This is not an isolated Danish phenomenon; banks in other European countries have experienced the same difficulties. Danmarks Nationalbank cannot provide liquidity facilities to cover borrowing requirements in foreign exchange since its role is primarily linked to kronedenominated liquidity. Banks with large business volumes in foreign exchange must themselves ensure adequate contingency funding plans in the relevant currencies.
Overall, the Danish money market has navigated fairly successfully through these rough waters, which ultimately shows that the Danish financial system is in good shape. Nevertheless, Denmark has been affected by the international turmoil. Financial statements for the 3rd quarter showed that Danish banks were also exposed to investment vehicles, liquidity lines and structured credit products.