the euro area in order to safeguard the credibility of the fixed - exchange - rate policy. the conclusion is clear. the credibility of the economic policy pursued is more important than the choice of exchange - rate regime. this also applies if fixed - exchange - rate policy is introduced in the form of participation in a monetary union. thanks to our relatively solid starting point, denmark has been less affected by the debt crisis than many other countries. the most important real economic issue is that danish economic growth is low partly due to poor consumer and business confidence. the steady stream of negative stories from the euro area is no doubt a contributing factor, but is far from the only reason. the danish economy was severely overheated from 2006 to 2008, with very strong credit growth and a housing bubble. we are now struggling with the repercussions of the overheating. the situation was aggravated by the financial and debt crises, but these are far from the only reasons for the lack of consumer and investor confidence that is currently hampering economic growth. in addition to a negative impact on confidence, weak growth in our key export markets obviously has an impact on danish growth. denmark is a small, open economy that is heavily dependent on foreign trade. close to 50 per cent of danish exports go to the euro member states. thanks to market participants ’ confidence in danish economy in general and monetary and exchange - rate policies in particular, denmark has not been affected by the increase in interest rates, seen in many euro area member states. danish government bonds are aaa - rated. this benefits the danish market for mortgage bonds, which is one of the largest bis central bankers ’ speeches and most liquid in the world due to our mortgage credit system. this is greatly to the advantage of danish home buyers at the moment, as a home purchase may be financed at short - term interest rates below 1½ per cent. this level of interest rates helps to protect the economy in the current highly uncertain climate. many euro area member states fear that the sovereign debt crisis will turn into a banking crisis, as the banking sector holds a large percentage of the government bonds of the highly indebted countries. again, denmark is not severely affected. the exposure of danish banks to the most debt - ridden euro area member states is limited and even major write - downs of sovereign debt would be manageable. in addition to the aspects already mentioned, i will draw attention to a third area where the crisis is leaving its mark : the management of economic policy

a bad thing. if policymakers react properly, this can boost consumer, business and investor confidence – and the current crisis is, to a large extent, also a crisis of confidence. if, on the other hand, there is a lack of political action, the volatility will spread to more and more countries. the decisions made at the eu and at the euro summits in october were important steps towards containing the crisis and preventing the occurrence of future crises. the key elements were the agreement on voluntary restructuring of greece ’ s sovereign debt, the recapitalisation of the banking sector and the barriers to prevent the sovereign debt crisis from spreading. a cause for concern is that since the details are still being debated at the eu level, implementation has remained uncertain for so long. despite the steps over the past year and a half to improve economic governance in the euro area and the adoption of new measures to contain the sovereign debt crisis, market tensions have increased. in order to address these tensions, steps were taken at the european council meeting last week to move towards a stronger economic union. ( slides 7 + 8 – european council decisions ). the plan contains two elements : a new fiscal compact and stronger economic and political coordination. and the development of stabilisation tools to face short term challenges. at the meeting there was a wish to include the fiscal compact, in the treaty. as will be known, the uk was against this. on this background the head of states or governments of the euro area decided to make a separate international agreement in order to implement the new fiscal compact. a number of non - euro countries have indicated that they will consider participate in the process after consultation with their respective parliaments. the danish government has stated that it will be decisive for an eventual danish participation that it does not conflict with our euro opt - out, which can only be changed by means of a referendum. i will not at this junction speculate over possible legal and pure political aspects but only comment on the aspects concerning the economic policy. if the euro member states decide between themselves a stronger and more binding framework for the economic policy, including fiscal policy, then denmark as a small open economy with a fixed exchange rate regime vis - a - vis the euro has no other option than either to take part in as much of the agreement as we can, respecting our euro opt - out, or place us as close as possible at the new euro compact without formal participation. in other words, a stronger discipline in the economic