Denmark and the euro

From Wikipedia, the free encyclopedia

     EU Eurozone (16)      EU states obliged to join the Eurozone (9)      EU state with an opt-out on Eurozone participation (1 - U.K.)      EU state planning to hold a referendum on the euro (1 - Denmark)      Areas outside the EU using the euro with an agreement (5)      Areas outside the EU using the euro without an agreement (4)  v • d • e 

At Copenhagen Airport prices are shown in both kroner and euros

Denmark uses the krone as its currency and does not currently use the euro, having negotiated an opt-out from participation under the Edinburgh Agreement in 1992. However, a referendum on the introduction of the euro is planned before the next national election, due in 2011.

[edit] Status

The Maastricht Treaty originally required that all members of the European Union join the euro once certain economic criteria are met. Denmark ratified this treaty on 18 May 1993 but with the addition of the Edinburgh Agreement which gives it an exception and allows it to not adopt euro if it does not want. However, Denmark meets all five criteria and could join the euro if it chooses ^[1].

	Convergence criteria
	Inflation rate 1	Government finances		ERM II membership	Long-term interest rate 2
		annual government deficit to GDP	gross government debt to GDP
Reference value 3	max 3.2%	max 3%	max 60%	min 2 years	max 6.5%
Denmark (2008)	3.6%[2]	-3.6% 4[3]	30.0%	joined ERM II on 1 January 1999	4.42%[4]
criteria fulfilled      criteria not fulfilled 1 No more than 1.5% higher than the 3 best-performing EU member states. 2 No more than 2% higher than the 3 best-performing EU member states. 3 Values from May 2008 report [2]. To be updated each year. 4 Negative value is a surplus.

Since 1 January 1999, the krone has been part of the ERM II mechanism, under which it is required to trade within a 2.25% either side of a specified rate of €1 = DKK 7.46038 making the lower rate 7.29252 and the upper rate 7.62824 kroner for 1 euro ^[5]. This band, ±2.25%, is narrower than for most ERM II members ±15%. However, the exchange rate has kept within 1% of the defined rate, even less than the set limits.^{[citation needed]}

[edit] History

[edit] Early monetary unions in Denmark (1873-1914)

Some Danish receipts state prices in euros as well as kroner

On 5 May 1873 Denmark with Sweden fixed their currencies against gold and formed Scandinavian Monetary Union. Prior to this date Denmark used Danish rigsdaler divided into 96 rigsbank skilling. In 1875 Norway joined this union. A rate of 2.48 kronor per gram of gold, or roughly 0.403 grams per krone was established. An equal valued krone of the monetary union replaced the three legacy currencies at the rate of 1 krone = ½ Danish rigsdaler = ¼ Norwegian speciedaler = 1 Swedish riksdaler. The new currency (krone) became a legal tender and was accepted in all three countries - Denmark, Sweden and Norway. This monetary union lasted until 1914 when the World War I brought an end to it. But the name of the currencies in each country remained unchanged.

[edit] Pre-eurozone documents (1992-1995)

The Maastricht Treaty originally required that all EU member states except the UK join the euro. However, following a referendum on 2 June 1992 in which Danes rejected this treaty, Denmark negotiated the Edinburgh Agreement, under which Denmark was also allowed to opt-out from eurozone membership, which was accepted in a referendum on 18 May 1993. As the result Denmark is not required to join the eurozone.

[edit] First euro referendum (2000)

A referendum held on 28 September 2000 rejected membership of the eurozone. 87.6% of eligible voters turned out, with 46.8% voting yes and 53.2% voting no.^[6]

[edit] Usage today

Please help improve this article or section by expanding it. Further information might be found on the talk page. (May 2009)

[edit] Future euro referendum (2010 or 2011)

Wikinews has related news: Danish PM pushes for new referendum on euro

On 22 November 2007, the newly re-elected Danish government declared its intention to hold a new referendum about abolishing the four exceptions, including the euro, by 2011.^[7] It remains unclear if people will vote on each exception separately, or if people will vote on all of them together.^[8] Fogh Rasmussen also said he would seek a "noticeable reduction of income taxes" and improved conditions for asylum-seekers in Denmark as he presented the government's platform for the next four years.

Denmark was expected to vote on whether to join the euro in 2008 according to Anders Fogh Rasmussen's statement.^[9] It was thought this would occur in the autumn, but due to the result of the Irish Lisbon referendum, the debate may be postponed.^[10]

There has been some speculation that the result of the Danish referendum will affect the Swedish debate on the euro.^[11]

Due to the economic crisis of 2008, Anders Fogh Rasmussen expressed that Denmark is at a disadvantage being outside the Eurozone. He also confirmed that referendum on joining the Eurozone will be held before the next parliamentary elections; all indications are that his successor, former Finance Minister Lars Løkke Rasmussen, will continue Fogh Rasmussen's policies.^[12] His idea of Denmark joining the eurozone was supported by Peter Straarup, general manager of Denmark's biggest commercial bank, Danske Bank.^[13]

On 2009-05-13, Danish PM Lars Løkke Rasmussen confirmed a referendum on the euro will be held before the next general elections (due in 2011).^[14] At the same point, he said that Denmark already is using the euro (because of the currency peg); only, they have decided to call it "danske kroner".

[edit] Polls

Euroopinion in Denmark since August 2006 by Børsen.
blue - support of adopting the euro
red - against adopting the euro
green - undecided

DKK-EUR exchange rate since 1999

Polls on the question whether Denmark should abolish the krone and join the euro. The actual wording of the question may have varied.

[edit] Danish dominions

The Faroe Islands currently use the Faroese króna, special bills which are exchanged 1:1 with Danish kroner and, in practice, are the same currency. Greenland currently uses ordinary Danish kroner, but plans to introduce the Greenlandic krone, a system similar to that of the Faroese one.^[35] Both continue to use Danish coins.

It remains unclear if Greenland and the Faroe Islands will adopt the euro should Denmark choose to do so. Both are parts of the Kingdom of Denmark, but remain outside of the EU. For this reason, they don't take part in EU referendums.

If Denmark adopts euro Danmarks Nationalbank would, in principle, have to continue to support the Faroe Islands and Greenland with Danish currency. This scenario is thought to be unlikely, so in effect Denmark's joining the euro would possibly mean that the Faroe Islands and Greenland will have to adopt it as well, even if they are not allowed to vote on the issue.^{[citation needed]}

[edit] Possible euro coin design

Before Denmark's 2000 referendum on the issue, Danmarks Nationalbank and the Royal Mint was asked by the Ministry of Economics to propose designs for the future Danish euro coins.^[36] The suggested design was based on the designs of the Danish 10 and 20 kroner, with Queen Margrethe II on the front, and the 25 and 50 øre, switching their back motif (a crown) to the front of the euro coins.

The design was merely meant as a possible suggestion, and since the referendum rejected the introduction of the euro, it is not clear if Denmark will use it, should the euro be adopted.^[37]

[edit] See also

• Danish euro referendum, 2000
• Sweden and the euro

[edit] References

v • d • e Topics on the euro Topics Linguistic issues · International status and usage · Euro sign · Eurozone · Petroeuro Administration European Central Bank (ESCB · Eurosystem · President) · Economic & Monetary Union · Ecofin · Stability & Growth Pact · Eurogroup History "Snake in the tunnel" · European Monetary System (I: ECU · II: ERM · III: EMU) · European Monetary Institute · Introduction · Enlargement Related EU economy · Economy of Europe · Eonia · Euribor · Global economy · Reserve currency · World currency Denominations coins €0.01 · €0.02 · €0.05 · €0.10 · €0.20 · €0.50 · €1 · €2 · €2 commemorative coins · Other commemorative coins · Identifying marks · Starter kits · Europa Coins banknotes €5 · €10 · €20 · €50 · €100 · €200 · €500 Coins by country adopted EU: Austria · Belgium · Cyprus · Finland · France · Germany · Greece · Ireland · Italy · Luxembourg · Malta · Netherlands · Portugal · Slovakia · Slovenia · Spain  – Non-EU: Monaco · San Marino · Vatican targeted Estonia · Latvia · Lithuania Adoption by other countries EU Bulgaria · Czech Republic · Denmark · Hungary · Poland · Romania  · Sweden · United Kingdom Non-EU Andorra · Croatia · Iceland · Kosovo · Montenegro Yielded currencies European Currency Unit · Austrian schilling · Belgian franc · Cypriot pound · Deutsche Mark · Dutch guilder · Finnish markka · French franc · Greek drachma · Irish pound · Italian lira · Luxembourgian franc · Maltese lira · Monegasque franc · Portuguese escudo · Sammarinese lira · Slovak koruna · Slovenian tolar · Spanish peseta · Vatican lira Remaining currencies ERM II Danish krone · Estonian kroon · Latvian lats · Lithuanian litas other (EU) British pound (plus Gibraltar pound) · Bulgarian lev · Czech koruna · Hungarian forint · Polish złoty · Romanian leu · Swedish krona Numismatics Portal · European Union Portal