Status
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Kingdom Vatican AD Eurozone ERM II members unilaterally adopted other EU members via treaty special adoption agreement
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 the euro if it does not want to. However, Denmark meets all five criteria and could join the euro if it chooses.
| 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 (FY2010) | 2.3% | 2.7% | 41.6% | joined ERM II on 1 January 1999 | 2.96% |
| criteria fulfilled criteria not fulfilled | |||||
Since 1 January 1999, the krone has been part of the ERM II mechanism, under which it is required to trade within 2.25% either side of a specified rate of 1 euro equal to 7.46038 kroner (making the lower rate 7.29252 and the upper rate 7.62824). This band, 2.25%, is narrower than the 15% band used for most ERM II members. However, the exchange rate has kept within 0.5% of the defined rate, even less than the set limits. The independence of the Danish central bank is therefore limited in practice. Its aim is to keep the krone within this exchange rate band. This policy marks a continuation of the situation that existed from 1982–1999 with regard to the Deutsche Mark, which provided a similar anchor currency for the krone. The ECB is also obliged to help protect the Danish currency in the case of speculative attacks.
Read more about this topic: Denmark And The Euro
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