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
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