Scandinavian Monetary Union The Scandinavian Monetary Union
was a monetary union
formed by Denmark
and the Swedish part of the Union between Sweden and Norway
on 5 May 1843, by fixing their currencies
at par to each other. After the dissolution of the Swedish-Norwegian union, in 1905, Norway
continued to be a part of this monetary union. The union ended with the outbreak of World War I.
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 = 1
⁄2 Danish rigsdaler
= 1 Swedish riksdaler
. The monetary union was one of the few tangible results of the Scandinavian political movement
of the 19th century.
The 1873 switch in Scandinavia from the silver to the gold standard
was triggered by Germany
's adoption of the gold mark
in the same year and of the consequent disturbance in the silver market. The rate in which the Reichsthaler
of the Hamburg Bank (The Hamburg Thaler
Banco) was converted to gold marks established the gold parity of the new krone: 4 krone = 1 Norwegian speciedaler
= 1 Hamburg Thaler
Banco = 4.5 gold marks. One gram of fine gold worth 2.79 gold marks was therefore equivalent to 2.48 krone.
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.
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.
The Scandinavian Monetary Union was inspired by the Latin Monetary Union
, established in 1865.
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. 
The union was dissolved gradually from the outbreak of World War One
until 1924, when the union formally was dissolved.
Nevertheless, the 1:1:1 banknote rate continued at least until the economical crisis in the early 1930s.
Whether the Scandinavian Monetary Union was a success or not, has been a subject of discussion. While some experts means it functioned as best between 1901 and 1905 and by then was a complete system of coin, banknotes and common drawing rights that worked between the central banks. A success 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, and this part was declining 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.
Other experts gives it a little better credit, no other politically independent countries went equally far in their monetary integration. In an international perspective, it was the most successful of all monetary unions during the time of the classic gold standard
Currencies before the union
Currencies during and after the union
- ^ 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.
- ^ The Danish National Bank: From silver standard to gold standard Archived 2013-11-03 at the Wayback Machine
- ^ "Historia.se - historisk statistik på nätet". Retrieved 21 February 2019.
- ^ "Isländsk krona - Sidor  - World uppslagsverk kunskap".
- ^ BBC
- ^ 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)
- ^ Lars Jonung, https://www.nationalekonomi.se/filer/pdf/31-4-lj.pdf, pdf-page 5 (of 8)
- ^ "Söndagstidningen Södra Sverige", 16. December 1926, page with exchange rates
- ^ "International Monetary Systems in Historical Perspective",Niels Kærgård and Ingrid Henriksen, 1995, publisher Palgrave Macmillan, London, ISBN 9781349242221, page 109, ‹See Tfd›doi:10.1007/978-1-349-24220-7_5
- ^ Lars Jonung, https://www.nationalekonomi.se/filer/pdf/31-4-lj.pdf, pdf-page 4 (of 8)
Last edited on 10 May 2021, at 17:15
Content is available under CC BY-SA 3.0
unless otherwise noted.