Denmark’s ‘Costly’ Euro Peg Offers No Clear Benefits

Denmark’s currency peg to the euro is “costly” and has failed to shield the Nordic country from credit-market disruptions during the financial crisis, the International Monetary Fund said.

A currency peg is “complicated, it requires movements in interest rates, it requires interventions, so this type of issue can be quite costly for the central bank without any clear benefits,” said Mark de Broeck, head of the IMF’s mission to Denmark, in an interview in Copenhagen yesterday.