Denmark is a small country with a population of about 5.7 million people, staying between state members of the eurozone or states that have their own currency directly associated with the euro. The economy of the northern state is largely dependent on the eurozone: Germany acquires 17% of Danish export goods; France, Italy and the Netherlands are the main importers. The persistence of a stable relationship between the Danish krone and euro is an essential thing to the economy and the export sector of this state. The National Bank of Denmark must implement decisions aimed at euro rather than internal factors, which can provoke imbalances.
For a stable balance between krone and euro, the Danish state bank should not just determine rates of 0% or lower but also invade the foreign exchange market to increase the amount of the Danish krone. These interventions could led to an impressive increase of foreign exchange reserves and prevent the growth of the krone against the euro, but also it could increase the liquidity and money supply of Denmark, which implies a significant risk to asset prices. But financial assets are not the only thing that can be of excessive value.
In the period of low interest rates after the crisis, the cost of housing increases and this begins to resemble an economic bubble in the mid-2000s. For this reason, serious measures are being taken, such as requiring greater financial stability for the buyer, who wants to take housing in a mortgage.
Even though families and Danish firms are making efforts to achieve a reduced level of debt in recent years, low interest rates have conflicting consequences. On the one hand, this simplifies the repayment of debt with an unstable rate, but also increases the demand for credit. Thus, private debt in Denmark remains above 200% of GDP, which is much higher than in many European countries.
In the beginning of 2018, the Danish Minister of Finance asked the European Central Bank to stop the incentive program, as there was a risk of financial overheating: there was a tightening of Danish financial and credit policy, while its economy was growing more than its capabilities, the labor market experienced the lack of human resources. Not only Denmark, but also several other states in the euro area, especially Germany, are in a situation of absolute employment and low interest rates, which form a threat of overheating and pressure on wages. The situation is that nominal wages in Denmark grow moderately, and real incomes rise above historical rates from the beginning of 2015.
At the beginning of this century, Denmark became the first country of the European Union, whose citizens opposed the transition to a single currency through the referendum. During the voting in 2000, 53.2% of Danes spoke against the euro. Thus, the Danish krone, introduced back in 1873, is still the countrys monetary unit. From the old EU countries at that time, the UK and Sweden also refused to switch to the euro. However, a survey of Danish residents in 2007 showed that 52% of the countrys inhabitants are no longer against the transition to the euro.
It is possible that Denmarks entry into the eurozone may be a way out of the potential problem, but it will also have its own negative consequences, which can be seen in the case of other countries that previously switched from their national currency to the euro. One of the first problems will be an increasing of prices for consumer goods, but the level of wages will remain at the same level, which will be the most unwelcome, because it could engender mass protests concerning the wrong policy by the current state bodies.
However, there are positive sides to entering the euro area, this can help solve the potential economic problems discussed in this article. The central bank of Denmark can be able to change the course of maintaining the stability of the Danish krone to the euro into a simpler regulation of national capital, which is certainly the best economic situation for country if assume that other economic sectors will remain at the same high level.
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Sheep that have no shepherd: the case of Faroe Islands
Anastasia Ganina, 2nd year student of the faculty of Management and economics, Institute of World Civilizations, Moscow
Abstract: The article gives an analysis of the reasons for the formation of the autonomy of the Faroe Islands in Denmark, its legal status, the system of state bodies at the level of autonomy and their powers, the mechanisms of interaction between the autonomy and central authorities of Denmark, financing, the basis of autonomy and guarantees for its development.
Introduction
Almost every European country in the early 20th century faced the problem of separatist movements in their territories. However, the types of separatism were different and manifested in different ways. Thus, modern EU member countries such as France, Britain, Belgium and Portugal have the experience of separating colonies from their territories. USSR member countries began the exit process from the Union of Republics, and Slovenia withdrew from Yugoslavia in the early nineties of the twentieth century.
As before, the tendency of the existence and functioning of separatist movements, organizations, political parties remain in Europe. Their activity can be observed in Ukraine, Spain, France, Poland and Denmark. So, this article will focus on the phenomenon of separatism on the example of the last country in the mentioned list Denmark.
The causes of the emergence of centrifugal tendencies in different states base on various factors: economic, ethnic, political etc. Scientific interest is reflected in the following questions: is there a direct link between the structure of Denmark and the emergence of separatist sentiments? Why are the separatist movements dominating the Faroe Islands? What are the causes of separatism?
Separatism in Denmark
The secessionist form of separatism aims at the creation of its own statehood (e.g. Northern Ireland in the UK); the ultimate goal of irredentism is joining another state (e.g. Hungarians in Romania). Enosis is a movement for reunification with a historical homeland (e.g. the Greek Cypriot movement for the unification of Cyprus with Greece in the seventies of the 20th century). Devolution is a movement in which regions inside the state require and receive political power and increasing autonomy from the central government (e.g. Kaliningrad Region of the Russian Federation).