This is the main background to Danmarks Nationalbank’s proposal to phase out deferredamortisation loans and to let property value tax develop in step with house prices. Both proposals would contribute to dampening fluctuations in the housing market and hence in the economy overall. * * * In addition to strengthening public finances, we need to boost growth in the Danish economy.
Looking back at the past period of deflation, a vicious cycle continued, in that households and firms became reluctant to consume or invest and postponed spending, which consequently decreased income and led to a further decline in spending. This vicious cycle ended with the introduction of quantitative and qualitative monetary easing (QQE) in 2013.