A fixed exchange rate system e.g. a currency peg either as part of a currency board system or membership of the ERM II for countries intending to join the Euro
The main arguments for adopting a fixed exchange rate system are as follows:
Denmark has been inside the ERM II since the launch of the Euro in 1999. Prior to the introduction of the euro, the Danish fixed exchange rate was vis-à-vis the German D-mark. Under ERM II, the Danish krone is fixed against the Euro – the central bank intervenes to keep the currency within agreed limits when needed.
The Danish central bank's sole mandate is to adjust policy interest rates and currency reserves to defend the krone's peg to the euro
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