Sweden and the euro
Sweden does not currently use the euro as its currency and has no plans to replace the krona in the near future. Sweden is obliged under the Treaty of Maastricht to adopt the euro at some point in the future. Under the 1994 Treaty of Accession Sweden has to join the eurozone once it meets the necessary conditions. Sweden maintains that joining the ERM II (a requirement for euro adoption) is voluntary,[dead link] giving Sweden a de facto opt out.
- 1 Status
- 2 History
- 3 Usage today
- 4 Plans
- 5 Economic research
- 6 Opinion polls
- 7 Swedish euro coins
- 8 See also
- 9 References
- 10 External links
Sweden joined the European Union in 1995 and its accession treaty obliged it to join the euro. However, one of the requirements for eurozone membership is two years' membership of ERM II, and Sweden has chosen not to join this mechanism and as a consequence tie its exchange rate to the euro ±2.25%. While there is government support for membership, all parties have pledged not to join without a referendum in favour of doing so.
Despite this, the euro can be used to pay for goods and services in some places in Sweden. (See below.)
Sweden meets four of five criteria.
|Assessment month||Country||HICP inflation rate
of annual rates)[nb 1]
|Budget deficit to GDP||Debt-to-GDP ratio||ERM II member||Long-term interest rate
of 10yr bond yields)[nb 2]
|2012 ECB Report[nb 3]||Reference values||max. 3.1%[nb 4]
(as of 31 Mar 2012)
(Fiscal year 2011)
|max. 60%, or decreasing
(Fiscal year 2011)
|min. 2 years
(as of 31 Mar 2012)
|max. 5.80%[nb 5]
(as of 31 Mar 2012)
|April 2013||Reference values||max. 2.5%[nb 6][nb 7]
(as of 31 Mar 2013)
(Fiscal year 2012)
|max. 60%, or decreasing
(Fiscal year 2012)
|min. 2 years
(as of 31 Mar 2013)
|max. 4.81%[nb 6][nb 8]
(as of 31 Mar 2013)
- The 12-months average for the annual HICP inflation rate must be no more than 1.5% larger than the unweighted arithmetic average of the similar HICP inflation rates in the 3 EU member states with the lowest HICP inflation. If any of these 3 states have a HICP rate significantly below the similarly averaged HICP rate for the eurozone (which according to ECB practice means more than 2% below), and if this low HICP rate has been primarily caused by exceptional circumstances (i.e. severe wage cuts or a strong recession), then such a state is not included in the calculation of the reference value and is replaced by the EU state with the fourth lowest HICP rate.
- The annual average for the yield of 10-year government bonds must be no more than 2.0% larger than the unweighted arithmetic average of the bond yields in the 3 EU member states with the lowest HICP inflation. If any of these states have bond yields which are significantly larger than the similarly averaged yield for the eurozone (which according to previous ECB reports means more than 2% above) and at the same time does not have complete funding access to financial markets (which is the case for as long as a government receives bailout funds), then such a state is not be included in the calculation of the reference value.
- Reference values from the ECB convergence report of May 2012.
- Sweden, Ireland and Slovenia were the reference states.
- Sweden and Slovenia were the reference states.
- The reference values for HICP inflation and long-term interest rates are calculated based on the "calculation principle" outlined in the 2012 ECB Convergence Report, with the input of forecasted data for the sliding assessment year 1 April 2012 - 31 March 2013.
- The 3 best performing countries in regards to HICP inflation were Greece (0.614%), Sweden (0.843%) and Latvia (1.567%), with no outliers detected.
- As Greece is part of a bailout program, and suffered from elevated interest rates significantly above the eurozone average (15.40% above), this country was excluded from the calculation of the reference limit for long term interest rates, leaving just Sweden (1.61%) and Latvia (4.00%) as benchmark countries.
Early monetary unions in Sweden (1873–1914)
On 5 May 1873 Denmark with Sweden fixed their currencies against gold and formed the Scandinavian Monetary Union. Prior to this date Sweden used Swedish riksdaler. In 1875 Norway joined this union. An equal valued krona of the monetary union replaced the three legacy currencies at the rate of 1 krona = ½ Danish rigsdaler = ¼ Norwegian speciedaler = 1 Swedish riksdaler. The new currency (krona) became a legal tender and was accepted in all three countries – Denmark, Sweden and Norway. This monetary union lasted until 1914, when it was brought to an end by World War I. As of 2012, the names of the currencies in each country have remained unchanged.
Joining the European Union
The Swedish European Union membership referendum of 1994 approved - with a 52% majority - the Accession Treaty and in 1995 Sweden joined the EU . According to the treaty Sweden is obliged to adopt the euro once it meets convergence criteria.
A referendum held in September 2003 saw 56.1 percent vote against membership of the eurozone. As a consequence, Sweden decided in 2003 not to adopt the euro for the time being. If they had voted in favour, Sweden would have adopted euro on 1 January 2006.
A majority of voters in Stockholm County voted in favour of adopting the euro (54.7% "yes", 43.2% "no"). In Skåne County the people voting "yes" (49.3%) outnumbered the people voting "no" (48.5%), although the invalid and blank votes resulted in no majority for either option. In all other polls in Sweden, the majority voted no.
Many stores, hotels and restaurants accept euros. This is especially common in some border cities. Shops especially oriented towards foreign tourists are more likely to accept foreign currencies (such as the euro) than other shops.
Official currency status
Matters such as official currency status and legal tender issues are decided by the Swedish parliament, and the euro is not an official currency of any part of Sweden. Nevertheless, politicians from some municipalities (see below) have claimed that the euro is an official currency of their municipalities. This means that the municipality has made an agreement with many shops that they should accept euros (in cash and credit cards). However this is not mandatory for the stores and the status as "official currency" is mostly a marketing device rather than a legal mandate.
The only Swedish city near the eurozone is Haparanda, where almost all stores accept euros as cash and often display prices in euros. Haparanda has become an important shopping city with the establishment of IKEA and other stores. 200,000 Finns live within 150 km distance.
Some municipalities, especially Haparanda, wanted to have the euro as a legally official currency, and, for example, contract salaries in euros to employees from Finland. However, this is illegal due to tax laws and salary rules. (The actual payment can be in euro, handled by the bank, but the salary contract and the tax documentation must be in kronor).
The town of Höganäs claimed itself to having adopted the euro for shops on 1 January 2009. From that date, all residents can use either kronor or euro in restaurants and shops, as well as in payments of rent and bills. Dual pricing is used at many places and ATMs dispense either currency without additional charge (the latter is law all over Sweden). Around 60 percent of stores in the town are reported to have signed up to the scheme and local banks have developed guidelines to accept euro deposits. This decision was approved and agreed by municipality of Höganäs. Höganäs has developed a special euro logo for the city. It is not a law in Höganäs, just a recommendation. This has been a rather successful PR coup, with good coverage in news papers, and it has been referred also in foreign newspapers.
Helsingborg and Malmö
Some shops accept euros, and price tags in euros exist in some tourist oriented shops, as in more cities in Sweden. Acceptance of and price tags in Danish kroner are probably more common.
Pajala and Övertorneå
The Pajala and Övertorneå municipalities have borders to Finland (and thus to the eurozone). The euro is often accepted in shops and sometimes shown on price tags, but there is no official adoption of the euro from the municipality point of view. However, there was a political proposal to officially adopt the euro in Pajala. Mining industry has started in Pajala, with close cooperation with nearby mines in Finland.
There was a political proposal in June 2009 from a party in the Sollentuna Municipality, that the municipality should adopt the euro as its parallel currency in 2010 (but again, see the section about official currency status above). This appears not to have taken effect, because it has not been mentioned after the media buzz in June 2009.
Stockholm is the most important tourist city in Sweden, measured as the number of nights spent by tourists. Some tourist-oriented shops accept euros, although there is no official policy from the municipality. Taxi services in Stockholm can be paid in euros. In 2009 there was a rejected political proposal to officially introduce the euro in Stockholm.
Some cash machines may dispense foreign currency. Usually the euro is the foreign currency dispensed, but sometimes British pounds, US dollars, Danish kroner or Norwegian kroner are dispensed instead. All of these cash machines also dispense Swedish kronor. Most of these cash machines are located in major cities, international airports and border areas.
Presence of the euro in Swedish law and bank system
The euro is present in some elements of Swedish law, based on EU directives. For example, an EU directive states that all transactions in euros inside the EU shall have the same fees as euro transactions within the country concerned. The Swedish government has made an amendment which states that the directive also applies to krona-based transactions. This means, for example, that euros can be withdrawn without fees from Swedish banks at any ATM in the eurozone, and that krona- and euro-based transfers to bank accounts in the European Economic Area can be done over the internet without a sending fee. The receiving banks can still sometimes charge a fee for receiving the payment, though, although the same EU directive typically makes this impossible for euro-based transfers to eurozone countries. This is different from, for example, Denmark where banks are required to set the price for international euro transactions within the EEA to the same price as for domestic Danish euro transactions (which does not have to be the same as the price for domestic Danish krone transactions). However, banks in Sweden still decide the exchange rate, and so are able to continue charging a small percentage for exchanging between kronor and euros when using card payments.
Most major political parties in Sweden, including the governing coalition Alliance for Sweden (except the Center Party), which won the 2006 election and the former governing Social Democratic party, are in principle in favour of introducing the euro.
The social democratic party stated in August 2011 that they write off a Swedish eurozone membership during a foreseeable future, for decades.
The newspaper Sydsvenska Dagbladet claimed on 26 November 2007 (a few days after the former Danish Prime Minister, Anders Fogh Rasmussen, had announced plans to hold another referendum on abolishing Denmark's opt-outs including the opt-out from the euro) that the question of another euro referendum would be one of the central issues of the 2010 election in Sweden. However it was not a big issue in that election.
Swedish politician Olle Schmidt in an interview with journalists from the European Parliament 2008 when asked when Sweden will have good reasons to adopt the euro, he said "When the Baltic countries join the euro, the whole Baltic Sea will be surrounded by euro coins. Then the resistance will drop. I hope for a referendum in Sweden in 2010."
2009 European elections
During the election campaign for the European Parliament elections, Liberal People's Party and Christian Democrats expressed interest in holding a second referendum on euro adoption. However, the Moderate Party and Centre Party thought that the time was ill-chosen.
A 2009 economic study from J. James Reade (Oxford) and Ulrich Volz (German Development Institute) on the possible entry of Sweden in the eurozone has found that it would be likely to have a positive effect. The study of the evolution of the Swedish money market rates shows that they closely follow the euro rates, even during times of economic crisis. This shows that Sweden would not lose in terms of monetary policy autonomy, as the Swedish Central Bank already closely follows the rates set by the European Central Bank. When adopting the euro, Sweden would swap this autonomy on paper for a real influence on the European monetary policy thanks to the gaining of a seat in the ECB's governing council. Overall, the study concludes that "staying outside of the eurozone implies forgone benefits that Sweden, a small open economy with a sizable and internationally exposed financial sector, would enjoy from adopting an international currency."
Since the 2006 election, negative poll results have led the prime minister to state that a rerun of the referendum is unlikely unless there are positive polls—although he also said that when more neighbours use the euro, it will be more visible that Sweden does not.
Polls on the question whether Sweden should abolish the krona and join the euro are regularly carried out, usually by the state statistics agency Statistiska centralbyrån. The results are always published in the press or online.
|Date (survey taken)||Date (when published)||YES||NO||Unsure||Number of participants||Held by|
|May 2004||18 June 2004||37.8%||50.9%||11.3%||7,046||SCB|
|November 2004||15 December 2004||37.3%||48.6%||14.3%||6,919||SCB|
|May 2005||21 June 2005||39.4%||46.4%||14.2%||6,985||SCB|
|November 2005||20 December 2005||36.1%||49.4%||14.5%||6,980||SCB|
|May 2006||20 June 2006||38.1%||48.7%||13.2%||6,870||SCB|
|November 2006||19 December 2006||34.7%||51.5%||13.8%||7,012||SCB|
|24 March 2007||37%||60%||3%||Skop|
|May 2007||19 June 2007||33.3%||53.8%||13%||6,932||SCB|
|November 2007||18 December 2007||35.0%||50.8%||14.2%||6,922||SCB|
|May 2008||17 June 2008||34.6%||51.7%||13.7%||6,817||SCB|
|November 2008||16 December 2008||37.5%||47.5%||15%||6,687||SCB|
|1 March 2009||45%||51%||4%||Skop|
|19 April 2009||47%||45%||8%||Sifo|
|12 May 2009||51%||49%||0%||1,000||Novus Opinion|
|25 May 2009||47%||44%||9%||1,000||Novus Opinion|
|May 2009||23 June 2009||42.1%||42.9%||15.1%||6,506||SCB|
|November 2009||15 December 2009||43.8%||42.0%||14.2%||6,398||SCB|
|9 April 2010||37%||55%||8%||1,004||Demoskop|
|May 2010||15 June 2010||27.8%||60%||12.2%||6,135||SCB|
|November 2010||14 December 2010||28.9%||58.2%||12.9%||6,192||SCB|
|May 2011||15 June 2011||24.1%||63.7%||12.2%||6,147||SCB|
|November 2011||13 December 2011||11.2%||80.4%||8.4%||5,907||SCB|
|May 2012||11 June 2012||13.6%||77.7%||8.7%||5,473||SCB|
|November 2012||12 December 2012||9.6%||82.3%||8.0%||5,479||SCB|
|May 2013||11 June 2013||10.9%||81.4%||7.7%||5,098||SCB|
Swedish euro coins
There are no designs for Swedish euro coins. It was reported in the media that when Sweden changed the design of the 1-krona coin in 2001 it was in preparation for the euro. A newer portrait of the king was introduced. The 10-kronor coin already had a similar portrait. This in fact is from a progress report by the Riksbank on possible Swedish entry into the euro, which states that the lead in time for coin changeover could be reduced through using the portrait of King Carl XVI Gustaf introduced on the 1- and 10-kronor coins in 2001 as the national side on Swedish 1- and 2 euro coins.
Only the national bank can manufacture valid coins by the law of Sweden. Some private collection mint companies have produced Swedish euro coins, claiming that they are copies of test coins made by the Riksbank. Swedish euro coins will not be designed or issued without a firm timetable for adoption.
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