##ers and unemployed people have moved out. especially the 19 – 24 - year - olds move to the cities, often in connection with education or training. but they increasingly stay there afterwards. conversely, the share of the population aged 65 or more is lowest in copenhagen. in statistics denmark ’ s population projection this pattern is expected to continue towards 2030. the geographical distribution of the population is reflected in the housing market. measured in real terms, house prices in urban areas have risen over time as still more people are living in an area of a virtually given size. in copenhagen, especially the prices of flats have shown an upward trend. compared with prices in other northern european capitals, the price level in copenhagen is not particularly high, but nevertheless we should monitor developments closely. after all, we do not want to see new housing market bubbles. in other areas, house prices are declining, and unsellable houses that are falling into disrepair is a well - known phenomenon. some areas also have a clear overrepresentation of households with loan - tovalue ratios in excess of 80 per cent. hence potential losses due to defaulted loans are higher in these areas. so far, the recovery in the cities does not seem to have begun to ripple through to the rest of denmark, as it did during the most recent boom. this means that there is a risk of further impairment charges and losses in the coming years in some areas, such as western and southern zealand, which have a clear overrepresentation of both mortgage arrears and enforced sales. the question is to which extent the current development is structural or simply cyclical. will the recovery in copenhagen and a few other cities at some point drive growth in other parts of denmark, or are the cities marginalising the rest of the country? the migration towards urban areas has structural elements. in effect, this represents acceleration of an actually bis central bankers ’ speeches global trend that has existed for a long time. an economic upswing may halt this development, as seen during the most recent boom and in the first half of the 1980s, but is hardly likely to reverse it. at some point, the differences between house prices may become so large that the gain from moving out halts the migration towards the cities, but presumably this will affect only the immediate surrounding areas, i. e. those within commuting distance. where is the financial sector in all this? the total lending volume remains high in a long - term perspective. due to consolidation and

of 2015, the council issued socalled observations entitled " low interest rates and build - up of systemic risks ". 13 an observation is one of the three forms of statements the council can issue apart from the press release. an observation implies that according to the council's assessment there is a risk that systemic financial risks may be building up ; however, no - one is required to comply with an observation. in the first observation, the council outlines the potential transmission channels through which the very low interest rates could give rise to a number of systemic financial risks. the first channel is the search for yield, with investors seeking higher risk in expectation of higher yields, resulting in low risk premia and rising asset prices. the second channel is the expectation that central banks will always come to the rescue if developments in the financial markets are contrary to expectations. that pattern of monetary policy was actually so widely practised by the fed under chairman greenspan that it was called the " greenspan put " – referring to the protection of a put option on asset prices. 14 the pattern of providing ample liquidity to markets every time there are signs of unrest is now even more widely used – by more central banks and with more monetary policy tools such as direct asset purchase programmes. however, the short term stabilisation of markets comes at a price – misaligned incentives leading to further risk - taking behaviour. all in all, a prolonged period of low risk premia, low volatility and rising asset prices may result in inherent expectations of these developments continuing for a long time. this may lead to underestimation of risk – or risk illusion – on the part of both financial institutions and their customers. unfortunately, governments and authorities are not immune to risk illusion either – over time they may also be led to believe in an everlasting boom of the economy. in its statement, the council finds that at that point in time " no considerable systemic risks have built up in the danish financial system as a result of the level of interest rates ". 15 however, the council also points out a number of areas where systemic risks might potentially develop and require extra caution, such as credit growth and credit standards, house price the two observations can be found on www. systemicriskcouncil. dk or the following link. binder, alan s., ricardo reis ( 2005 ), understanding the greenspan standard, proceedings, federal reserve bank of kansas city, august. the danish systemic risk council