DENMARK EYES NEGATIVE INTEREST RATE MOVE - Denmark is considering a move to negative interest rates to help resist pressure on the Danish krone. Interest rates in the EU but non-euro zone country are already at a record low of 0.45% but investors have been piling in to buy the Danish krone and Danish government bonds as a safe haven from the euro. That is not helping Danish exports but it is testament to the confidence in the country's economy.
Owen Callan is a senior dealer with Danske Markets, part of the Danish bank Dankse group, and has recently returned from a secondment to the country. He says that investors view Denmark as an easy alternative, a safe haven away from the euro zone as the fear of contagion continues to spread around the block. He says that investors are less concerned about the return on their capital and are more concerned about actually getting their capital back. The analyst says that the Danish economy is doing so well because it has more flexibility in its monetary policy and have made deeper interest rates cuts than the ECB. The country has also taken a higher line on its banking sector and has imposed losses on both bondholders and depositors when banks failed there.
Mr Callan says the Danish banking system is unique as it is made up of six big banks and 120 small banks, which he says are more like credit unions. The banks that got into trouble had assets of €4 billion - 1% of the entire banking system - but the government was determined that the tax payer would not have to pay to bail them out despite the move sending borrowing costs higher for a short time.
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MORNING BRIEFS - The international law firm Maples and Calder is to expand its Irish operation. The firm plans to hire 75 new staff over the coming three years and the move is supported by IDA Ireland. That will bring its Irish headcount to 250.
**** China has pledged $43 billion to the International Monetary Fund as part of its latest fund-raising drive. Alongside new commitments from Brazil and Mexico - the host of the ongoing G20 summit at Los Cabos - that brings the IMF fire-fighting fund to $456 billion. Late last year Christine Lagarde, the managing director of the IMF, had set out a target of $600 billion. The IMF then lowered that target mainly because the US refused to commit any more money.The IMF has therefore been relying on developing nations to contribute more resources. That puts it under political pressure because those same nations are unhappy with their relatively limited role in running both the World Bank and the IMF and are seeking a greater say in how both bodies go about their business.
**** Microsoft has unveiled a new tablet computer to compete with Apple's iPad. The new range of what are called "surface" tablets were announced by Microsoft last night. They look like any other tablet but come with a soft cover that also doubles as a keyboard. This marks a departure for Microsoft which generally has stuck to making software to run other people's devices rather than making hardware of its own.
