Denmark’s €400bn pensions industry is proposing the state issue defence and security bonds to finance some of the extra DKK120bn (€16bn) the Nordic country is having to invest in Danish armament over the next few years.
Insurance & Pension Denmark (IPD), the pensions and insurance industry association, has made the proposal to politicians as well as putting it forward through the media.
Kent Damsgaard, chief executive officer of IPD, said: “By earmarking the revenue from the bonds for defence and security, Denmark can send an important signal that the money is going to some very specific and necessary investments.”
In an article in the Danish financial news service Finans, the CEO said that as well as being a transparent way to debt-finance the additional defence spending Denmark was now planning, it would also help send a signal to the pension sector and other investors that defence investments were generally legitimate.
“We also think that such a model could be an inspiration for more indebted countries in Europe,” Damsgaard said.
A spokesman for the association told IPE that the lobby group had previously advocated for green government bonds, and that when the Danish government finally issued them, IPD’s members bought them all.
“We believe the same will happen with defence government bonds – if the government decides to issue them,” he said.
Danish finance minister Nicolai Wammen told Finans that there were currently no plans to issue special defence and security bonds, but that Denmark was in a new security policy situation where it was crucial the country accelerated the build-up of defence and security.
“I am convinced that even more money will have to be allocated to defence in the future,” he said, adding that he welcomed all good and constructive suggestions on how to get there.
Last month, after the Danish government announced the earmarking of an extra DKK50bn for defence, IPD called for frameworks to be created enabling the pension sector to contribute with private investments in defence.
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