Central Bank in Denmark Loses Tool After Debt Funding Need Jumps
- Government's cash reserve risks becoming too low, Nordea says
- Debt office may be forced to raise 2015-2016 auction target
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Denmark’s revelation it will need to borrow at least 6 percent more from bond markets next year is putting unwelcome pressure on its exchange rate regime.
Nordea, Scandinavia’s biggest bank, says the development means the central bank has lost its freedom to switch off bond auctions should Denmark’s euro peg come under attack, as it did in January. The nation’s borrowing need is now simply too big for that option still to be on the table, according to Nordea.