Scandinavian Monetary Union

Source: Wikipedia, the free encyclopedia.
Scandinavian Monetary Union
  • Den Skandinaviske Møntunion (Danish)
  • Den skandinaviske myntunionen (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.
Unit
Unitkrone/krona
Pluralkroner/kronor
Symbolkr.‎
Denominations
Subunit
 1⁄100øre/öre
Plural
 øre/öreøre/öre (singular and plural)
Coins1, 2, 5, 10, 25, 40, 50 øre
1, 2, 5, 10, 25 kroner
Demographics
User(s) Denmark
 Sweden
 Norway
Issuance
Central bankDanmarks Nationalbank, Skandinaviska Banken, Norges Bank, Sveriges Riksbank
Valuation
Pegged withGold standard
This infobox shows the latest status before this currency was rendered obsolete.
Part of a series on
Scandinavia
Countries
History
History by country

Chronological history

Geography
Economy
Related

The Scandinavian Monetary Union was a

monetary union formed by Denmark and Sweden on 5 May 1873, with Norway joining in 1875. It established a common currency unit, the krone/krona, based on the gold standard. It was one of the few tangible results of the Scandinavian political movement of the 19th century. The union ended during World War I.[1]

Overview

The original Scandinavian currencies were based on the silver

Norwegian speciedaler or two Danish rigsdaler. Sweden's riksdaler specie was slightly heavier at 25.5 g and was equal to four Swedish riksdaler
riksgalds.

The Scandinavian switch to the

German gold marks (hence, 1 krone = 1.125 marks) established the gold parity of the krone: one gram of fine gold worth 2.79 marks was equivalent to 2.48 krone (or 0.4032 g gold per krone).[2]

The

Gold Exchange Standard wherein gold coins rarely circulated but the respective central banks (the Sveriges Riksbank, Danmarks Nationalbank and Norges Bank
) centralized their respective gold reserves and guaranteed the conversion of krone banknotes to gold for export purposes.

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

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.

All three countries still use the same currencies as during the monetary union, but they lost their peg, one to one, in 1914. The

currency reform was introduced, in which 1 new Icelandic króna was set to 100 original ones.[4]

The Scandinavian Monetary Union was inspired by the

British Pound was similar to what Scandinavia wished to get rid of, the French defeat in the Franco-Prussian War made the French Franc less attractive and as the German Mark was out of the question in Denmark after the 1864 Second Schleswig War, the idea of a Scandinavian Monetary system based on the Gold standard was imposed 1873 to 1875.[6] The union was dissolved gradually from the outbreak of World War One until 1924, when the union formally was dissolved.[7] Nevertheless, the 1:1:1 banknote rate continued at least until the economical crisis in the early 1930s.[8]

Whether the Scandinavian Monetary Union was a success has been a subject of discussion. Some experts observe it functioned best between 1901 and 1905, at which point it was a complete system of coin, banknotes and common drawing rights available to the central banks. Although it was effective in its own limited monetary terms, the Union, however, was only of minor importance in the total foreign relations of the member countries. Moreover, the trade between the member countries composed only a small part of their total trade, a share that was in decline during the lifetime of the Union. The monetary union was never accompanied by a tariff union as well. This stresses its partial nature - it never formed a vital part of these countries' international economic relations.[9] Other experts take a more positive view, arguing that no other politically independent countries went equally far in their monetary integration. From an international perspective, it was the most successful of all monetary unions during the time of the classic gold standard.[10]

See also

Economics

Banks

Currencies before the union

Currencies during and after the union

References

  1. S2CID 158598433
    .
  2. ^ The Danish National Bank: From silver standard to gold standard Archived 2013-11-03 at the Wayback Machine
  3. ^ "Historia.se - historisk statistik på nätet". Retrieved 21 February 2019.
  4. ^ "Isländsk krona - Sidor [1] - World uppslagsverk kunskap".
  5. ^ BBC
  6. ^ Lars Jonung (former Professor of the Swedish Trading School, Stockholm), https://www.nationalekonomi.se/filer/pdf/31-4-lj.pdf, pdf-page 2 (of 8)
  7. ^ Lars Jonung, https://www.nationalekonomi.se/filer/pdf/31-4-lj.pdf, pdf-page 5 (of 8)
  8. ^ "Söndagstidningen Södra Sverige", 16. December 1926, page with exchange rates
  9. doi:10.1007/978-1-349-24220-7_5
  10. ^ Lars Jonung, https://www.nationalekonomi.se/filer/pdf/31-4-lj.pdf, pdf-page 4 (of 8)

Further reading

  • Henriksen, Ingrid; Niels Kærgård. "The Scandinavian currency union 1875–1914." in Jaime Reis, ed., International Monetary Systems in Historical Perspective (Palgrave Macmillan UK, 1995). pp. 91–112.
  • Øksendal, Lars Fredrik. "The impact of the Scandinavian Monetary Union on financial market integration." Financial History Review 14#2 (2007): 125–148.
Retrieved from "https://en.wikipedia.org/w/index.php?title=Scandinavian_Monetary_Union&oldid=1205989677"