At a time when interest rates on deposits are close to zero, Danes are nonetheless putting their money in the bank, according to the latest figures from the central bank.

Private depositors currently have some DKK 814 billion in banks, equalling half of Denmark’s GDP.

In May alone, some DKK 4.2 billion was banked, no doubt early retirement contributions freed up by the government’s early retirement reform.

“It’s certainly not the interest rate that makes people put their money in the bank as the sort of account they are putting it in will normally have an interest rate close to zero. A lot of people are probably thinking about what to do with the money,” says Danske Bank’s Las Olsen, adding most of the funds will end up as savings rather than consumption.

Nykredit’s Johan Juul-Jensen says a large part of the overall funds are needlessly banked in low interest accounts.

“Simply by moving some of the savings into high-interest accounts, Danes could increase their revenues by several billion each year – without taking on any extra risk,” Juul-Jensen says, adding an alternative could be to repay some debt.

“That would give an immediate bonus as the interest on private debt is normally much higher than the interest you get on savings,” he says.

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