. other factors may also justify the relatively high earnings, such as high productivity or high earnings capacity due to efficient utilisation of highly educated, specialised labour. but despite all these explanations it is a fact that the earnings level is high in the sector and that the coming years may see downward pressure on earnings. conversely, ownership structures in the financial sector or the absence of strong potential foreign competition could dampen the pressure for efficient cost control and equalisation of additional earnings over time. so it is an important financial sector management task regularly to focus on ensuring a balance between employee earnings levels and productivity and value for the company. the special payroll tax paid by the financial sector since 1988 provides a key incentive in this respect. * * * now i would like to turn to the situation in the agricultural sector, which is of major importance to many small banks. in the years leading up to the economic reversal in 2008, land prices rose more rapidly than house prices. today it is obvious that there was a genuine bis central bankers ’ speeches “ land price bubble ” and that prices per hectare were decoupled from the potential gain from cultivating the land. the surge in the prices of land and agricultural properties was partly attributable to an expansion in pig farming, so that land was needed for spreading slurry. since 2010, the trend in pig production has flattened. at the same time, land prices have dived, although they remain somewhat above the level before the financial crisis, and they still seem to be high relative to the potential return – especially if the level of interest rates normalises. rising land prices and property values were pledged as “ collateral ” for loans from banks and mortgage banks. i have deliberately put quotation marks around the word “ collateral ” in my manuscript as the current fall in land prices clearly shows that this collateral is of little value for the lowest - ranking creditors. often loans were granted in the expectation that land prices would rise further, which to some extent contributed to pushing up prices even more. these are the classical characteristics of a bubble : expectations become self - fulfilling for a while – until sentiment changes and the bubble bursts. the result of all this is a heavily indebted agricultural sector and many farms with low solvency ratios. at the same time, the loans are often of the most risky type – short - term variable rate loans without amortisation. in the years leading up to the crisis, loans in swiss francs without further hedging were also popular

lars rohde : overview of the danish economy against the background of global developments speech by mr lars rohde, governor of the national bank of denmark, at the annual meeting of the association of local banks, savings banks and cooperative banks in denmark, copenhagen, 8 may 2014. * * * the international economy is recovering. the us upswing is gaining momentum, and the euro area is showing encouraging signs with positive growth in the last three quarters. now the debt - ridden southern european economies are also beginning to pick up – with greece as the exception. interest rates have fallen in these economies, and government yield spreads to germany have narrowed. the greek government is able to borrow in the international capital markets again. that has not been the case for nearly four years. conversely, the emerging economies are slowing down, and there is heightened uncertainty about several economies, including brazil, argentina and turkey, which have seen capital outflows and weakening currencies. but the joker at present is the development in ukraine. so far the crisis has not had any major impact on the international capital markets, except in russia, but that may very well change. nevertheless, the overall expectation is that the global upswing will accelerate this year. the us economy is now so strong that the federal reserve in january began the previously announced tapering of its asset purchases. the fed has announced that it will reduce its monthly purchases after each meeting of the federal open market committee, during the rest of the year, provided that the economy develops as assumed. the market expectation is that monetary policy interest rates will not begin to rise in earnest until the 2nd half of 2015, so the low level of interest rates is set to continue for some time yet. exactly how long will be determined by the us labour market. in recessions, there is normally a tendency for the labour force to shrink, one reason being that some of the unemployed give up the hope of finding work. conversely, the labour force grows in good times when the chances of finding a job are better. but unlike in the usa, the euro area labour force has actually increased during the economic crisis, partly due to labour market and pension reforms. although such reforms will strengthen public finances and the growth potential in the long term, they have initially caused euro area unemployment to rise more sharply than the decline in employment would warrant. however, we have now seen the first signs that unemployment is declining in some of the most severely affected member states, such as spain and portugal.