* C.bank governor says spread has had intended effect
* Bernstein says banks have reduced use of c.bank facilities
By Ole Mikkelsen
COPENHAGEN, Sept 1 (Reuters) - A spread of 10 basis points between the Danish central bank's lending rate and rate on certificates of deposits has contributed to reducing banks' use of central bank facilities, the central bank chief told Reuters.
The Nationalbank introduced a spread between its lending and CD rates on June 4 when it trimmed the lending rate by 10 basis points to 1.55 percent and simultaneously cut the CD rate by 20 bps to 1.45 percent.
Replying in writing to Reuters questions, central bank Governor Nils Bernstein said the spread has had the intended effect.
"From the introduction of the spread to the end of August, banks' and mortgage credit institutions' net positions at the Nationalbank have risen by 20 billion crowns, while in the same period their borrowing at the Nationalbank has declined by 60 billion," Bernstein said.
The lending and CD rates have in the past been identical, so the introduction of the spread marked a policy change.
The central bank said at the time that the purpose of the spread was to give banks and mortgage-lenders an incentive to settle differences in liquidity through the money market rather than relying on the facilities of the Nationalbank.
"After the margin was introduced, there has been a tendency for banks and mortgage credit institutions to reduce their overall utilisation of facilities of the Nationalbank, which was the purpose," Bernstein said.
"It is, however, hard to determine how strong the connection is," he added.
Since the spread was introduced in June, it has been maintained through two rate cuts in August when the Nationalbank trimmed both the lending and the CD rate by 10 bps, which brought the lending rate down to 1.35 percent and the CD rate down to 1.25 percent.
Bernstein declined to say if the spread could be widened.
"In principle, I do not answer questions about possible, future rates," he said in his response to Reuters questions.
Before the spread, commercial banks had CDs with the central bank of about 245.2 billion crowns ($47.32 billion) and Nationalbank loans of about 173.8 billion, for a difference of 71.4 billion.
On Friday, banks had 206.9 billion in CDs and 113.2 billion in loans with the central bank, so the difference had grown to 93.7 billion.
The Swedish central bank, the Riksbank, has exceptionally introduced a negative interest rate of 0.5 percent on bank deposits in a bid to get commercial banks to loan more money to businesses and households.
Bernstein declined to comment on Sweden's negative rate, but noted that Danish rates are set on the basis of Denmark's policy of keeping the crown steady against the euro.
The Danish central bank changes rates for the sole purpose of keeping the crown steady around its central parity of 7.46038 to the euro and between 7.62824 and 7.29252.
Large foreign currency reserves have boosted the crown in recent months, which has been the reason for the central bank's independent rate cuts in August and June.
The bank will publish fresh foreign-exchange reserve figures for August on Wednesday at 1400 GMT. (Reporting by Ole Mikkelsen; Editing by Victoria Main)