Scandinavian Monetary Union
Encyclopedia
The Scandinavian Monetary Union was a monetary union formed by Sweden
and Denmark
on May 5, 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. An equal valued krone/krona of the monetary union replaced the three legacy currencies at the rate of 1 krone/krona = ½ Danish rigsdaler
= ¼ 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. Even if 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 Scandinavian languages.
In 1905 the political union between Sweden and Norway was dissolved, 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 August 2, 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.
Sweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....
and Denmark
Denmark
Denmark is a Scandinavian country in Northern Europe. The countries of Denmark and Greenland, as well as the Faroe Islands, constitute the Kingdom of Denmark . It is the southernmost of the Nordic countries, southwest of Sweden and south of Norway, and bordered to the south by Germany. Denmark...
on May 5, 1873, by fixing their currencies
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
against gold
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...
at par to each other. Norway
Norway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
, which was in union
Union between Sweden and Norway
The Union between Sweden and Norway , officially the United Kingdoms of Sweden and Norway, consisted of present-day Sweden and Norway between 1814 and 1905, when they were united under one monarch in a personal 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. An equal valued krone/krona of the monetary union replaced the three legacy currencies at the rate of 1 krone/krona = ½ Danish rigsdaler
Danish rigsdaler
The rigsdaler was the name of several currencies used in Denmark until 1873. The similarly named Reichsthaler, riksdaler and rijksdaalder were used in Germany and Austria-Hungary, Sweden and the Netherlands, respectively....
= ¼ Norwegian speciedaler
Norwegian speciedaler
The speciedaler was the currency of Norway between 1816 and 1875. It replaced the rigsdaler specie at par and was subdivided into 120 skilling . It was replaced by the Norwegian krone when Norway joined the Scandinavian Monetary Union...
= 1 Swedish riksdaler
Swedish riksdaler
The riksdaler was the name of a Swedish coin first minted in 1604. Between 1777 and 1873, it was the currency of Sweden. The daler, like the dollar, was named after the German Thaler. The similarly named Reichsthaler, rijksdaalder, and rigsdaler were used in Germany and Austria-Hungary, the...
. The monetary union was one of the few tangible results of the Scandinavian political movement
Scandinavism
Scandinavism and Nordism are literary and political movements that support various degrees of cooperation between the Scandinavian or Nordic countries...
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. Even if 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
Legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....
virtually throughout the entire area.
Upon acceding to the union Sweden had the name of its currency changed from Riksdaler Riksmynt to Swedish krona
Swedish krona
The krona has been the currency of Sweden since 1873. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it, but especially in the past, it sometimes preceded the value...
. The word "krone
Krone
-General:* Crown * ADC KRONE, formerly The KRONE Group, a German telecommunications company acquired by ADC Telecommunications* KRONE LSA-PLUS, a popular telecommunications connector* Krone an der Brahe, the German name for Koronowo, Poland...
/krona
Krona
Krona may refer to:In monetary units, where krona and its variants mean crown:* Danish krone* Estonian kroon* Faroese króna* Icelandic króna* Norwegian krone* Swedish krona* Czech koruna* Slovak koruna* Czechoslovak korunaOther:...
" literally means "crown
Crown (headgear)
A crown is the traditional symbolic form of headgear worn by a monarch or by a deity, for whom the crown traditionally represents power, legitimacy, immortality, righteousness, victory, triumph, resurrection, honour and glory of life after death. In art, the crown may be shown being offered to...
", and the differences in spelling of the name represent the differences between the Scandinavian languages.
In 1905 the political union between Sweden and Norway was dissolved, but this did not affect the basis for co-operation in the monetary union. It was instead the outbreak of World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
in 1914 that brought an end to the monetary union. Sweden abandoned the tie to gold on August 2, 1914, and without a fixed exchange rate the free circulation came to an end.
All three countries still use the same currencies
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
as during the monetary union, but they lost their peg, one to one, in 1914. The Icelandic króna
Icelandic króna
The króna is the currency of Iceland. The króna is technically subdivided into 100 aurar , but in practice this subdivision is no longer used....
is a derivative of the Danish krone, established after Iceland
Iceland
Iceland , described as the Republic of Iceland, is a Nordic and European island country in the North Atlantic Ocean, on the Mid-Atlantic Ridge. Iceland also refers to the main island of the country, which contains almost all the population and almost all the land area. The country has a population...
was elevated to a separate kingdom in union with Denmark in 1918. Iceland cut its ties to Denmark in 1944 and became a republic.
Economics
- Economy of DenmarkEconomy of DenmarkWith very few natural resources, the economy of Denmark relies almost entirely on human resources. The service sector makes up the vast amount of the employment and economy. Its industrialised market economy depends on imported raw materials and foreign trade. Within the European Union, Denmark...
- Economy of NorwayEconomy of NorwayThe economy of Norway is a developed mixed economy with heavy state-ownership in strategic areas of the economy. Although sensitive to global business cycles, the economy of Norway has shown robust growth since the start of the industrial era...
- Economy of SwedenEconomy of SwedenThe economy of Sweden is a developed diverse economy, aided by timber, hydropower and iron ore. These constitute the resource base of an economy oriented toward foreign trade...
- Monetary policy of SwedenMonetary policy of SwedenThe monetary policy of Sweden is decided by Sveriges Riksbank, the central bank of Sweden. The monetary policy is instrumental in determining how the Swedish currency is valued.-History:The main events in the monetary history of the Krona are:...
Banks
- Danmarks NationalbankDanmarks NationalbankDanmarks Nationalbank is the central bank of the Kingdom of Denmark. It is a non-eurozone member of the European System of Central Banks . The bank issues the Danish currency, the krone....
- Norges Bank
- Skandinaviska BankenSkandinaviska BankenSkandinaviska Banken, literally the Scandinavian Bank, was a Swedish bank founded in Gothenburg, 1864. Its foundation coincided with the political aspirations of the Scandinavian movement, which sought to unite Sweden, Norway and Denmark into a single kingdom...
- Sveriges RiksbankSveriges RiksbankSveriges Riksbank, or simply Riksbanken, is the central bank of Sweden and the world's oldest central bank. It is sometimes called the Swedish National Bank or the Bank of Sweden .-History:...
Currencies before the union
- Danish rigsdalerDanish rigsdalerThe rigsdaler was the name of several currencies used in Denmark until 1873. The similarly named Reichsthaler, riksdaler and rijksdaalder were used in Germany and Austria-Hungary, Sweden and the Netherlands, respectively....
- Norwegian rigsdalerNorwegian rigsdalerThe rigsdaler was the unit of currency used in Norway until 1816 and in Denmark until 1873. The similarly named Reichsthaler, riksdaler and rijksdaalder were used in Germany and Austria-Hungary, Sweden and the Netherlands, respectively.-History:...
- Norwegian speciedalerNorwegian speciedalerThe speciedaler was the currency of Norway between 1816 and 1875. It replaced the rigsdaler specie at par and was subdivided into 120 skilling . It was replaced by the Norwegian krone when Norway joined the Scandinavian Monetary Union...
- Swedish riksdalerSwedish riksdalerThe riksdaler was the name of a Swedish coin first minted in 1604. Between 1777 and 1873, it was the currency of Sweden. The daler, like the dollar, was named after the German Thaler. The similarly named Reichsthaler, rijksdaalder, and rigsdaler were used in Germany and Austria-Hungary, the...
Currencies during and after the union
- Danish kroneDanish kroneThe krone is the official currency of the Kingdom of Denmark consisting of Denmark, the Faroe Islands and Greenland. It is subdivided into 100 øre...
- Norwegian kroneNorwegian kroneThe krone is the currency of Norway and its dependent territories. The plural form is kroner . It is subdivided into 100 øre. The ISO 4217 code is NOK, although the common local abbreviation is kr. The name translates into English as "crown"...
- Swedish kronaSwedish kronaThe krona has been the currency of Sweden since 1873. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it, but especially in the past, it sometimes preceded the value...