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Scandinavian Monetary Union

From 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
1100øre/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.

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]

YouTube Encyclopedic

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  • The European Union Explained*
  • What if Scandinavia United? How Powerful Would It Be?
  • Currency union collapse in history
  • The European Monetary Union: Dr Stefan Auer Interviewing Dr Jan Libich
  • Currency union collapse in history

Transcription

Where, is the European Union? Obviously here somewhere, but much like the the European continent itself, which has an unclear boundary, the European Union also has some fuzzy edges to it. To start, the official members of the European Union are, in decreasing order of population: * Germany * France * The United Kingdom * Italy * Spain * Poland * Romania * The Kingdom of the Netherlands * Greece * Belgium * Portugal * The Czech Republic * Hungary * Sweden * Austria * Bulgaria * Denmark * Slovakia * Finland * Ireland * Croatia * Lithuania * Latvia * Slovenia * Estonia * Cyprus * Luxembourg * Malta The edges of the EU will probably continue to expand further out as there are other countries in various stages of trying to become a member. How exactly the European Union works is hideously complicated and a story for another time, but for this video you need know only three things: 1. Countries pay membership dues and 2. Vote on laws they all must follow and 3. Citizens of member countries are automatically European Union citizens as well This last means that if you're a citizen of any of these countries you are free to live and work or retire in any of the others. Which is nice especially if you think your country is too big or too small or too hot or too cold. The European Union gives you options. By the way, did you notice how all three of these statements have asterisks attached to this unhelpful footnote? Well, get used to it: Europe loves asterisks that add exceptions to complicated agreements. These three, for example, point us toward the first bit of border fuzziness with Norway, Iceland and little Liechtenstein. None of which are in the European Union but if you're a EU citizen you can live in these countries and Norwegians, Icelanders, or Liechtensteiner(in)s can can live in yours. Why? In exchange for the freedom of movement of people they have to pay membership fees to the European Union -- even though they aren't a part of it and thus don't get a say its laws that they still have to follow. This arrangement is the European Economic Area and it sounds like a terrible deal, were it not for that asterisk which grants EEA but not EU members a pass on some areas of law notably farming and fishing -- something a country like Iceland might care quite a lot about running their own way. Between the European Union and the European Economic Area the continent looks mostly covered, with the notable exception of Switzerland who remains neutral and fiercely independent, except for her participation in the Schengen Area. If you're from a country that keeps her borders extremely clean and / or well-patrolled, the Schengen Area is a bit mind-blowing because it's an agreement between countries to take a 'meh' approach to borders. In the Schengen Area international boundaries look like this: no border officers or passport checks of any kind. You can walk from Lisbon to Tallinn without identification or need to answer the question: "business or pleasure?". For Switzerland being part of Schengen but not part of the European Union means that non-swiss can check in any time they like, but they can never stay. This koombaya approach to borders isn't appreciated by everyone in the EU: most loudly, the United Kingdom and Ireland who argue that islands are different. Thus to get onto these fair isles, you'll need a passport and a good reason. Britannia's reluctance to get fully involved with the EU brings us to the next topic: money. The European Union has its own fancy currency, the Euro used by the majority, but not all of the European Union members. This economic union is called the Eurozone and to join a country must first reach certain financial goals -- and lying about reaching those goals is certainly not something anyone would do. Most of the non-Eurozone members when they meet the goals, will ditch their local currency in favor of the Euro but three of them Denmark, Sweden and, of course, the United Kingdom, have asterisks attracted to the Euro sections of the treaty giving them a permanent out-out. And weirdly, four tiny European countries Andorra, San Marino, Monaco & Vatican City have an asterisk giving them the reverse: the right print and use Euros as their money, despite not being in the European Union at all. So that's the big picture: there's the EU, which makes all the rules, the Eurozone inside it with a common currency, the European Economic Area outside of it where people can move freely and the selective Schengen, for countries who think borders just aren't worth the hassle. As you can see, there's some strange overlaps with these borders, but we're not done talking about complications by a long shot one again, because empire. So Portugal and Spain have islands from their colonial days that they've never parted with: these are the Madeira and Canary Islands are off the coast of Africa and the Azores well into the Atlantic. Because these islands are Spanish and Portuguese they're part of the European Union as well. Adding a few islands to the EU's borders isn't a big deal until you consider France: the queen of not-letting go. She still holds onto a bunch of islands in the Caribbean, Reunion off the coast of Madagascar and French Guiana in South America. As far as France is concerned, these are France too, which single handedly extends the edge-to-edge distance of the European Union across a third of Earth's circumference. Collectively, these bits of France, Spain and Portugal are called the Outermost Regions -- and they're the result of the simple answer to empire: just keep it. On the other hand, there's the United Kingdom, the master of maintaining complicated relationships with her quasi-former lands -- and she's by no means alone in this on such an empire-happy continent. The Netherlands and Denmark and France (again) all have what the European Union calls Overseas Territories: they're not part of the European Union, instead they're a bottomless well of asterisks due to their complicated relationships with both with the European Union and their associated countries which makes it hard to say anything meaningful about them as a group but... in general European Union law doesn't apply to these places, though in general the people who live there are European Union citizens because in general they have the citizenship of their associated country, so in general they can live anywhere in the EU they want but in general other European Union citizens can't freely move to these territories. Which makes these places a weird, semipermeable membrane of the European Union proper and the final part we're going to talk about in detail even though there are still many, more one-off asterisks you might stumble upon, such as: the Isle of Man or those Spanish Cities in North Africa or Gibraltar, who pretends to be part of Southwest England sometimes, or that region in Greece where it's totally legal to ban women, or Saba & friends who are part of the Netherlands and so should be part of the EU, but aren't, or the Faeroe Islands upon which while citizens of Denmark live they lose their EU citizenship, and on and on it goes. These asterisks almost never end, but this video must.

Overview

The original Scandinavian currencies were based on the silver Reichsthaler, defined by the Hamburg Bank as 25.28 grams fine silver, which was equal to one 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 gold standard was triggered by Germany's adoption of the German gold mark in 1873 and of the consequent disturbance in the silver market. The monetary union established the gold krone (krona in Swedish) replacing the legacy currencies at the rate of 1 krone = 1 Swedish riksdaler = 12 Danish rigsdaler = 14 Norwegian speciedaler = 14 Hamburg reichsthaler. The latter's conversion to 4.50 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 British pound (the "world currency" of the time) was equal to 18.16 kroner,[3] and the franc of France and the Latin Monetary Union was worth 0.72 krone. Sweden's long-established tradition of using paper currency eased the implementation of a 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 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.

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 Icelandic króna soon became volatile, causing a high inflation and in 1980 a 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 Latin Monetary Union, established in 1865.[5] As Scandinavia became industrialized, a call for a firm monetary system had risen in the 1860s. The idea of using a foreign currency was discussed, but as the old dividing of 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. ^ Rongved, Gjermund Forfang (2017-09-02). "The Gold War: the dissolution of the Scandinavian Currency Union during the First World War". Scandinavian Economic History Review. 65 (3): 243–262. doi:10.1080/03585522.2017.1364292. ISSN 0358-5522. 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. ^ "International Monetary Systems in Historical Perspective",Niels Kærgård and Ingrid Henriksen, 1995, publisher Palgrave Macmillan, London, ISBN 9781349242221, page 109, 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.
This page was last edited on 10 February 2024, at 23:17
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