Danish CB Says It Will Not Lift Current Account Cap

Denmark’s central bank said on Tuesday it did not plan to lift the amount of cash commercial banks can keep in its current account after increasing the cost to them of holding money in deposits last week.

The central bank cut the certificate of deposit rate — its main policy rate — on Monday and on Thursday last week to defend the crown currency’s peg to the euro, taking it from -0.05 percent to -0.35 percent.

That means banks needing to store money with the central bank for liquidity purposes are effectively charged 0.35 percent for their deposits.

 
By contrast, the current account rate was left at zero, meaning it is now much cheaper to park money there than in the deposit account.

But unlike the last time the certificate of deposit rate was negative, in 2012, the central bank said it would not raise current account limits to help commercial banks shoulder the costs of depositing money.

via Reuters

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza