Denmark Shelves Euro Goal Indefinitely as Crisis Scars Last
Baku, May 17 (AZERTAC). Denmark is shelving indefinitely its euro adoption goal as Prime Minister Helle Thorning-Schmidt says an exchange rate peg without full European monetary membership is proving the best currency regime for the Nordic nation.
A euro referendum “in this election term is unrealistic,” Thorning-Schmidt said yesterday in an interview in Stockholm. “I don`t think it makes any sense to discuss the option of a euro referendum in the next term” set to run from 2015 to 2019, she said.
Thorning-Schmidt, half-way through her first four-year term, said Denmark`s chosen model of an opt-out from the euro has shielded the economy from the worst of the crisis further south. The nation, which together with the rest of Scandinavia emerged as a haven from Europe`s fiscal turmoil, will continue to debate the question of whether Denmark should join the euro at some point, she said.
“The euro has been subject to a lot of uncertainty over the course of the last couple of years, actually many years, and the time isn`t ripe for a referendum on Denmark joining the euro,” Thorning-Schmidt said. “That doesn`t change the fact that Denmark will remain at the core of European cooperation.”
Danish aversion to the euro tested a record in March as voters watched the 17-nation bloc lurch from one bailout to the next. Central bank Governor Lars Rohde said a month later it probably won`t be feasible to hold a euro referendum for the “foreseeable future.”
The difference in yield on Denmark`s 10-year bond and equivalent German bunds narrowed to its smallest today since Jan. 31, to 10 basis points. Denmark pays less to borrow over 10 years than any euro member except Germany. The yield on its 1.5 percent note due November 2023 eased four basis points to 1.398 percent as of 11:27 a.m. local time.
Denmark, which last rejected the euro in a 2000 plebiscite, hasn`t set a date for a new vote. According to a poll published in March by Danske Bank, the no side would win by a margin of 42 percentage points, close to a record 44.6 points in December 2011. The debt crisis raging in the euro zone and near record- low Danish interest rates explain the poll outcome, Danske said.
Denmark negotiated an opt-out from the euro in 1993 a year after Danes rejected full monetary union. The Danish central bank`s sole mandate is to adjust interest rates and currency reserves to defend the krone`s peg to the euro. Its efforts to stem a capital influx since last year have pushed the benchmark lending rate down to a record-low 0.2 percent. The deposit rate is minus 0.1 percent.
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