Denmark to be 17th EMU member?

I had pointed the dilemma of EU members in this paper – some want to quit and some want to join in.

Denmark is a member of EU but not EMU (Denmark Central Bank still is responsible for its monetary policy and still has its own currency). Denmark always prided on being a non-member until this crisis happened. I have noted the problems with Denmark’s monetary policy and the problems on its economy.

The Denmark Central Bank Governor Nils Bernstein gave a speech to Danish parliament. In this he outlined Denmark’s case for joining EMU and accepting Euro as a currency.

Danish participation in the euro can be expected to lead to slightly lower interest rates, a small increase in foreign trade and lower transaction costs. In normal, calm periods, interest rates will be only marginally lower than under the current fixed exchange- rate regime.

The real reason is:

In the current situation with a financial crisis and a global economic slowdown, the Economic and Monetary Union demonstrates its strength. The single currency and single monetary policy are stabilising factors that prevent the individual member states from seeking their own – often mutually competitive – monetary solutions to the crisis. This would only make it escalate further, as we saw in the 1970s. It is and has been the general view of Danmarks Nationalbank that Denmark’s adoption of the euro is a natural extension of our fixed-exchange-rate policy and would not involve major economic upheavals.

He also points how ECB is a great institution which has extended support to non-EU member is the crisis. He also says ECB works in a coordination fashion and Denmark’s voice will be equally heard.

Eurointelligence also points out Denmark is set to join EMU and Euro adoption from the political angle.

Exciting times. Would UK, Sweden, Norway follow as well and initiate public debate on the topic? I havent read much on Norway and Sweden but in UK discussions are already on. Willem Buiterhas been advocating the same in his blog and also points to a recent publication of leading economists/policymakers on the issue.

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6 Responses to “Denmark to be 17th EMU member?”

  1. Interest Rates » Denmark to be 17th EMU member? « Mostly Economics Says:

    […] Read the rest of this great post here […]

  2. Enrique Says:

    Amol,

    Norway, a large oil producer, is NOT a member state of the European Union (E.U.) but part of the European Economic Area, an enhanced FTA, including a Customs Union and free circulation of people (Schengen Agreement)

    Iceland also is NOT a member state of the E.U. but there is a poltical debate about the need to join both the European Union and the Eurozone.

  3. Denmark to be 17th EMU member? « Mostly Economics | Denmark Blogs Says:

    […] Denmark is a member of EU but not EMU ( Denmark Central Bank still is responsible for its monetary policy and still has its own currency). Denmark always prided on being a non-member until this crisis happened. I have noted the problems … Here is the original:  Denmark to be 17th EMU member? « Mostly Economics […]

  4. What if Denmark was part of Europe? « Mostly Economics Says:

    […] had made a case for joining ECB earlier as […]

  5. denmark to be 17th emu member? | Denmark Says:

    […] denmark to be 17th emu member? […]

  6. The European Debt Crisis – from a Danish Perspective « Mostly Economics Says:

    […] rates are messy most of the time). This prompted Denmark Central Bank chief to suggest that Denmark should join the Euro. He even looked at what would have happened if Denmark was part of […]

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