Denmark

 Denmark has targeted its exchange rate throughout, first within the Snake and the EMS – with increasing strictness from the mid-1980s – and then in ERM2 from 1999.

Years Targets and attainment Classification
1974-82 currency in Snake then EMS, recurring devaluations; monetary policy operated via interest rates and bank refinancing facilities, together with controls on bank lending up to 1980 and guidelines thereafter; budget deficits pose problems, but non-monetary financing increased; no monetary targets but aim to keep monetary growth below growth of nominal income loose exchange rate targeting LERT
1983-2014 1983-98 currency in EMS till 1998, small devaluations versus DM 1986, 1987; growing emphasis on exchange rate stability versus hard ERM currencies/DM, and on interest rates rather than forex intervention as main instrument; krone allowed to depreciate after July 1993, but back in old narrow bands by mid-1995; bank lending guidelines abandoned 1985; early 1990s monetary operations shift towards repo markets;

1999-2014 currency pegged to euro in ERM2 with narrow margins; monetary policy closely follows ECB; 2012-14 limited use of negative interest rates against safe-haven inflows

full exchange rate targeting FERT

Selected IMF references: RED 1979 pp33-5; RED 1982 pp19-21; RED 1985 pp27-8; SR 1986 pp16-17; RED 1988 pp36-8; RED 1997 pp53-8; SR 2002 pp12-13, 17; SR 2014 pp13-14.

Additional sources: Christensen and Topp (1997); Houben (2000, especially pp204-6, 302-3).

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