central bankers ’ speeches * * * the extraordinary measures introduced by the european central bank to supply liquidity to the market during the crisis led to a period of very low market interest rates in the euro area. spreads to the corresponding danish interest rates widened, leading to capital inflows and a tendency for the krone to strengthen. to keep the krone stable against the euro, danmarks nationalbank purchased foreign exchange in the market in the 1st half of 2010 and on several occasions lowered its interest rates unilaterally. from the spring of 2010, only the rate of interest on certificates of deposit and the current - account rate were lowered, while the lending rate was kept unchanged, so that the spread to the ecb ’ s benchmark interest rate remained 0. 05 percentage point. liquidity conditions in the euro area are now normalising, and euro area money market interest rates are, once again, approaching the ecb ’ s benchmark interest rate. to the extent that higher market interest rates in the euro area lead to pressure on the krone, danmarks nationalbank will follow its usual practice, including raising interest rates if necessary. this will apply to both lending and deposit rates. we have no plans to deviate from the principle of operating with a margin between the rate of interest on certificates of deposit and the lending rate. * * * public debate sometimes focuses on the high gross debt of danish households relative to gdp or to household disposable income. but the households ’ pension and housing wealth is also high. the fact that the assets are less liquid than the liabilities entails a certain degree of vulnerability. the high gross debt is primarily reflected in household mortgages. this, in turn, should be viewed against the background of the efficient danish mortgage credit system, which differs materially from those seen in most other countries. despite their high gross debt, danish households have weathered the financial crisis. losses in the banking sector have been limited seen in relation to the crisis in the early 1990s, and have only to a small extent been attributable to the household sector. mortgage arrears ratios are also low and declining. all the same, i believe that the resilience of the households should be strengthened on account of their high debt ratios. after all, tax cuts, special pension savings disbursements and very low interest rates might not be on the agenda the next time a crisis comes knocking on our door. high debt goes hand in hand with a

nils bernstein : danish economy developments and the 2020 plan speech by mr nils bernstein, governor of the national bank of denmark, at the annual meeting of the association of danish mortgage banks, copenhagen, 27 april 2011. * * * growth in the global economy remains robust and is increasingly self - sustained. as regards 2011, the international monetary fund has lowered its growth expectations for the usa, japan and the uk a little, while expectations for germany have been adjusted upwards. factors such as the high energy and commodity prices are expected to curb growth. the rising energy and commodity prices have contributed to higher inflation worldwide, not least in many developing countries. in the euro area, inflation stood at 2. 7 per cent in march, which is considerably above the medium - term target of just below 2 per cent. in the assessment of the european central bank, inflationary risks in the euro area are on the upside. against this background, the ecb raised its lending rate by 0. 25 percentage point at the beginning of this month, after having kept it constant at a very low level for almost two years. danmarks nationalbank followed suit. the debt crisis in the eu is still evolving. portugal has now – some people might say finally – applied to the eu and the imf for financial assistance. matters are further complicated by the uncertain political situation in portugal, where a caretaker government is in charge until the election in june. it has been indicated that the assistance package will impose more stringent conditions than the reform package which brought down the portuguese government – and that broad political agreement must be reached before the election. viewed on the basis of developments in yield spreads, there seems to be a decoupling of market assessments of the situation in the three troubled member states – portugal, ireland and greece – on the one hand, and the rest of the euro area – including spain and italy – on the other hand. this is positive and gives us reason to hope that the debt crisis in the eu can be contained. * * * turning to the danish economy, the upswing is also becoming more evident here. the negative growth in the 4th quarter of 2010 seems to have been a one - off. danmarks nationalbank expects growth in 2011 to be just below 2 per cent, which is actually above the eu average. household disposable income is set to develop at a substantially weaker pace than last year, but on account of the currently very low consumption and investment ratios – combined with strong growth in some of