The head of Denmark’s central bank has warned that the Danish krone is coming under intense pressure from investors seeking a haven in Europe and betting that the currency’s peg to the euro could be cracked by the crisis.
Nils Bernstein, governor of the central bank, said the upward pressure on the krone was the most severe he had seen in his seven years as governor, and warned that negative interest rates could be on the cards if the problem continues.
“You can see from our history that we like to keep the krone within a narrow band, half a percentage point or less,” said Mr Bernstein. “I think we have the tools to continue to do that, and if it is necessary to move into negative interest rate territory we will be ready for that.”