What is the DKK (Danish Krone)
DKK is the currency abbreviation in the foreign exchange for the Danish krone. The krone is the official currency of Denmark as well as the provinces of Greenland and the Faroe Islands. The krone subdivides into 100 øre and pegs to the euro.
BREAKING DOWN DKK (Danish Krone)
First introduced in 1619, the Danish krone was also known as the Danish crown, as "crown" is the literal translation of krone. Denmark replaced the former Danish rigsdaler with the Danish krone as its official currency and tied the krone to the gold standard. The first Danish currency were coins minted by the monarch. As Danish international trade grew, the demand for a paper currency grew.
Denmark created the second Danish krone (DKK) as part of the dissolution of the country's participation in the Scandinavian Monetary Union with Sweden and Norway. The union dissolved in 1914, and the three participating countries chose to keep their currencies. The krone was pegged to the German Reichsmark mark briefly, then to the British pound and later to the German Deutschmark.
Denmark first applied to be a member of the European Union’s predecessor community, the European Economic Community, in 1961 but did not join until 1973. Despite the long-term participation of Denmark in the European Community, the Danish people have earned a reputation for being relatively skeptical of the EU, as the result of failed referendums related to increased integration into the European community. In 2000, the population voted not to replace the krone with the euro.
The first failed referendum took place in 1992 when Danish voters rejected a referendum on the Maastricht Treaty or one of the two treaties that form the constitutional basis for the European Union. After the failure of the 1992 referendum, amendments to the treaty satisfied some Danish concerns, and a second referendum ratified it in 1993.
But skepticism of the euro lived on in Denmark, even after it joined the EU. After Denmark’s accession to the European Union, influential political figures, like Prime Minister Poul Nyrup Rasmussen, supported also joining the eurozone. He fought to hold a referendum on the issue, which took place on the 28th of September 2000, with 53.2% Danish voters deciding not to adopt the euro.
The Danish Krone in the International Economy
The Danish Krone is part of the European Exchange Rate Mechanism, aimed at reducing exchange rate volatility among EU nations. It pegs to the Euro at a ratio of 7.5 krone to 1 Euro. Despite Danish attachment to their currency, independent analyses have argued that Denmark is a de facto user of the euro since the National Bank of Denmark tracks European Central Bank policy so closely. Former Danish Prime Minister Anders Fogh Rasmussen has characterized this status as being a part of the eurozone without having a seat at the decision-making table.
According to World Bank data, Denmark experiences a 1.6% annual inflation rate and has a gross domestic product (GDP) growth of a 2.2%, as of 2017, which is the most current year of available data.