Denmark's economy looks set to absorb the recent diplomatic flare-up over Greenland and a steep market decline for its largest company without major damage, one of the country's central bank governors said in remarks at a U.K. economic forum.
Ulrik Nødgaard told delegates at the Warwick Economic Summit in Coventry that the twin shocks that drove the Danish crown to a six-year low against the euro and erased roughly a fifth of Novo Nordisk's market value were unlikely to have fundamentally altered the central bank's outlook.
"The Danish economy has been quite resilient," Nødgaard said in a weekend interview. He noted that the central bank's September projection envisaged growth near 2% for the year. "That can certainly change, but it's not like we have a completely different outlook," he added.
Geopolitics, markets and the crown
Last month the tightly managed Danish crown slipped to a six-year trough versus the euro after comments from U.S. President Donald Trump that he might seek to seize Greenland. At the same time, fears about intensifying competition in the obesity drug market sparked a rout in global equities that hit Novo Nordisk particularly hard, slicing about 20% off the company's value in a single week.
Denmark has been among Europe's stronger performers over the past two years, a stretch during which Novo Nordisk was a significant contributor to market confidence. Despite that, Nødgaard played down links between the Greenland episode and the currency move, saying the central bank viewed the decline as driven more by other market flows and by a gap between Denmark's 1.6% policy rate and that of the European Central Bank.
The crown is pegged at a central rate of 7.46038 crowns per euro and permitted to move only 2.25% on either side of that level. The currency's fall to 7.4729 last month brought it close to the lower boundary, fuelling speculation of possible central bank intervention. Nødgaard reiterated that the institution's strategy is to maintain the peg and said markets had begun to "correct" as the currency approached weaker levels.
European autonomy and reserve posture
While declining to disclose any internal deliberations over the Greenland situation or whether there had been direct contacts with the U.S. Federal Reserve, Nødgaard argued that recent tensions underscored a wider European need to examine dependencies and build strategic autonomy. He said such adjustments are long-term projects rather than quick fixes and cited even basic infrastructures - like payments systems - as examples of where Europe may need to strengthen its standing.
On the central bank's own holdings, Nødgaard said there had been no change in how dollar assets are managed in Denmark's reserves. He noted, however, that some Danish pension funds had recently chosen to reduce holdings of U.S. Treasuries - a decision he indicated was for those funds themselves to make.
Market stability, tech selloff and cyber preparedness
Turning to market turbulence more broadly, including a selloff in global technology stocks, Nødgaard described the financial sector as largely resilient and capable of absorbing shocks of the size seen so far. He warned, though, that a severe market correction leading to a notable rise in risk premia would have economic consequences.
Separately, Nødgaard urged the creation of an emergency back-up system to preserve core banking functionality in the event of a cyberattack. The proposal would see an offline data vault able to be activated if a bank were taken down, allowing customers and businesses to carry out essential transactions such as cash withdrawals. Nødgaard said the measure would require legislation and anticipated the project would take a few years to implement, but expressed hope it would succeed.
Outlook
In sum, Denmark's central bank governor painted a picture of an economy that has navigated recent shocks without a material shift in its near-term prospects, while flagging structural policy considerations - from reserve posture to cyber-resilience and Europe's strategic position - that merit longer-term attention.