The tasks of Danmarks Nationalbank
Danmarks Nationalbank is the central bank of Denmark as defined in the Danmarks Nationalbank Act of 1936. Under the first section of the Act, "Danmarks Nationalbank … shall as the Central Bank of this country have the object … to maintain a safe and secure currency system in this country, and to facilitate and regulate the traffic in money and the extension of credit”. This description still fits the tasks of Danmarks Nationalbank today.
Three main objectives
Under the Act, Danmarks Nationalbank has three main objectives:
- Stable prices: Danmarks Nationalbank helps to maintain stable prices, i.e. low inflation. This is done by pursuing a fixed-exchange-rate policy against the euro.
- Safe payments: Danmarks Nationalbank promotes safe settlement of cash and electronic payments. This is done by issuing banknotes and coins and ensuring that payments can be settled between banks.
- A stable financial system: Danmarks Nationalbank helps to maintain the stability of the financial system. This is done by overseeing financial stability and payment systems, compiling financial statistics and managing the central government’s borrowing and debt.
An independent, self-governing institution
Danmarks Nationalbank is an independent, self-governing institution established by law. Its independence dates back to its establishment in 1818. The independence of Danmarks Nationalbank is incorporated in the 1936 Act, in that the bank’s Board of Governors is solely responsible for determining monetary-policy interest rates.
The principle of the independence of central banks is also stated in the Treaty establishing the European Community (article 130), which says that neither the ECB nor a national central bank shall seek or take instructions from Community institutions, from any government of a member state or from any other body.