Introduction

We deal in this chapter with the five member states that currently comprise the Nordic Council: Denmark, Finland, Iceland, Norway, and Sweden. Especially interesting is the sharply different policies of each major Nordic country with respect to the European common currency. Denmark consistently refuses to adopt the euro, even though it has been a member of the European Union the longest. Its central bank keeps the exchange rate of the Danish krone within narrow limits as part of the European Monetary System II, however. Sweden also manages to keep the exchange rate of its currency, the Swedish krona, in line with both the Danish krone and the euro, but refuses to join the European Monetary System, thanks to popular rejection of the idea of joining the euro in the referendum of September 2003. Both Norway and Iceland eschew the euro, the EMS, and the European Union. Nevertheless, these two outsiders have the highest rates of adoption of single market directives, better than any of the EMU members (see chapter 7). That leaves only Finland as a member of the European Union and the European Monetary Union using the euro as its currency. Figure 17.1, however, demonstrates that the exchange rates of all five have moved very much together since the creation of the common European currency. Since the creation of the euro in 1999, moreover, even Iceland's much-weakened currency has moved in parallel with the other Nordic currencies.