Treasury Today Country Profiles in association with Citi


Map/flag of Denmark

Denmark, although a country small in size, has international presence due to its prominance in global trade. With few natural resources of its own, Denmark has looked to build up its service industry in order to maintain economic stability and a competitive edge.

Key facts

Official country name:
Kingdom of Denmark
Danish Krone (DKK)
Capital city and financial centre:
Other major cities:
Aalborg, Aarhus, Odense
Time zone:
UTC +1
5,569,077 (2014 est)
Population growth rate:
0.22% (2014 est)
GDP per capita (USD equivalent):
$44,300 (2014 est)
GDP real growth rate:
1.5% (2014 est)
Government type:
constitutional monarchy
Head of state:
Queen Margrethe II
Political leader:
Prime Minister Lars Løkke Rasmussen
Top export partners:
Germany, Sweden, UK, US, Norway, Netherlands
Top import partners:
Germany, Sweden, Norway, Netherlands, China, UK

Economic overview

Once the home of the Vikings, Denmark is now regarded as a modern market economy with high standards of living and opportunity for social mobility. Denmark has utilised its 7,000 km coastline extensively, engaging in foreign trade where it is a net exporter of machinery, instruments and food products.

The Danish economy achieved growth rates of close to 3% from the mid-1990’s up until the financial crisis. Domestic consumption and a housing boom largely contributed to this growth. However, towards the end of 2007 consumer spending began to fade and, as the global financial crisis took hold, house prices started to drop markedly in 2008-09. During this period, consumer confidence was also damaged, export demand was affected, and the cost of borrowing rose, which led to declines in Danish GDP of 0.9% in 2008 and 5.2% in 2009. These, however, were relatively slight compared with many of Denmark’s EU neighbours.

Following the crisis, a modest recovery began – thanks to increased government spending in 2010. Faced with a technical recession in 2011, another round of government stimulus was introduced in 2012 to ease the effects. Despite the turbulent waters, Denmark’s fiscal position remains amongst the strongest in the EU with public debt at 45.2% of GDP in 2014.

In 2000, the Danish people voted to reject the euro 53.2% to 46.8% in a nationwide referendum. In the years following this vote, then-Prime Minister, Lars Lokke Rasmussen (who was re-elected in June 2015), and Justice Minister, Lars Barfoed, said the country should reconsider its choice to opt-out from the Eurozone in another referendum. To date, no second referendum has taken place and, upon taking power in 2011, the Helle Thorning Schmidt administration promised that no such vote would take place during their four year term. During that period, Helle Thorning-Schmidt publicly stated that the country should eventually become part of the Eurozone. But the Danish population may still need some convincing.

The banking sector

Denmark has a stable, prudent and well-developed banking system that consists of 88 commercial and savings banks. Danske Bank, Nordea Bank and Jyske Bank are the largest commercial banks. In recent years, the sector has increased its ability to withstand shocks. This is exemplified by the country’s largest banks participating in – and passing – the 2014 pan-European stress test. They demonstrated the strength needed to handle potential negative economic developments.

The Danish Financial Supervisory Authority (Finanstilsynet) conducts regular inspections of Danish banks and subsequently prepares assessments of the institutions. These assessments are made available on each individual institution’s website on the last day of the quarter. Despite these assessments, the IMF has warned that Denmark needs to increase the size and capacity of its financial regulator in order to fully monitor the risks in the system – including the large debt that citizens carry and the distortions in the housing market, for instance.

Danmarks Nationalbank is Denmark’s independent central bank. Its key objectives are to maintain stable prices through a fixed-exchange rate policy with the euro; promoting the safe payment of cash and electronic payments; and maintaining the stability of the financial system by monitoring payment systems, compiling financial statistics and managing the central government’s borrowing and debt.

Payments and clearing

Clearing system Clearing type Transaction types Value dates Times
TARGET2 RTGS High-value, urgent payments denominated in EUR Settlement in real time with immediate finality

Operates from 07:00 to 18:00 CET

Cut off times for customer payments = 17:00 CET Interbank payments = 18:00 CET

KRONOS RTGS High-value, urgent payments denominated in DKK Settlement in real time with immediate finality Open for payments between 07:00 and 15:30 CET. In addition, it is open between 16:00 and 16:30 CET for transfers to settlement accounts for the night-time Sum Clearing settlement
Sum Clearing1 Multilateral net settlement Non-urgent, low-value electronic payments Next day value Operates 24 hours a day, Mon-Fri
Intraday Clearing Retail payment system Low-value retail credit transfers Same day Operates Monday to Friday with four clearing cycles a day
Express Clearing RTGS Retail payments of up to DKK 500,000 Real time 24 hours a day, seven days a week
  1. Divided into two subsystems: Nets that clears card payments, direct debits and credit transfers. Dokumentløse clearing an electronic truncation and clearing system for bank-initiated payments.

  • Electronic credit transfers have been the preferred means of payment for business transactions for more than a decade. Denmark is a part of the SEPA initiative for EUR-denominated payments.

  • Payment cards have become increasingly popular in Denmark. By the end of 2012, there were 6.5m debit cards and 1.8m credit cards in use. The most popular is the Dankort, the nationwide debit card that continues to dominate the market in terms of both volume and value.

  • Direct debits are used by over 90% of Danish households and have been available in the country for more than 30 years. SEPA direct debit schemes were launched in Denmark in 2009.

  • Nemkonto (EasyAccount) is used by most Danish citizens and companies to occasionally receive payments from the public sector. Tax and VAT refunds, for example.

  • Cheques. As a means of payment, their use continues to decline. Cheques account for around only 1% of all transactions.

  • Electronic banking services are widespread and highly utilised. There is no independent standard in the country and all banks offer their own system.

Investment options

  • Current accounts. Credit balances on Danish current accounts are usually interest bearing.

  • Time deposits are the most popular short-term investment in Denmark. Time deposits can be subject to a minimum deposit amount of DKK 250,000 and CIBOR is the benchmark interest rate to one year.

  • Certificates of deposit and commercial paper. Both CDs and CP are available in Denmark. For CP, the minimum investment is typically DKK 1m.

  • Treasury bills are very popular with both companies and financial institutions. Denmark’s government securities carry no minimum investment. T-bills are issued in multiples of DKK 20m, with maturities up to 12 months. The government’s t-bill programme was in fact phased out between 2005 and 2008 but an issue in February 2010 marked its return.

  • Money market funds. These are only offered by some commercial banks in the country, not all.

  • Repurchase agreements. Typically, the minimum investment amount for a repo is DKK 1m while the minimum amount for a reverse repo is DKK 500,000. These have maturities ranging from one day to 12 months.

  • Corporation tax is currently levied at 23.5% (2015). This will be reduced to 22% in 2016 (excluding the oil and gas sector).

  • There are no foreign exchange controls in place in Denmark.

  • Denmark generally does not levy withholding tax on interest paid to non-residents, although a 25% withholding tax applies to interest paid to foreign related entities in certain situations. A rate of 25% for royalties also applies, unless reduced under a tax treaty or the EU interest and royalties directive. Where dividends are paid to an EEA corporate shareholder by a resident company, no withholding tax applies. If paid outside the EEA, a levy of 27% typically applies.