Danish and Swedish regulators argue that the newly introduced proposals from Basel Committee on Banking Supervision are destroying mortgage bond markets in both countries as banks are required to increase holdings and capital in order to prevent a possible bankruptcy from another crisis.

Denmark's covered bond market is the world's third largest after the US and Germany with a total value of $450 billion, along with Sweden's $220 billion of bonds will be penalized due to the size of the bond market compared with the government debt each country holds.

Basel proposal suggest that banks should hold level 2 debts, including covered bonds to 40.0 percent of liquid assets, while being listed at 85 percent of the market value. One third of Denmark mortgage bonds are held by local banks.