| year | event |
|---|---|
| 650 | The first coins were minted by the King of Lydia in around 650 B.C. In ancient times, coins were minted to facilitate trade. Coins were made of gold or silver, and since their value was determined by their metal content, they could be used both locally and for trade between countries. |
| 995 | The silver coin of Svend Tveskæg (Sweyn Forkbeard) from around 995 is the oldest Danish coin bearing the name of king and country. Production was limited to 20,000 coins at very most. King Svend did not mint coins to raise money, but rather to show that he and his country were part of Europe’s elite. The coins were minted according to Anglo-Saxon traditions, possibly because the mint master, Godwine, was Anglo-Saxon, and also because the Vikings had close relations with England as rulers of Danelaw. |
| 1000 | The Chinese manufactured the first paper money in around the year 1000. Metal money had become too heavy to travel with. The banknotes were issued with a guarantee that they could be encashed for gold or silver. In some cases they were merely a receipt for gold or silver deposited in a bank. |
| 1020 | The first actual organized coinage was created by Knud den Store (Canute the Great) around 1020. The city of Lund was the principal minting place. Since then Danish kings — with a few exceptions — have issued coins with their name, monogram and/or portrait. From the start, coins were used not only as a means of payment, but also as the state’s probably only form of mass communication by which the king could assert his sovereignty. |
| 1397 | The coinage was based on silver, but to give the kings — and thus the state — an easy source of income, the metal value was gradually reduced, and thus did not correspond to face value. Coinage was reestablished in 1397 by Queen Margrete I. However, the privilege of coining was still used to reduce the metal value of the coins, with the result that the inferior Danish coins were to a large extent replaced by foreign coins. |
| 1541 | In 1541, during the reign of Christian III, the coinage was reorganized and stabilized once again. The value of the coins was fixed, and minting in Denmark proper was referred to Copenhagen, to a newly-established mint in the former Saint Clare Cloisters, approximately at the corner of present-day Gammelmønt („old mint”) and Møntergade („mint master street”). The mint was situated there until the early 17th century. However, there were other mints in the realm too. |
| 1713 | Banknotes first became part of the Danish money supply in the years 1713-28. The huge costs of rearming during the Great Nordic War swept coins away to abroad. In order to facilitate trade „authorized banknotes” were issued. The banknotes were to have the same value as coins, but could not be exchanged for coins. Danes did not trust this paper money and its value therefore soon fell to below the coin value. The banknotes were withdrawn again in 1728. |
| 1736 | In order to support the commercial sector Den Københavnske Assignations-, Veksel- og Lånebank called the Kurant Bank was established. The bank held the sole right to issue banknotes, which it was obliged to exchange for silver coins at any time. However, it was not required to hold enough silver to cover the value of the notes. Since it issued more notes than it could encash the notes depreciated in value. |
| 1757 | Owing to surplus issue of banknotes, making encashment for silver impossible, the exchangeability of the Kurant banknotes was abolished in 1757. At the same time the banknotes were made compulsory legal tender. |
| 1791 | As confidence in the Kurant Bank had been eroded, Den Dansk-Norske Speciesbank was established and the sole right to issue banknotes in Denmark and Norway was transferred to this bank. A few years earlier Slesvig-Holsten, which had lost confidence in the Danish monetary system, had established its own note-issuing bank, Den Slesvig-Holstenske Speciesbank in Altona. The Species Bank in Copenhagen suffered the same fate as its predecessor. |
| 1807 | England attacked Denmark in 1807 during the Napoleonic wars, bombarded Copenhagen and made off with the fleet. Denmark became the ally of France and England declared war on Denmark. Rearmament resulted in soaring wartime inflation, since the state financed its military expenses by excess issue of banknotes. The war ended in 1814. |
| 1810 | The savings banks are the oldest of the banks we know today. The first was established in 1810 on the Holsteinsborg estate. The purpose of the first savings bank was to act as a safe depositary for the fortunes of minors. These savings were therefore deposited with the Treasury. |
| 1813 | After 1810 wartime inflation escalated so strongly that the value of money in relation to silver had to be written down drastically. In January 1813 this led to a new monetary reform, in which connection a new banknote-issuing bank, the Rigsbank, was established. It held the bank mortgage, i.e. cover for the new banknotes. This was a first-priority mortgage for 6 per cent of the value of all properties in Denmark. It was either deposited with the bank as a lump sum or paid in installments. A maximum limit to the issue of notes was fixed and the old notes, the „kurantrigsdaler”, were converted into new „rigsbankdaler” in the ratio 6:1. The same ratio was applied to government securities to be redeemed with the new notes. Since the state thus could not cover its liabilities, the monetary reform is known in history as the bankruptcy of the state. The Rigsbank could not maintain the value of the new banknotes. Private means of payment flourished, and the value of the banknotes in relation to silver reached its lowest point, at 9 per cent, in September 1813. During the following years the price fluctuated strongly. |
| 1818 | On August 1, 1818 Nationalbanken i Kjøbenhavn (the Nationalbank in Copenhagen) was established as a private limited liability company. A royal charter, from Frederik VI gave it the sole right to issue banknotes for 90 years. Since experience had shown that it was too dangerous to allow the state to be responsible for the note issue the Nationalbank was to be independent of the state. The establishment of Danmarks Nationalbank was thus a departure from the principle under the absolute monarchy of vesting all power in the king and government. Danmarks Nationalbank’s task was to restore order to the Danish monetary system and its revenue was the bank mortgages. During the first years all resources were devoted to withdrawing enough notes to ensure that notes carried their full value in relation to coins. This was achieved in the 1830s. Hereafter Danmarks Nationalbank as Denmark’s only bank could conduct ordinary banking activities. |
| 1829 | The first commercial bank in Denmark was Centralkassen in Copenhagen from 1829. It was of only little significance. More important was the establishment of Fyens Disconto-Kasse in Odense in 1846 and Privatbanken i Kjøbenhavn in 1857. These early banks were first and foremost involved in discounting bills of exchange, i.e. the owners of the bills of exchange (claims) sold them to a bank or banker at a discount. |
| 1830 | After confidence in the banking system had been restored in the 1830s, in parallel with the development in other countries a credit market developed and savings banks, banks and mortgage-credit associations were established. The first mortgage-credit associations was formed as early as after the Great Fire in Copenhagen in 1795. From the 1830s the savings banks began to carry out lending activities, especially to agriculture, and in this way gained great significance in financing the major agricultural investments between 1840 and 1870. |
| 1837 | In the first instance Danmarks Nationalbank’s lending comprised discounting bills of exchange for the business sector and extending loans against securities as collateral, and subsequently also against mortgages on property. As the monetary system stabilized, there was great demand for credit and soon the Jutland region requested that a branch of Danmarks Nationalbank be established there. This wish was granted and the first branch was opened in Århus. This branch was discontinued in 1989. |
| 1844 | At the end of the 1930s the people of Slesvig also requested that a branch be established in Flensborg, to promote the economic development of the city and the region. The branch was established in 1844 and was considered by some to be a Trojan horse which by devious means would introduce a common monetary policy with the Kingdom. This branch was discontinued in 1939. |
| 1845 | The restructuring of the monetary system had progressed so far that notes could be declared redeemable with coins and rules of coverage were introduced to ensure that the Nationalbank could fulfill its encashment obligation at any time. The metal standard, at that time silver, entailed that the issue of notes had to be adapted to holdings of metal. If silver flowed out of the country as a consequence of an external deficit, the note circulation had to be curtailed, while it could be expanded if silver flowed into the country. |
| 1856 | After the establishment of the silver standard Danmarks Nationalbank began to use the discount rate to manage lending, whereby the discount rate was raised if it was necessary to ration lending and lowered if there was ample cover for the note circulation. The word discount dates back to the time when bills of exchange were widely used in trade. A bill of exchange is a debt certificate which the buyer of goods issues to the seller, in return for which payment is postponed for e.g. 3 months. If the seller needs the money immediately, he can sell the bill of exchange to his bank. The bank makes a profit by purchasing the bill of exchange at a discount. The bank is said to discount the bill of exchange, hence the word discount. |
| 1857 | In the period 1857-75 a large number of private banks and savings banks were established. They took over most of Danmarks Nationalbank’s business with the business sector, while Danmarks Nationalbank increasingly became banker to the banks and thus gradually took on the role of central bank. |
| 1860 | Danmarks Nationalbank transferred all the work of printing Danish, Icelandic and Danish-West Indian notes to the Thiele company. |
| 1875 | — In 1873 a new Coin Act was introduced, coming into force on 1 January 1875. The unit of coinage was changed from rigsdaler to kroner, and 1 rigsdaler was exchanged for 2 kroner. At the same time the decimal system was introduced, 1 krone being equivalent to 100 øre. — As part of the transition to the krone coin Denmark acceded to the Scandinavian Currency Union convention. This currency union was the most extensive seen at the time. All Scandinavian countries introduced the gold standard and the same unit of account (the krone), as well as common circulation of the principal coins, i.e. gold coins with a value of 10 and 20 kroner, and the small coins. The Scandinavian Currency Union lasted up to World War I. — Germany’s decision to introduce the gold standard drew greater interest in the gold standard in Denmark. Germany and the UK, Denmark’s two most important trading partners, would now both have a monetary system based on gold, and to avoid exchange-rate fluctuations via the gold and silver values, it was an advantage for Denmark also to adopt the gold standard. The new Coin Act which came into force in 1875 therefore introduced gold as legal tender in Denmark. The Coin Act set a value of kr. 2,480 for 1 kg of fine gold, i.e. 1 krone corresponded to 0.403 grams of fine gold. |
| 1881 | In 1881 Danmarks Nationalbank established a branch in Ålborg at Jernbanegade 4. In 1943 the branch moved to a newly constructed building at Gl. Torv 4. The branch closed in 1972 and its activities were transferred to the Århus branch. |
| 1882 | The branch in Nykøbing Falster opened in 1882. In 1908 the branch was moved to Dronningensgade 24, to a newly constructed bank building. The branch closed in 1964. |
| 1895 | A general price drop had led to an increased debt burden for agriculture, so that farmers wished to convert to loans at a lower rate of interest. In 1886-96 there was a wave of conversions of both government loans and mortgage-credit loans. In 1895 Danmarks Nationalbank participated in conversion transactions whereby the interest rate was lowered to 3 1/2 per cent. |
| 1901 | Danmarks Nationalbank established two branches in 1901, one in Kolding and one in Odense. The Kolding branch was at Jernbanegade 29. In 1926 a newly constructed bank building on the neighboring site was inaugurated. The branch in Kolding was closed in 1968. The address of the branch in Odense was Overgade 10, 1st floor, above a hardware merchant’s. In 1932 the branch was extended to include the hardware store’s premises. In 1968 a new bank building was constructed at Munkerisvej/Hjallesevej. The branch closed in 1989. |
| 1904 | The new bank on the Danish West Indian Islands was established as a limited liability banking company by Danmarks Nationalbank in 1904. It was formed on the basis of negotiations between Danmarks Nationalbank, Handelsbanken, Landmandsbanken and Privatbanken i Kjøbenhavn. One condition for its establishment was that the West Indian coin system become a permanent scheme. The islands were relinquished to the USA in 1917, but the Royal Danish banking privileges remained in force until they expired in 1934. Then the Danish-West Indian Nationalbank was discontinued and the US dollar introduced on the islands. |
| 1907 | The extension of the legal basis for Danmarks Nationalbank was not subject to very much debate when the Royal Charter from 1818 approached expiry in 1908. It was extended to 1938 with few changes. The most significant change was to the banknote coverage rules whereby the old subscription system was replaced by the rule that 50 per cent of the stock of banknotes had to be covered by gold. In addition, the number of Governors by Royal Appointment was raised from 1 to 2, one of whom had to have knowledge of agriculture. |
| 1908 | During the boom in the first years of the 20th century Copenhagen was subject to major speculative expansion in the building sector. To a great extent the investments were financed with short-term foreign loans. In 1907 financial turbulence abroad led to the revocation of the loans and a currency shortage, and several Copenhagen banks began to flounder. At the same time Danmarks Nationalbank had to raise the discount rate significantly from 6 to 8 per cent. This led to a serious banking crisis in 1908, when Danmarks Nationalbank and the state embarked on a prolonged reconstruction. The crisis led to the appointment of a commission in 1910 to prepare proposals for regulation of the banks. However, the Banking Act was not implemented until 1919. |
| 1914 | — In 1914 Danmarks Nationalbank became the sole banker to the central government, reinforcing its role as central bank. As part of this cooperation Danmarks Nationalbank granted the central government interest-rate privileges and other facilities to offset the better terms previously offered by private banks — After the first news of the outbreak of war on August 1 people queued outside Danmarks Nationalbank to convert their notes to gold. On August 2 an act was passed in all haste to suspend the gold encashment obligation temporarily, so that Danmarks Nationalbank would no longer be obliged to redeem notes with gold. At that time the bank had already encashed notes with gold for a value of kr. 5 million, out of a note circulation of kr. 156 million. A few days later the suspension of the gold encashment obligation was followed up by a ban on the export of gold. |
| 1918 | In 1918 Danmarks Nationalbank took over the printing of banknotes and appointed its own staff for this work. The actual printing took place in the Danmarks Nationalbank building designed by the architect J.D. Herholdt. Since 1918 Danmarks Nationalbank’s own staff have printed Danish banknotes. |
| 1922 | In 1922 Landmandsbanken — the largest bank in the Nordic countries – had to be restructured with the help of Danmarks Nationalbank and the central government. The collapse of Landmandsbanken was the largest, but by no means the only case during the decade. The reasons for the banks’ collapse were a recession and exceptionally large financing of individual customers, combined with speculation and borrowing against stock-exchange-listed securities. In addition to Landmands-banken the fourth largest bank in the country, the Københavns Diskonto- and Revisionsbank, had to be restructured in 1921-22 with the help of Danmarks Nationalbank and the three principal banks. More than one in four Danish banks were unable to settle the losses of the 1920s without drawing on their share capital. At the close of 1930 31 of the 208 banks in existence at the end of 1920 had gone into liquidation and faced losses which in respect of 14 banks affected not only shareholders but also depositors. |
| 1924 | The price increases during World War I and the crises in the following years made it difficult to restore the krone’s gold parity from before 1914, i.e. kr. 2,480 per kg fine gold. There were countless discussions of whether the krone should be written up to its par value — the honest krone where the gold value of 1 krone was 1 krone — or stabilized at a lower value. The Currency Act of 1924 adopted a gradual return to par from the level at that time, where the gold value of 1 krone was 65 øre. However, the measures to tighten the economy, to support the gradual return to par, contributed to very rapid appreciation of the krone, and the gold parity was restored already in December 1926. The reintroduced gold standard was a gold-bar standard, i.e. Danmarks Nationalbank was only obliged to encash amounts equivalent to the value of one bar of gold. The deflation after the restoration of the krone’s gold parity from before World War I affected the business sector very severely and brought unemployment up to 21-22 per cent. This was also a time of numerous crises in the banking sector. |
| 1927 | During the 1920s new payment methods became more prevalent. The post giro system was established in 1920 and by 1927 cheque transactions had reached such a scale that Danmarks Nationalbank and the major banks concluded an agreement for cheque clearing at Danmarks Nationalbank’s premises. The banks exchanged cheques to settle net amounts. |
| 1931 | The Great Depression from 1929 led to pressure on the Danish currency reserve, inter alia because non-residents redeemed their claims. At the same time Denmark’s key trading partner, Britain, broke with the gold standard on 21 September 1931. In view of these circumstances on 22 September 1931 Denmark introduced a ban on the export of gold. Only a few days later the gold standard was finally abandoned with the Act on the discontinuation of the gold encashment obligation of 29 September 1931. |
| 1932 | „The Act on Measures to Protect the Danish Currency” introduced currency rationing. Danmarks Nationalbank was responsible for its administration and a permit from Danmarks Nationalbank’s currency office, called the Currency Clearing Centre, was required for each import transaction. The Currency Clearing Centre imposed stringent constrictions on the business sector and soon became the most-criticized crisis measure of the 1930s. |
| 1933 | After almost 1½ years with a floating exchange rate the Kanslergade Agreement between the government (the Social Democratic Party and the Radical Liberal Party) and the Liberal Party meant that the krone was to be held at a rate of kr. 22.50 against sterling, equivalent to writing it down by 24 per cent. |
| 1936 | The legal basis for Danmarks Nationalbank was brought up to date and the Royal Charter of 1818 was replaced on April 7 by the Danmarks Nationalbank Act, whereby the bank was restructured from a limited liability company to an independent institution. The Act gave the government and the Rigsdag (Parliament) greater insight into the affairs of Danmarks Nationalbank. Danmarks Nationalbank was to be headed by a Board of Directors of 25 members, a Committee of Directors and a Board of Governors. Two members of the Board of Directors were to be appointed by the government and eight by the Rigsdag, while the Board of Directors itself appointed the remaining 15 members, who were to have an expert knowledge of trade. The Board of Governors was to have three members, the Chairman being Governor by Royal Appointment. Danmarks Nationalbank Act of 1936 is still in force. |
| 1939 | In the months prior to the German occupation on 9 April 1940 gold was transported from Copenhagen to the USA, where most of it remained during the war, while some was sold to cover interest costs on Danish government loans in the USA. Since some of the gold was already deposited in England, on Denmark’s occupation there was very little gold left at Danmarks Nationalbank. Today most of Danmarks Nationalbank’s gold is deposited with the Bank of England in London. |
| 1940 | During the German occupation of Denmark the country’s monetary system was strongly affected by the enforcement of an obligation to finance the occupying power. This financing was via payments from Danmarks Nationalbank, which found it important that Danish means of payment be used. The result was an exceptionally large increase in the money supply. Danmarks Nationalbank’s payments were made against the central government guarantee. Danmarks Nationalbank’s financing of payments to the German government during the occupation years of 1940-45 took place via two accounts. They were included in Danmarks Nationalbank’s balance sheet under assets as „Clearing accounts with abroad” and „Sundry debtors”. On capitulation the first-mentioned account amounted to approximately kr. 2,900 million. Most of Denmark’s other payments for German account were, on the other hand, via the „occupation account”, i.e. Danmarks Nationalbank’s account for „Hauptverwaltung der Reichkreditkassen, Berlin”. The occupation account increased even more strongly than the clearing account. On capitulation Danmarks Nationalbank’s outstanding on this account was approximately kr. 5,000 billion. After liberation the central-government guarantee meant that Germany’s debt to Danmarks Nationalbank could be transferred in its entirety to the central government’s adjustment account at an amount of kr. 7,611 million. |
| 1942 | Prices rose strongly in Denmark in the early years of German occupation. Especially export prices for the key agricultural products rose, and consequently a revaluation of the krone was proposed. This would, among other things, reduce export revenues in the agricultural sector. The occupying power did not favor this proposal, since lower export revenues might affect the agricultural sector’s willingness to supply goods, but finally revaluation of the krone by 8 per cent vis-à-vis all currencies was accepted. The revaluation was adopted on 22 January 1942. |
| 1944 | At a conference in Bretton Woods, USA, it was agreed to establish The International Monetary Fund (IMF) after the war. The objective of the IMF was to reduce restrictions on trade and to create a system with fixed, but adjustable, exchange rates, to avoid the competing devaluations of the 1930s. Under the fixed-exchange-rate system fluctuations of +/- 1 per cent vis-à-vis the US dollar were accepted. The dollar had a fixed value in gold. It was also a key task of the IMF to administer loan schemes for member countries experiencing balance-of-payments problems. Denmark joined the IMF and participated in the fixed-exchange-rate system that became known as the Bretton Woods system. The 1942 exchange rate was used as the central rate. |
| 1945 | During the occupation note circulation had increased strongly. From a level of approximately kr. 400 million in the pre-war years banknote circulation increased to approximately kr. 1,600 million during the occupation, i.e. four times over. In order to avoid inflation after the deregulation of post-war prices, control and reduction of this substantial note circulation was one of the most pressing challenges of the post-war economy. This problem was to be solved by withdrawing all Danmarks Nationalbank’s banknotes in circulation, while at the same time taking stock of all assets. It was thus possible to confiscate collaborator profits and expose black marketeers, and to cancel any banknotes the occupying power might have taken out of the country. To achieve this, in the autumn of 1943 Danmarks Nationalbank secretly began to manufacture a new type of banknote. In February 1945 Danmarks Nationalbank’s stocks of all banknote categories were sufficient for the substitution to take place. The money substitution began on the „asset status day” of 23 July 1945, and included all banknotes. Prior to that, the new banknotes for kr. 1,400 million had been distributed to the banks. The substitution revealed that almost kr. 3,000 million, or 20 per cent of the reported assets, were earnings not reported to the tax authorities. |
| 1949 | — On 18 September 1949 the UK announced a devaluation of sterling against the dollar by approximately 30 per cent, and on the next day the Danish government decided to allow the krone to follow the pound. This decision was taken primarily to secure Danish agricultural exports to the UK. The domestic economy was otherwise favorable, with rising output and foreign trade, moderately declining prices and favorable international terms of trade. — During the war the Faroe Islands were isolated from Denmark, but in November 1948 they again became part of the Danish currency area. By the Act of April 12, 1949 on Faroese banknotes is was decided that the Faroe Islands would have their own banknotes, to be covered in full by payment of Danish kroner to a special account with Danmarks Nationalbank. The Faroese banknotes are produced at Danmarks Nationalbank’s Bankote Printing Works and put into circulation by Danmarks Nationalbank via two cash depots with the Faroese banks. |
| 1958 | In connection with increasing liberalization and growing world trade, the interest in currency convertibility, i.e. free exchange of currencies, increased. Consequently, the Western European currencies, including the Danish krone, became convertible vis-à-vis the dollar at the end of 1958. |
| 1967 | One of Danmarks Nationalbank’s original functions was to grant credits to private enterprises, e.g. by discounting bills of exchange. These exposures were greatly reduced over time, and on 1 October 1967 the last private customer relationships were terminated. |
| 1971 | During the 1960s the fixed exchange rates within the Bretton Woods system were subject to increasing pressure, and in 1971 the USA announced that the dollar could no longer be encashed for gold. Later that year the fluctuation bands within the system were widened from +/-1 per cent to +/-2.25 per cent, and the currency system had thus in reality collapsed. For a brief period, however, the system was maintained with the new fluctuation bands, but in the following years the participating countries opted out one by one, and allowed their currencies to float vis-à-vis the dollar. |
| 1972 | — With the widening of the fluctuation bands in the Bretton Woods system to +/-2.25 per cent, the EC currencies could fluctuate against each other by as much as 9 per cent. In order to stabilize the exchange rates within the EC a European currency system was therefore established in 1972. It reduced the overall fluctuation band between the EC currencies to 4.5 per cent. This system was known as „the snake” since the exchange rates could „slither” within the outer margins fixed by the Bretton Woods system. Even though it did not join the EC until 1 January 1973, Denmark was part of „the snake” from the start. — In May 1972 a new Coin Act was adopted to replace the 1873 Coin Act. The new Act abolished the 1-øre and 2-øre coins, which ceased to be legal tender on 1 April 1973. |
| 1975 | On January 1 the administration of The Royal Mint was transferred from the central government to Danmarks Nationalbank. This was part of much needed measures to rationalise coin production. |
| 1979 | From 1979 until the introduction of the euro on 1 January 1999 Denmark participated in the Exchange Rate Mechanism, ERM, within the European Monetary System, EMS. The ERM maintained the "snake’s" band of +/-2.25 per cent, but countries which did not participate in the system from the beginning could operate with a fluctuation band of up to +/-6 per cent for a transition period. Italy was one of the countries to utilize this option. The system also allowed for exchange-rate adjustments to be made from time to time. |
| 1982 | After a number of years of frequent krone devaluations, the new Conservative/ Liberal government introduced a fixed-exchange-rate policy within the EMS. Since 1982 exchange-rate adjustment has not been used actively in Denmark’s economic policy, and the central rate vis-à-vis the D-mark and later the euro has remained unchanged since January 1987. |
| 1983 | — Denmark was one of the first countries to establish a paperless bond market. The Danish Securities Centre was established, and paper-based securities trading was replaced by an electronic registration and settlement system. The Danish Securities Centre was organized as a private self-governing institution with a Board appointed by the Minister for Industry and representing the sectors directly affected by the Centre’s activities. In 2000 the Danish Securities Centre was converted into a limited liability company, VP Securities Services, with Danmarks Nationalbank as one of its shareholders. At present Danmarks Nationalbank owns 24 per cent of the shares in VP Securities Services. — The Dankort (debit card) was introduced in 1983, but did not become prevalent until the late 1980s. By the end of 2001, almost 3.2 million cards had been issued. |
| 1988 | As from the 1950s the currency regulations were subject to gradual liberalization. In 1988 this was so far advanced that the few remaining restrictions were of little significance to protecting the foreign-exchange reserves. The liberalization was completed on October 1, 1998, marking the end of 57 years of currency regulation. |
| 1989 | — A much needed coin reform was initiated in 1989. Among other things it removed the two smallest coins, the 5-øre and 10-øre coins, from circulation, since their purchasing power had become negligible and they had become too expensive to produce. It cost approximately 8 øre to mint a 5-øre, and around 20 øre to mint a 10-øre coin. The time had also come to replace the smallest note, the 20-krone note, with a coin. The note was no longer of sufficient value for it to be treated with care, and its circulation life was therefore very short. The objective was to achieve a coherent, well-functioning coin series in which each coin was easy to place in the series and the coins could easily be distinguished from each other. — The last two of Danmarks Nationalbank’s branches, in Odense and Aarhus, were discontinued. The branches were Danmarks Nationalbank’s local cash depots and for many years conducted lending to the banks. They also undertook ordinary banking transactions for private individuals and for the business sector. |
| 1992 | The Maastricht Treaty was signed on 7 February 1992, and the EC Treaty thus became the Treaty on European Union. Among other things, the treaty included a three-stage schedule for European Economic and Monetary Union, EMU, and laid down the so-called convergence criteria for member states’ economies. The treaty had to be ratified by the member states, and in a referendum on 2 June 1992 Denmark was the first country to decide on accession to the Maastricht Treaty. The result was a rejection of the treaty – 50.7 per cent voted against, while only 49.3 per cent voted in favour of the treaty. At the EC summit in Edinburgh in December 1992 a number of Danish opt-outs were agreed. In February 1993 the Edinburgh decision was implemented in a Danish bill which comprised Danish opt-outs from four areas of the Maastricht Treaty, including that Denmark will not introduce the common currency. The referendum on May 18, 1993 endorsed Denmark’s accession to the Maastricht Treaty with the opt-outs set out in the Edinburgh Agreement - 56.7 per cent voted for, and 43.3 per cent against the Agreement. The Maastricht Treaty came into force on 1 November 1993, after which the EC has been known as the EU. |
| 1993 | German unification in 1990 led to a significant increase in domestic German demand in the early 1990s, which again led to higher inflation and thereby higher German interest rates. This presented problems for the other EMS countries, since the D-mark was the anchor currency in the EMS. At the same time, growth in Europe was coming to a standstill, and currency markets increasingly focused on the diverging economic development of the European countries. In the summer of 1992 it also became clear that the European integration plans were met with considerable skepticism by the general public, and this gave rise to uncertainty as to the future of an Economic and Monetary Union. A combination of these circumstances triggered a prolonged EMS crisis. Many participants, including Denmark, had to raise interest rates, and several currencies were devalued. After a brief period of strong currency pressure the UK and Italy decided to opt out of the EMS. On 2 August 1993 the unrest culminated with the increase of the EMS fluctuation bands to +/-15 per cent, and the EMS had in effect collapsed. |
| 1994 | On 1 January 1994 the European Monetary Institute, EMI, was established. The EMI’s main role was to coordinate the monetary and exchange-rate policies of the EU member states, and to prepare the single monetary policy and the single central bank in stage three of EMU. The EMI was the forerunner of the European Central Bank, ECB. |
| 1997 | In the autumn of 1997 a new EU treaty was signed in Amsterdam. Among other things, the treaty regulated the new Exchange-Rate Mechanism, ERM II, and the Stability and Growth Pact for economic stability in the EU. In a referendum on 28 May 1998 the Danes endorsed the Amsterdam Treaty – 55.1 per cent voted in favor, while 44.9 per cent voted against. |
| 1999 | — On 1 January 1999 the euro was introduced as the single currency in the participating member states. Their national currencies thereby ceased to exist as independent currencies. Initially, the euro functioned as account money; euro banknotes and coins were not introduced until 1 January 2002. Greece did not comply with the convergence criteria at the convergence assessment in the spring of 1998 and therefore could not adopt the euro from day one. Greece adopted the euro on 1 January 2001. Apart from Denmark, Sweden and the UK do not participate in the euro. — On 1 January 1999 Denmark joined the new exchange-rate mechanism, ERM II, which has the euro as its anchor currency. The central rate of the krone vis-à-vis the euro, kr. 746.038 per 100 euro, is calculated on the basis of the central rate vis-à-vis the D-mark. The standard ERM II fluctuation band is +/-15 per cent, but participating countries may agree on a narrower band, as in Denmark’s case. The Danish band is +/- 2.25 per cent. After Greece adopted the euro on 1 January 2001, Denmark is the sole participant in ERM II. |
| 2000 | On 28 September 2000 a referendum was held on Denmark’s adoption of the euro. The proposal was rejected by 53.1 per cent, while 46.9 per cent voted in favor. Consequently Denmark has not adopted the euro, but the krone is still closely linked to the euro via the exchange-rate mechanism, ERM II. |
| 2002 | On 1 January 2002 euro banknotes and coins were put into circulation in the 12 euro area member states, and all participants thus entered the final stage of EMU. Until 28 February 2002, both euro and the legacy currencies were in circulation, but thereafter the legacy currencies ceased to be legal tender. |