– particularly on the part of pension funds, which needed to hedge their long - term commitments. in november and december 2008, the danish government took the extraordinary step of issuing 30 - year bonds. as a result, danish pension funds restructured their portfolios from foreign to domestic securities. this supported the krone. last – but not least – it was equally important that the government, at short notice in early october 2008, decided to issue a guarantee for all deposits with and loans to danish banks. it is impossible to say exactly what the impact of this measure, known as bank rescue package i, was. non - residents withdrew krone deposits totalling dkk 70 billion from danish banks in october 2008. this package contributed strongly to keeping capital outflows during the crisis at a manageable level. timing and determination were essential elements in terms of ensuring confidence in danish banks. as i see it, the danish banks would have been far worse off without this guarantee, and danmarks nationalbank ’ s ability to keep the krone stable might have been called into doubt. but while the government provided bank guarantees totalling around 2. 5 times denmark ’ s gdp, the potential claims on the foreign - exchange reserve increased. if a bank failed, the guarantee might be called in at short notice. if loans had been raised abroad, this would have affected the foreign exchange reserve. therefore, the need to increase the reserve was even more important. the turning point in the krone crisis came in late october, when stabilisation of the krone market enabled us to buy back foreign exchange. large scale buy - backs took place from 4 november 2008. partial normalisation of the situation made it possible for us to follow suit when the ecb lowered its interest rates by 0. 5 per cent on 6 november. in december, the monetary - policy spread gradually narrowed by a total of 0. 75 percentage point. conclusion ( chart 8 ) during 2009, danmarks nationalbank gradually reduced interest rates so that the spread to the euro area narrowed again. today, the monetary - policy spread is only 5 basis points. but the actual money - market spread is around 50 basis points, mainly due to the substantial amount of excess liquidity in the euro area. over the last year, danmarks nationalbank has built up the foreign exchange reserve to a much higher level than it used to be. it now exceeds dkk 400 billion. the dollar swap line with the federal reserve has expired. so, in

growth. there is much uncertainty, however, about how smoothly this transition will proceed and about the policy framework in place to manage any financial disruptions that might accompany it. these uncertainties were heightened by market confusion earlier this year over china ’ s exchange rate policy. a second concern relates to the prospects for commodity prices, particularly oil. for the united states, low oil prices, on net, likely will boost spending and economic activity over the next few years because we are still a major oil importer. but the apparent negative reaction of financial markets to recent declines in oil prices may in part reflect market concern that the price of oil was nearing a financial tipping point for some countries and energy firms. in the case of countries reliant on oil exports, the result might be a sharp cutback in government spending ; for energy - related firms, it could entail significant financial strains and increased layoffs. in the event oil prices were to fall again, either development could have adverse spillover effects to the rest of the global economy. if such downside risks to the outlook were to materialize, they would likely slow u. s. economic activity, at least to some extent, both directly and through financial market channels as investors respond by demanding higher returns to hold risky assets, causing financial conditions to tighten. but at the same time, we should not ignore the welcome possibility that economic conditions could turn out to be more favorable than we now expect. the improvement in the labor market in 2014 and 2015 was considerably faster than expected by either fomc participants or private forecasters, and that experience could be bis central bankers ’ speeches repeated if, for example, the economic headwinds we face were to abate more quickly than anticipated. for these reasons, the fomc must watch carefully for signs that the economy may be evolving in unexpected ways, good or bad. risks to the inflation outlook the inflation outlook has also become somewhat more uncertain since the turn of the year, in part for reasons related to risks to the outlook for economic growth. to the extent that recent financial market turbulence signals an increased chance of a further slowing of growth abroad, oil prices could resume falling, and the dollar could start rising again. and if foreign developments were to adversely affect the u. s. economy by more than i expect, then the pace of labor market improvement would probably be slower, which would also tend to restrain growth in both wages and prices. but even if such developments were to occur, they