The Danish government is using the economic crisis to take another look at the possibility of Denmark joining the euro zone. To move the debate forward the Danish government invited several prominent speakers including the French Finance Minister, Christine Lagarde and the European Commissioner for Economic and Monetary Affairs, Joaquim Almunia.

Lagarde told the Danes that the EUR has made Europe stronger during the current economic crisis and that the actions of the European Central Bank has given the EUR the advantage of greater stability, solidarity and credibility on the international stage. Whilst Almunia stated that in ten years the EUR will be the most reliable international currency.

Denmark is aware of how the EUR has acted like a security blanket for members during recent months. Denmark was the first European economy to enter into recession last year and the lack of a security blanket was evident as the Danish authorities faced the challenges on their economic and financial institutions alone.

Combined with this solitude is a lack of flexibility for each time the ECB changes the rate of interest the Danish National Bank must follow suit. The Danish Prime Minister, Anders Fogh Rasmussen said “We are implementing the same policy, but without the benefits of the euro.”

Denmark is also aware that to be a part of the Euro Group decision making process would be no bad thing. “We too were committed to our currency,” said Lagarde, “but I cannot emphasize enough that today, our businesses are pleased to have an area of 325 million consumers!”

Whilst the Danes seem less excited about the entering the euro zone than they were a few months ago a majority still supports the adoption of the euro. The Danish National Bank quotes 43.8% as yes voters while 38% would vote no. In November these figures were 44.3% and 37.8% respectively. In 2000, 53% of Danes rejected the single currency.

The question of a Danish referendum comes at a time when the integrity of the Euro Zone is raising questions. Some extreme economic scenarios have those countries with most debt actually leaving euro zone. This would give them the freedom to devalue their currencies and print money free from the communal constraints of budgetary discipline. In contrast, the more virtuous, prudent countries like Germany might also decide to leave so that they would not to spend to support the weaker countries.

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