the section Auditors’ Danmarks Nationalbank’s financial statements responsibility for audit of the financial statements in includes the information required pursuant to this Auditors’ opinion. We are independent of Dan- the National Bank of Denmark Act. marks Nationalbank in accordance with the IESBA’s Code of Ethics for Professional Accountants and In our opinion and based on the work per­ the additional requirements applying in Denmark, formed, the Board of Governors’ report on and we have also complied with our other ethical the activities of Danmarks Nationalbank is in obligations in accordance with the IESBA’s Code of accordance with the financial statements and Ethics and these requirements. We believe that the has been prepared in accordance with the audit evidence we have obtained is sufficient and requirements laid down in the National Bank of appropriate to provide a basis for our audit opin­ Denmark Act. We have not found any material ion. misstatements in the Board of Governors report.

38 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Danmarks Nationalbank’s Committee • We identify and assess the risk of material mis- of Directors and Board of Directors’ responsibility statement in the financial statements, whether for the financial statements. due to fraud or error, plan and perform audit The Committee of Directors and the Board of activities in response to such risk and obtain Directors are responsible for the preparation and audit evidence that is sufficient and appropriate fair presentation of financial statements in accord­ to provide a basis for our audit opinion. The ance with the National Bank of Denmark Act. The risk of not discovering material misstatements Committee of Directors and the Board of Directors is higher for material misstatements resulting are also responsible for internal controls consid­ from fraud than for material misstatements ered necessary by the Committee of Directors resulting from error as fraud may include con- and the Board of Directors for preparing financial spiracy, forgery, wilful omissions, misrepresen- statements that are free of material misstatement, tation or non-observance of internal controls. whether due to fraud or error. • We gain insight into the internal controls of relevance to the audit in order to design audit When preparing the financial statements, the activities that are appropriate in the circum- Committee of Directors and the Board of Directors stances, but not to express an opinion on the are responsible for assessing Danmarks Nation­ effectiveness of Danmarks Nationalbank’s inter- albank’s ability to continue as a going concern, nal controls. for providing information about going concern • We consider whether the accounting policies issues where this is relevant and for preparing applied are appropriate and whether the ac- the financial statements on the basis of the going counting estimates made and related informa­ concern accounting principle, unless the Commit- tion prepared by the Committee of Directors tee of Directors and the Board of Directors plan and Board of Directors are reasonable. either to liquidate Danmarks Nationalbank or to • We express an opinion as to whether the discontinue operations, or have no other realistic preparation of the financial statements by the alternative to doing so. Committee of Directors and Board of Directors on the basis of the going concern accounting Auditors’ responsibility for audit principle is appropriate and whether, on the of the financial statements basis of the audit evidence obtained, there is Our objective is to obtain a high degree of cer- material uncertainty linked to events or circum- tainty that the financial statements as a whole stances that may cause substantial doubt as to are free of material misstatement, whether due to Danmarks Nationalbank’s ability to continue as fraud or error, and to present an auditors’ report a going concern. If we reach the conclusion that with an opinion. A high degree of certainty is a there is material uncertainty, we must in our high level of certainty, but is not a guarantee that auditors’ report draw attention to information an audit conducted in accordance with ISAs and about this in the financial statements or, if such the additional requirements applying in Denmark information is not sufficient, qualify our opinion. will always detect a material misstatement if it Our opinions are based on the audit evidence exists. Misstatements may occur as a result of obtained until the date of our auditors’ report. fraud or error and can be deemed to be material However, future events or circumstances could if it can reasonably be expected that they will, mean that Danmarks Nationalbank is no longer individually or jointly, have an impact on the finan- able to continue as a going concern. cial decisions made by users on the basis of the • We consider the overall presentation, struc- financial statements. ture and content of the financial statements, includ­ing information in the notes, and whether As part of an audit in accordance with ISAs and the financial statements reflect the underlying the additional requirements applying in Denmark, transactions and events in such a way that they we exercise professional judgment and maintain provide a true and fair view thereof. professional scepticism throughout the audit. We also:

DANMARKS NATIONALBANK ANNUAL REPORT 2020 39 We communicate with the top management on, inter alia, the planned scope and timing of the audit, as well as material audit observations, including any material shortcomings in the internal controls identi- fied by us during our audit.

Copenhagen, 23 February 2021

PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR number 3377 1231

Christian F. Jakobsen State-Authorised Public Accountant mne16539

Claus Christensen State-Authorised Public Accountant mne33687

40 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Signatures

These financial statements, audited in the manner pre- scribed by the by-laws of Danmarks Nationalbank, are hereby adopted by the Board of Directors at the meeting on 16 March 2021.

At 1 March 2021, the members of the Board of Directors are

Christian Schultz, Chairman Anne Hedensted Steffensen, Deputy Chairman

Jens Bjørn Andersen Per Bank Eva Berneke

Grete Christensen Rune Lund Kristian Thulesen Dahl

Michael Dithmer Asger Enggaard Peter Gæmelke

Kristian Hundebøll Bent Jensen Claus Jensen

Jacob Jensen Johan Legarth Christian Rabjerg Madsen

Sofie Carsten Nielsen Jesper Petersen Troels Lund Poulsen

Anja Philip Philipp Schröder Lizette Risgaard

Peter Skaarup Gitte Pugholm Aabo

DANMARKS NATIONALBANK ANNUAL REPORT 2020 41 Accounting policies

General principles The principles for and the classification of the individu- al items in the financial statements remain unchanged from the previous year. Danmarks Nationalbank’s financial statements for 2020 are presented in accordance with the Nation­ al Bank of Denmark Act. In all significant respects, these accounting policies are in accordance with Income statement the sound policies of European central banks in the euro area. The main differences relate to unrealised gains on foreign exchange and securities, which are Net income from interest, etc. recognised in the income statement in Danmarks Besides interest on interest-bearing assets and liabilities, Nationalbank’s financial statements. interest income and expenses comprise maturity reduc­ tions ­of the bond portfolios, fees, premiums and discounts The basic principle is that the financial reporting on Treasury bills and certificates of deposit, and income should reflect economic reality. The effects of from Exchange Traded Funds, as well as premiums on transactions and events are recognised when they forward securities and forward exchange contracts. occur and are stated and presented in the finan- cial statements for the year which they concern. Value adjustments, etc. The financial statements include all material and Value adjustments comprise market value adjustments relevant circumstances. Revaluations are shown and exchange rate adjustments concerning financial irrespective of their impact on profits and net assets and liabilities and gold. Both realised and unrea­ capital, and calculation and valuation methods lised gains and losses are recognised in the income are applied consistently within each category of statement. information. When initially recognised, assets and liabilities are stated at cost price. Subsequently, Income from financial fixed assets, etc. assets and liabilities are valued as described under Income from financial fixed assets etc. comprises -in each accounting item. come from shares received, net gains from the sale of financial fixed assets, etc., as well as revaluations and Transactions in foreign currency are converted to write-downs. Income is recognised in the year in which Danish kroner at the exchange rate applying on the dividend is announced. the transaction date. On the balance sheet date, financial assets and liabilities in foreign currencies Other income are converted at the exchange rates most recently Other income comprises income from Danmarks Na­ published by Danmarks Nationalbank. Both realised tionalbank’s sales of coins, etc., as well as other income and unrealised gains and losses are recognised in not related to Danmarks Nationalbank’s primary ac­ the income statement. tivities or not annually recurring.

42 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Expenses Repurchase agreements and securities lending, etc. Staff expenses comprise salaries and remuneration, Securities sold in connection with simultaneous re- including pension contributions and support, etc., purchase agreements and securities made available training costs and other staff expenses. Expenses for lending are included in Danmarks Nationalbank’s concerning banknote and coin production services respective holdings. comprise the costs of purchase of banknotes and coins produced by external suppliers. Other ex­ Financial fixed assets, etc. penses­ concern the operation of Danmarks Na- Financial fixed assets and similar investments and tionalbank’s properties, IT operations and other equity investments in associated companies (in which expenses. the ownership interest or voting rights are 20 per cent or more) are stated at the acquisition value, un- Other expenses less the fair value is lower. Other expenses comprise expenses not related to Danmarks Nationalbank’s primary activities or not Tangible and intangible fixed assets annually recurring. Tangible and intangible fixed assets comprise Dan- marks Nationalbank’s properties (land, buildings and building renovations), leasehold improvements, technical building facilities (lifts, special cooling in Balance sheet server rooms, etc.), technical production facilities (for banknote and coin sorting), office equipment and vehicles, hardware and software, and fixed assets in Gold the course of construction. Gold is stated at the gold price on the balance sheet date in US dollars. Danmarks Nationalbank’s properties are the fixed asset groups comprising bank properties, other properties Financial assets and liabilities and building renovations. Building renovations include Financial assets and liabilities traded in active mar- capitalised replacement of entire building components kets are stated at the fair value on the balance sheet in order to extend their lifetime, major renovation date. projects to improve buildings, cost-saving building renovations and costs defrayed in order to expand the Holdings of Exchange Traded Funds and stock use of the properties. Leasehold improvements are fu­tures which are included in ‘Foreign assets’ are entered under the relevant fixed asset group. traded on an active market, so that the fair value is based on quoted prices. Fixed assets are stated in the balance sheet at acqui­ sition prices less accumulated depreciation and For bond portfolios in less active or inactive write-downs. markets which are included in ‘Foreign assets’ and ‘Domestic bonds’, the fair value on the balance Assets with an acquisition value of less than kr. sheet date has been calculated using a model 100,000 per unit are carried as expenditure in the based on estima­tion and assessment techniques year of acquisition. which take account of recent transactions in similar instruments, the discounted payment flows for the Depreciation and amortisation on a linear per-annum portfolios and the relevant term structure based on basis take place over the expected useful lives of the the market condi­tions existing on the balance sheet fixed assets. date. The useful lives are assessed as follows: Monetary policy accounts, including certificates of deposit and other lending and deposits, are stated • Bank properties 100 years at nominal value. • Other properties 25-50 years

DANMARKS NATIONALBANK ANNUAL REPORT 2020 43 • Building renovations 10-25 years Other liabilities • Technical building facilities 10-25 years The item includes other liabilities not covered by • Technical production facilities 5-10 years other liability items. The item includes negative • Hardware and software 3-5 years net value of hedging instruments in the form of • Other machinery and equipment 3-5 years. unset­tled foreign exchange transactions and other financial derivatives by instrument type, as well as Leasehold improvements are written down over uncovered pension commitments, commitments by the expected lease term unless another useful life is way of support and severance payments and other stated. provisions for guarantees provided. Also included are expenses falling due after the end of the financial Fixed assets under construction comprise expenses year, including interest payable and holiday pay. incurred for tangible fixed assets and intangible development projects in the course of construction. Financial derivatives such as forward securities and Expenses are transferred to the relevant fixed asset forward exchange contracts, interest rate and curren- groups when the assets are ready for use. cy swaps, etc. are measured at fair value on the bal­ ance sheet date. Other items are measured at cost. Under section 17 of the National Bank of Denmark Act, the value booked, including building improvements Contingent liabilities and related assets under construction, must not ex- and other financial commitments ceed the public property valuation. In such case, any Other liabilities concerning guarantees provided are excess amount will be recognised as an expense. stated at the estimated value of the payment obli- gation. Contractual obligations relating to rented Profit/loss on the sale of fixed assets is recognised in premises, including any re-establishment obligation, the income statement under depreciation, amortisa- have been stated as the total contractual obligation tion and write-downs and is stated as the difference during the period of non-terminability per lease that between the selling price and the book value at the extends beyond normal contractual terms. time of sale. Pension commitments Other assets For defined-contribution pension plans, the current The item includes other assets not covered by other premium payments to the pension companies are asset items. The item includes positive net value of carried as expenditure in the income statement, and hedging instruments in the form of unsettled foreign the pension commitment hereafter passes to the exchange transactions and other financial derivatives pension companies. stated by instrument type. Also included is income falling due after the end of the financial year, includ- For defined-benefit pension plans, provisions are ing interest receivable. made in the financial statements of Danmarks Nationalbank for uncovered pension undertakings Financial derivatives such as forward securities and compiled according to actuarial principles. forward exchange contracts, interest rate and curren- cy swaps, etc. are measured at fair value on the bal­ ance sheet date. Other items are measured at cost.

Accruals Accruals recognised under assets include prepaid expenses relating to subsequent financial years. Ac- cruals are measured at cost.

Banknotes and coins in circulation Banknotes and coins in circulation are measured at their nominal value.

44 DANMARKS NATIONALBANK ANNUAL REPORT 2020 DANMARKS NATIONALBANK ANNUAL REPORT 2020 45 ProfitINCOME STATEMENTand loss account

K 1000 N 2020 201

Net income from interest, etc.: I 1 211 202 I E T F 0016 06 I 2 12 1616 I 0 211 I 01 111 I 612 66 C 1 61

Net income from interest, etc., total -627,669 -21,884

Value adjustments, etc.: 2606 10 6 1026 022 10 111

Value adjustments, etc., total 3,098,732 7,010,193

Profit/loss from financial portfolios 2,471,063 6,988,309

Income from financial fixed assets, etc. 212,782 19,203

Other income 2,039 1,903 Expenses: S 6 66 E 10 1 11 O 11 61 211

Total expenses 964,687 837,246

Depreciation, amortisation and impairment charges on tangible and 12 85,744 75,911 intangible fixed assets

Other expenses 1 19,000 -

Net profit/loss for the year 1,616,453 6,096,258

Allocation of profit/cover of loss for the year: A G R 1616 6062

1,616,453 6,096,258

46 DANMARKS NATIONALBANK ANNUAL REPORT 2020 1 2012021 BalanceBALANCE SHEET sheet

N

Assets C IM C TAET

EC M O T O A

Total assets 481,369,135 480,936,069

Liabilities C M N C O C C S IM O

Total creditors 399,967,214 401,150,601 C S

Total net capital 81,401,921 79,785,468

Total liabilities 481,369,135 480,936,069

Financial derivatives used for FX hedge

Other financial derivatives

Contingent liabilities and other financial commitments

Loan and purchase commitments to the IMF

Pension commitments

DANMARKS NATIONALBANK ANNUAL REPORT 2020 47 Notes NOTES

Note 1 – Interest on net foreign assets

-2,139,517 -2,027,358

Note 2 – Interest on monetary policy lending and deposits and certificates of deposit

855,712 1,386,167

N A T N N

Note 3 – Interest on central government deposits

N T

48 DANMARKS NATIONALBANK ANNUAL REPORT 2020

Notes

– –

N N N N N N N N N

– –

N N N T T T

– – E E E

– – N N N

N N T S S T S S N T S S

DANMARKS NATIONALBANK ANNUAL REPORT 2020 49

Notes

– – – S S S

– – – S S S T T TO O O O O O S S S S N S N S ON O O O O O O O O

N N N N N N

50 DANMARKS NATIONALBANK ANNUAL REPORT 2020

Notes

–

–

E E

–

–

T O T O

–

–

N

N

–

– T T T T DANMARKS NATIONALBANK ANNUAL REPORT T2020 T 51

–

E

–

T O

–

Notes

N

–

T T T

–

– T T T T T T –

–

E T E T

N S N S T N N T N N N N T T

T E S O

O T E S O O O O O 52 DANMARKS NATIONALBANK ANNUAL REPORT 2020 O O

T E S O

O T E S O O O O O O

O

E S S E S N T E S S E S N T

–

T T T

–

E T

N S Notes T N N N

T

T E S O

O O O O O

T E S O

O O O O O

E S S E S N T

DANMARKS NATIONALBANK ANNUAL REPORT 2020 53 Notes

–

S S

T N

S S

S T S T up share of Denmark’s quota at the IMF and N S S T N S S S S N S

S S

T N

Loans to the Poverty Reduction and Growth Trust (PRGT) N S S S Loans under the NAB (New Arrangements to Borrow) agreement S N S

–

T T 54 DANMARKS NATIONALBANK ANNUAL REPORT 2020

–

S S

T N

S S

S T S T up share of Denmark’s quota at the IMF and N S S T N S S S S N S

S S

T N

Notes Loans to the Poverty Reduction and Growth Trust (PRGT) N S S S Loans under the NAB (New Arrangements to Borrow) agreement S N S

–

T T

–

r anks oans to ash entres anks foren ehane oans

s at Deemer other endn nudes oans to ash entres and oans to Dansh anks n onneton th sap areements th entra anks

–

r

Maturt n ess than ear Maturt after ear and ess than ears Maturt after ears

–

r

Fnana fed assets and smar nestments qut nestments n assoated ompanes

s at Deemer the estmated market aue of the per ent of ts apta susrpton to the as ts anks portfoo of fnana fed assets et as at east kr ontruton to the s operatn osts s the entra on ank of a noneuro area memer ountr Danmarks atonaank does not partpate n the dstruton of DANMARKS NATIONALBANK ANNUAL REPORT 2020 55 Danmarks atonaanks portfoo of fnana fed assets profts or the aoaton of osses n the and smar nestments omprses the apta susrpton to the uropean entra ank and shares n the ank s a resut of ret an adustment of the s apta kes for Internatona ettements I and IF to hh the as made n Danmarks atonaanks share of the foon spea ondtons app s apta susequent amounts to mon euro of hh mon euro has een pad up equa to kr In aordane th rte of the tatute of the mon uropean stem of entra anks the natona entra anks n the are the soe susrers to the he I shares hae een pad up at per ent of ther s apta he apta susrptons are determned nomna aue Danmarks atonaank has an oaton the ehtns assned to the natona entra anks n to pa up the remann per ent of the nomna aue of aordane th rte of the s tatute s a non ts hodn n the I f requested to do so the I hs euro area memer of the Denmark s suet to the pament oaton amounts to mon Ds equa to transtona prosons n rte of the s tatute kr mon Danmarks atonaank must onsequent pa up

–

r

anks oans to ash entres anks foren ehane oans

s at Deemer other endn nudes oans to ash entres and oans to Dansh anks n onneton th sap areements th entra anks

– Notes r

Maturt n ess than ear Maturt after ear and ess than ears Maturt after ears

–

r

Fnana fed assets and smar nestments qut nestments n assoated ompanes

s at Deemer the estmated market aue of the per ent of ts apta susrpton to the as ts anks portfoo of fnana fed assets et as at east kr ontruton to the s operatn osts s the entra on ank of a noneuro area memer ountr Danmarks atonaank does not partpate n the dstruton of Danmarks atonaanks portfoo of fnana fed assets profts or the aoaton of osses n the and smar nestments omprses the apta susrpton to the uropean entra ank and shares n the ank s a resut of ret an adustment of the s apta kes for Internatona ettements I and IF to hh the as made n Danmarks atonaanks share of the foon spea ondtons app s apta susequent amounts to mon euro of hh mon euro has een pad up equa to kr In aordane th rte of the tatute of the mon uropean stem of entra anks the natona entra anks n the are the soe susrers to the he I shares hae een pad up at per ent of ther s apta he apta susrptons are determned nomna aue Danmarks atonaank has an oaton the ehtns assned to the natona entra anks n to pa up the remann per ent of the nomna aue of aordane th rte of the s tatute s a non ts hodn n the I f requested to do so the I hs euro area memer of the Denmark s suet to the pament oaton amounts to mon Ds equa to transtona prosons n rte of the s tatute kr mon Danmarks atonaank must onsequent pa up

–

r

ropertes Mahner and other operatn equpment ardare and softare Fed assets n ourse of onstruton

f the aoe the aue of easehod mproements t the most reent offa assessment Danmarks amounts to kr mon kr hh s rtten atonaanks propertes ere aued at kr mon don oer the term of the nddua eases

–

r

Market aue of unsetted foren ehane transatons Market aue of unsetted domest seurtes transatons 56 DANMARKS NATIONALBANK ANNUAL REPORT 2020 qut nestments n ommera orporatons Interest reeae ther reeaes

qut nestments n ommera orporatons omprse dest the shares sne the ank does not sh to hod equt nterests reeed n onunton th the sae of equt nterests n ommera ompanes suet to other fnana assets Danmarks atonaank seek to ompetton

–

r

ropertes Mahner and other operatn equpment Notesardare and softare Fed assets n ourse of onstruton

f the aoe the aue of easehod mproements t the most reent offa assessment Danmarks amounts to kr mon kr hh s rtten atonaanks propertes ere aued at kr mon don oer the term of the nddua eases

–

r

Market aue of unsetted foren ehane transatons Market aue of unsetted domest seurtes transatons qut nestments n ommera orporatons Interest reeae ther reeaes

qut nestments n ommera orporatons omprse dest the shares sne the ank does not sh to hod equt nterests reeed n onunton th the sae of equt nterests n ommera ompanes suet to other fnana assets Danmarks atonaank seek to ompetton

–

anknotes n ruaton kr

krone krone krone krone krone der seres Faroese anknotes

anknotes ssued efore the most reent seres

ons n ruaton kr

krone krone krone krone krone re der seres hemat and ommemorate ons th other nomna aues

ons ssued efore the urrent seres

DANMARKS NATIONALBANK ANNUAL REPORT 2020 57 –

anks n Denmark hod aounts th Danmarks partpants n onneton th the Intrada and atonaank a these aounts usn the ronos Sumclearing sstems and for the redt ne onernn pament sstem the sette nterank reeaes and Straksclearing Danmarks atonaank aso oers ther reeaes ss Danmarks atonaank he eurtes for the amounts resered partpants n anks aso use ther aounts th Danmarks atonaank onneton th the settement of trades perod runs and to sette paments n Dansh and nternatona pament straksafvikling and settement sstems Danmarks atonaank rants redt aanst oatera to the fnana nsttutons to t the ose of the monetar po da on Deemer ensure that there s aas suffent qudt n the the anks and mortae redt nsttutons had tota fnana sstem for paments to e setted deposts n urrent aounts and settement aounts th Danmarks atonaank of kr on kr Durn the monetar po da Danmarks atonaank on oers Fnane Denmark for the amounts resered

–

anknotes n ruaton kr

krone krone krone krone krone der seres Faroese anknotes

anknotes ssued efore the most reent seres

ons n ruaton kr

krone krone krone krone Noteskrone re der seres hemat and ommemorate ons th other nomna aues

ons ssued efore the urrent seres

–

anks n Denmark hod aounts th Danmarks partpants n onneton th the Intrada and atonaank a these aounts usn the ronos Sumclearing sstems and for the redt ne onernn pament sstem the sette nterank reeaes and Straksclearing Danmarks atonaank aso oers ther reeaes ss Danmarks atonaank he eurtes for the amounts resered partpants n anks aso use ther aounts th Danmarks atonaank onneton th the settement of trades perod runs and to sette paments n Dansh and nternatona pament straksafvikling and settement sstems Danmarks atonaank rants redt aanst oatera to the fnana nsttutons to t the ose of the monetar po da on Deemer ensure that there s aas suffent qudt n the the anks and mortae redt nsttutons had tota fnana sstem for paments to e setted deposts n urrent aounts and settement aounts th Danmarks atonaank of kr on kr Durn the monetar po da Danmarks atonaank on oers Fnane Denmark for the amounts resered

–

r

anks and mortae redt nsttutons deposts n urrent aounts n euro anks toa oatera n ash Deposts under sap areements ther deposts

Deposts under sap areements onern Dansh krone t the end of Dansh anks hae on rased doar deposts th Danmarks atonaank n onneton th oans he market aue of the orrespondn oans s kr sap areements onuded th the Federa esere and mon see ote the uropean entra ank to prode doar and euro qudt to the Dansh fnana sstem

–

s of Deemer entra oernment deposts amounted to kr mon he entra oernment does not reee a share of the proft for

–

hs tem omprses deposts n Dansh kroner th ounterpartes n onneton th toa oatera n Danmarks atonaank supranatona nsttutons and ash he uropean ommssons depost amounts to kr other entra anks as e as euro deposts from foren mon kr mon

58 DANMARKS NATIONALBANK ANNUAL REPORT 2020

–

hs at omprses the IMFs orna aoaton of here ere no hanes n the aoaton of Ds n pea Dran hts to Denmark ota aoatons he urrent hodns of Ds are spefed n ote amounted to mon Ds as at Deemer ams on the IMF et

–

r

Market aue of other fnana derates Interest paae aaes aereated paaes ther ates

–

r

anks and mortae redt nsttutons deposts n urrent aounts n euro anks toa oatera n ash Deposts under sap areements ther deposts

Deposts under sap areements onern Dansh krone t the end of Dansh anks hae on rased doar deposts th Danmarks atonaank n onneton th oans he market aue of the orrespondn oans s kr sap areements onuded th the Federa esere and mon see ote the uropean entra ank to prode doar and euro qudt to the Dansh fnana sstem

Notes

–

s of Deemer entra oernment deposts amounted to kr mon he entra oernment does not reee a share of the proft for

–

hs tem omprses deposts n Dansh kroner th ounterpartes n onneton th toa oatera n Danmarks atonaank supranatona nsttutons and ash he uropean ommssons depost amounts to kr other entra anks as e as euro deposts from foren mon kr mon

–

hs at omprses the IMFs orna aoaton of here ere no hanes n the aoaton of Ds n pea Dran hts to Denmark ota aoatons he urrent hodns of Ds are spefed n ote amounted to mon Ds as at Deemer ams on the IMF et

–

r

Market aue of other fnana derates Interest paae aaes aereated paaes ther ates

–

enera enera r ota apta Fund eseres and et apta anuar tatutor etaned earnns eseres

–

kr mon ota D ther

Forard ehane ontrats urhase ae

DANMARKSnsetted spotNATIONALBANK urren trades ANNUAL REPORT 2020 59 urhase ae

urren and nterest rate saps urhase ae

kr mon ota D ther

Forard ehane ontrats urhase ae

nsetted spot urren trades urhase ae

urren and nterest rate saps urhase ae

Notes –

enera enera r ota apta Fund eseres and et apta anuar tatutor etaned earnns eseres

–

kr mon ota D ther

Forard ehane ontrats urhase ae

nsetted spot urren trades urhase ae

urren and nterest rate saps urhase ae

kr mon ota D ther

Forard ehane ontrats urhase ae

nsetted spot urren trades urhase ae

urren and nterest rate saps urhase ae

60 DANMARKS NATIONALBANK ANNUAL REPORT 2020 Notes

–

kr mon ota D D

Forard ontrats onds urhase ae

Futures onds urhase ae

Futures shares urhase ae

kr mon ota D D

Forard ontrats onds urhase ae

Futures onds urhase ae

Futures shares urhase ae

–

r

ontratua oatons reatn to rented premses ther uarantees

Danmarks atonaanks ontratua oatons reatn t the end of these oatons totaed kr to rented premses nude rent and other ommtments mon of hh an amount of kr mon fas due n reatn to the renta of a temporar dome and other rented premses he nontermnat perods epre eteen md and md In addton Danmarks atonaank has entered nto an nterenton areement th the as e as sap areements th entra anks

DANMARKS NATIONALBANK ANNUAL REPORT 2020 61

–

kr mon ota D D

Forard ontrats onds urhase ae

Futures onds urhase ae

Futures shares urhase ae

kr mon ota D D

Forard ontrats onds urhase ae Notes Futures onds urhase ae

Futures shares urhase ae

–

r

ontratua oatons reatn to rented premses ther uarantees

Danmarks atonaanks ontratua oatons reatn t the end of these oatons totaed kr to rented premses nude rent and other ommtments mon of hh an amount of kr mon fas due n reatn to the renta of a temporar dome and other rented premses he nontermnat perods epre eteen md and md In addton Danmarks atonaank has entered nto an nterenton areement th the as e as sap areements th entra anks

62 DANMARKS NATIONALBANK ANNUAL REPORT 2020 –

–

Ds kr Ds kr

he IMFs dran rht on the quota Ds kr Ds kr Danmarks atonaanks oaton to purhase Ds he ndran IMFs dran rust rht oan on fat the quota Danmarksndran oan atonaanks fates for oaton the IMF n toonneton purhase thDs ndranthe areement rust oan fat ndran oan fates for the IMF n onneton th theatera areementoans ndran oan fates for the IMF n onneton th atera oans

ndran oan fates for the IMF n onneton th

atera oans equa to mon euro ndran oan fates for the IMF n onneton th

atera oans equa to mon euro

he IMF ssues oans to ountres n eonom dffutes under the rust oan fat are uaranteed the and fnanes these oans a the memer ountres quotas Dansh entra oernment heand IMFoan ssues ommtments oans to ountresDanmarks n atonaanks eonom dffutes tota under the rust oan fat are uaranteed the andam fnanes aanst these the IMF oans as a kr the memeron at ountres the end of quotas Danshhe unused entra redt oernment ommtments under e rranements andsee oteoan ommtments Danmarks atonaankDanmarks atonaanks has made tota to orro the areement hae een nreased to amommtments aanst the for IMFfurther as oans kr totan on at kr the end on of he unused mon redt Ds ommtments equa to kr under mone rranements th effet see ote Danmarks atonaank has made tofrom orro theand run unt areement oemer hae een nreased to ommtmentseera of Danmarks for further atonaanks oans totan areements kr on on further mon Ds equa to kr mon th effet oans and ommtments to purhase Ds epred at the fromhe undran and oan run fatesunt oemer for the IMF n onneton th eeraend of of Danmarks In ths ontet atonaanks ne areements areements hae on een further atera oans hae een redued th effet from so oansonuded and ommtments th effet fro tom purhaseanuar Ds and epred Feruar at the hethat undranthe IMF an oan dra fates on for the euro IMF fromn onneton Danmarks th end of respete In ths ontet ne areements hae een ateraatonaank oans aansthae een preous redued th on effet euro from so onuded th effet from anuar and Feruar that the IMF an dra on euro from Danmarks In addton respete to the estn areement the rust oan atonaank aanst preous on euro fat has een etended mon Ds equa to kr In addton mon to ththe estn effet from areement Feruar the rust oans oan fat has een etended mon Ds equa to kr mon th effet from Feruar oans

DANMARKS NATIONALBANK ANNUAL REPORT 2020 63

–

resent and former empoees of Danmarks atonaank et Danmarks atonaank s thus oed to make the hae ether defnedontruton or defnedeneft penson ontrutons neessar to ensure the fufment of the pans penson undertakns

For defnedontruton penson pans Danmarks enson ommtments for the defnedeneft penson pans atonaank arres the onon premum paments to are auated as the apta aue of the future enefts the penson ompanes as ependture ne the penson paae under suh pans he penson undertakns are ontrutons for these pans hae een pad to the ased prmar on the saar on retrement he apta penson ompanes Danmarks atonaank has no further aue s auated on the ass of assumptons onernn penson ommtments to these empoees the future deeopment n for eampe ae ees nterest rates nfaton and mortat th reard to defnedeneft penson pans Danmarks atonaank s oed to ensure the pohoder a In prnpe the defnedeneft penson pans are oered defned penson eneft For these pans Danmarks in Danmarks Nationalbank’s Pension Fund subject to atonaank ears the rsk onernn the future ndnup deeopment n nterest rates aes nfaton mortat

e fures for the aounts of the enson Fund

r mon

enson ommtments and other ates Far aue of the assets of the enson Fund et apta of the enson Fund oen requrement of the enson Fund

he omparate fure for has een adusted n reaton to the preous ear as a resut of a hane n the enson Funds fnana statements for

ther defnedeneft penson pans are oered n a penson ompan

64 DANMARKS NATIONALBANK ANNUAL REPORT 2020

DANMARKS NATIONALBANK ANNUAL REPORT 2020 65 Danmarks Nationalbank Langelinie Allé 47 DK-2100 Copenhagen Ø www.nationalbanken.dk

Copyright © 2021 Danmarks Nationalbank