one trend : there are currently signs that homeowners are taking higher risks. mortgage credit institutions are increasingly granting loans to highly indebted homeowners. we can also see that the mortgage credit institutions are granting more loans where the homeowner doesn't pay any instalments on the debt at all – also to the most highly indebted customers. this means that the homeowners only pay interest and contribution on their mortgage loans. in turn, the mortgage credit institutions do not build up the same margin of security as for loans with amortisation. we also know that rising interest rates may have major consequences for homeowners with variable - rate loans. some homeowners will have to tighten their belts even with a moderate rise in interest rates. the general interest rate level has been decreasing for years. in fact, many have virtually only experienced falling interest rates on housing loans. those of us with receding hairlines and slightly more years behind us do recall that interest rates were higher once. that's not to say it will happen again. several of the housing market structures are in dire need of an overhaul. let me mention three initiatives that can make homeowners, banks and the whole economy more resilient : page 2 of 7 firstly, we believe that if we're to have loans with deferred amortisation, they should only be used by the most resilient homeowners. unfortunately, denmark has not followed the other countries in this area. when we compare ourselves with other countries, i have to say that we stand out : in most countries, homeowners cannot both have deferred amortisation and as lenient a deposit requirement as we have in denmark. secondly, it's important that the new housing taxation scheme isn't delayed further. implementation of new housing taxation will restore a link between housing tax and home value. that's a sound principle. thirdly, the interest deduction should be reduced. the interest deduction actually means that the tax system rewards indebtedness. that isn't a sound principle. with the current very low interest rates, the change will not hurt homeowners. as mentioned, activity in the danish economy is high, interest rates are low and the unemployment queue is very short. in addition to the measures strengthening resilience for many years to come, it will not hurt to take a little momentum out of the economy. and yet, we've

banknotes and coins and can be used in the entire area. i will go into the issue of the special faroese banknotes a little later. re 2 ) danmarks nationalbank is responsible for the currency, which is the danish krone. danmarks nationalbank has a considerable net capital and a large foreign - exchange reserve, which safeguard the stability and credibility of the currency. re 3 ) the private banks and credit institutions in denmark, in greenland and on the faroe islands may hold accounts at danmarks nationalbank and may make deposits or raise collateralised loans. danmarks nationalbank is “ banker to the banks ” in the entire danish commonwealth. re 4 ) the payment and clearing system can be used by danish, faroese and greenlandic banks. re 5 ) danmarks nationalbank is the central bank to all banks in the danish commonwealth. it may thus provide liquidity support to a solvent bank with liquidity problems. this function is called “ lender of last resort ”. it is very rarely used, but it has happened. the special faroese banknotes act no. 248 of 12 april 1949 stipulates that the faroe islands shall have their own banknotes as legal tender on the islands. these banknotes are printed and issued by danmarks nationalbank. the faroese banknotes in circulation are included together with the danish banknotes in circulation in the item “ banknotes ” on the liabilities side on danmarks nationalbank ’ s balance sheet. the faroese banknotes can be exchanged for danish banknotes on a 1 : 1 basis. danmarks nationalbank has cash depots on the faroe islands to supply banknotes to the local banks. although the special faroese banknotes can be used for cash transactions on the faroe islands, contracts, bank deposits and financial transactions are conducted in danish kroner. banknotes in circulation consist of the special faroese banknotes, but the money stock is otherwise made up of bank deposits in danish kroner. the international iso currency code for danish kroner is dkk. this currency code is also used on the faroe islands. the faroese banks use danmarks nationalbank ’ s monetary - policy instruments and the danish payment systems. danmarks nationalbank ’ s decisions relating to monetary and foreign - exchange policy - including interest - rate decisions - apply fully and directly to the faroe islands. it must thus be concluded that the danish krone is used as the currency of the far