Denmark and the Euro

Denmark and the Euro

1. Introduction

On 1 January 1999 eleven Member States of the European Union replaced their national currencies by a single European currency, the euro. From this point on these countries will share a single monetary and exchange rate policy.

In the Edinburgh decision from 1992, Denmark announced that it will not participate in the third stage of the EMU and in the single currency.

Denmark has made an agreement with the new European Central Bank (ECB) on limiting the fluctuations between Danish Kroner and the euro (ERM 2). By this agreement the Danish Krone is in fact linked closely to the euro.

In Denmark there is an increasing awareness of the advantages of the single currency. A referendum, however, has to be held before Denmark can join the EMU. It is anticipated that a referendum will be held within the next few years which may enable Denmark to join the EMU by 1 January 2002 when the euro notes and coins are introduced.