Danish Economists weigh the advantage of Denmark to remain outside the euro single currency Union


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Wednesday, 13 July 2011
The support among economists for the single European currency in Denmark declines in step with the problems looming large in the euro countries.

Danish newspaper Politiken reports on Wednesday that domestic bank economists have previously embraced monetary cooperation with the Euro. But the debt crises have now dampens the interest in the currency and the zeal to sign up for it has fallen flat.

“There are more arguments that it is good to stand outside the euro. Loans granted in aid packages to countries in need will not necessarily be paid back, and it's convenient for Denmark to stand outside and pay a smaller share,” said Frank Oland Hansen, senior economist at the Danske Bank.


Frank Oland Hansen continues that: “Moreover, it has a disciplining effect on economic policy to remain outside the euro, and that's why Denmark has not been pressured by the debt crisis.”
He points that for Denmark to stand outside the euro, the country will be forced by the market to pursue a responsible economic policy to prevent currency speculation.

The political costs of being outside the euro too have been observed by Nordea, according to Politiken:
“Conversely, the political costs prove to be greater in the long term,” says Jan St�rup Nielsen, senior analyst at Nordea.
He believes that Denmark will lose even more influence if the euro countries solve the crisis with a common fiscal policy.

Two years ago the Danish Economic Council after weighing in the pros and cons in a report of adopting the European currency, concluded that there would be some minor economic benefits of joining the euro, but the decision to enter into cooperation is more political than economic.

Since the debt crisis escalated in southern Europe, Hans J�rgen Whitta-Jacobsen acknowledges to Politiken that it for the sake of having a disciplining effect on fiscal policy, it is vital for Denmark to remain outside the euro.
By Team

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