Scandinavian Monetary Union

Scandinavian Monetary Union
  • Den Skandinaviske Møntunion  (Danish)
  • Den Skandinaviske Myntunion  (Norwegian)
  • Skandinaviska Myntunionen  (Swedish)

Two golden 20 kr coins, with identical weight and composition. The coin to the left is Swedish and the right one is Danish.
Denominations
Subunit
  1⁄100 øre/öre
Plural kroner/krona
 øre/öre øre/öre (singular and plural)
Symbol kr.
Coins 1, 2, 5, 10, 25, 40, 50 øre
1, 2, 5, 10, 25 kroner
Demographics
User(s)  Denmark
 Sweden
 Norway
Issuance
Central bank Danmarks Nationalbank, Skandinaviska Banken, Norges Bank, Swedish National Bank
Valuation
Pegged with Gold standard
This infobox shows the latest status before this currency was rendered obsolete.

The Scandinavian Monetary Union (Danish: Den skandinaviske møntunion, Swedish: Skandinaviska myntunionen, Norwegian: Den skandinaviske myntunion) was a monetary union formed by Denmark and Sweden on 5 May 1873, by fixing their currencies against gold at par to each other. Norway, which was in union with Sweden, however with full inner autonomy, entered the union two years later, in 1875, by pegging its currency to gold at the same level as Denmark and Sweden, 2.48 kroner/kronor per gram of gold, or roughly 0.403 grams per krone/krona.[1] An equal valued krone/krona of the monetary union replaced the three legacy currencies at the rate of 1 krone/krona =  1⁄2 Danish rigsdaler =  1⁄4 Norwegian speciedaler = 1 Swedish riksdaler. The monetary union was one of the few tangible results of the Scandinavian political movement of the 19th century.

The union provided fixed exchange rates and stability in monetary terms, but the member countries continued to issue their own separate currencies. Although not initially foreseen, the perceived security led to a situation where the formally separate currencies were accepted on a basis of "as good as" the legal tender virtually throughout the entire area.

Upon acceding to the union, Sweden had the name of its currency changed from Riksdaler Riksmynt to Swedish krona. The word "krone/krona" literally means "crown", and the differences in spelling of the name represent the differences between the North Germanic languages.

The political union between Sweden and Norway was dissolved in 1905, but this did not affect the basis for co-operation in the monetary union. It was instead the outbreak of World War I in 1914 that brought an end to the monetary union. Sweden abandoned the tie to gold on 2 August 1914, and without a fixed exchange rate the free circulation came to an end.

All three countries still use the same currencies as during the monetary union, but they lost their peg, one to one, in 1914. The Icelandic króna is a derivative of the Danish krone, established after Iceland was elevated to a separate kingdom in union with Denmark in 1918. Iceland cut its ties to Denmark in 1944 and became a republic.

The Scandinavian Monetary Union was inspired by the Latin Monetary Union, established in 1865.[2]

See also

Economics

Banks

Currencies before the union

Currencies during and after the union

References

  1. ↑ The Danish National Bank: From silver standard to gold standard
  2. ↑ BBC

Further reading

This article is issued from Wikipedia - version of the 12/1/2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.