The capital flows also pose challenge for the monetary policy setting. I allude to the much discussed Mundell-Fleming trilemma, i.e., it is impossible to have an open capital account independent monetary policy and fixed exchange rate. Capital account openness and independent monetary policy framework could lead to flexible exchange rate which can be disorderly and volatile. 10.
And we must have a realistic approach to how much special Danish circumstances will be taken into account in future. I will also observe that the credit institutions’ own targeted returns seem to be rather high, and that a long period of low interest rates involves considerable inherent risk. *** My first topic is equity capital and financial regulation.