Business World

Sunday 21 January 2018

Denmark ready to impose capital controls

Danish kroner notes
Danish kroner notes

Mehreen Khan

Denmark's central bank is ready to impose capital controls to stop the inflow of money that has threatened its currency peg with the euro.

The country's central bank has already made a series of drastic moves to protect the value of the krone as the euro has continued to weaken on news of eurozone quantitative easing and worries about Greece.

The head of Denmark's Economic Council, Hans Jorgen Whitta-Jacobsen, said the central bank had other means available to defend the peg "to the last drop of blood".

"If it takes restrictions on free capital movement for a period to defend the fixed exchange rate, I assess that the central bank would be willing to go that far," Mr Whitta-Jacobsen said.

Denmark's deposit rate has already been slashed to a record low -0.75pc, having been cut four times in less than three weeks.

The country has also been forced to into massive foreign exchange purchases, buying €32bn so far this year to prevent the krone from developing into a safe haven for investors.

This intervention amounts to nearly 10pc of Denmark's GDP and is deemed unsustainable by some analysts.

Irish Independent

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