We’re back in crisis — and Denmark’s safe haven status is even more extreme. How extreme? Nominal interest rates are now negative! The central bank charges private banks 0.2 percent to hold deposits, and the interest rate on 2-year government debt is -.23 percent.
Danish yields are even lower than German yields. I’m not sure that anyone really thinks Germany could face a liquidity squeeze — any situation in which that might happen is also probably a situation in which the euro is gone and Germany has its own currency again. But maybe not; also, maybe there’s some concern about Germany having to cough up a lot of money to save the euro.
Anyway, what’s happening in Denmark is an indication of just how severe the euro crisis is — so severe that people are willing to pay to have their money stored somewhere else.