Sweden and the euro: Wikis

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     EU Eurozone (16)      EU states obliged to join the Eurozone (9)      EU state with an opt-out on Eurozone participation (1 - UK)      EU state planning to hold a referendum on the euro (1 - Denmark)      States outside the EU with issuing rights (3)      Other non-EU users (4)   

Sweden does not use the euro as its currency and has no plans to replace the krona,[1] but in accordance with the 1994 Treaty of Accession it has to do so once it meets the necessary conditions.[2] However, as being part of ERM II is a required criteria and joining ERM II is voluntary,[3][4] Sweden has so far used this as a de facto opt out.

Contents

Status

SEK-EUR exchange rate since 1999

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. While there is government support for membership, all parties have pledged not to join without a referendum in favour of doing so.

The Swedish Krona is floating freely against other currencies, and no effort to stabilize the exchange rate is made by the Riksbank.

The EU has accepted that Sweden is staying outside the Eurozone on its own decision. Olli Rehn, the EU commissioner for economic affairs has said that this is up to Swedish people to decide.[5]

Despite this, the euro can be used to pay for goods and services in some places in Sweden.

Sweden meets four of five criteria.

Convergence criteria
Inflation rate 1 Government finances ERM II membership Long-term interest rate 2
annual government deficit to GDP gross government debt to GDP
Reference value 3 max 3.2% max 3% max 60% min 2 years max 6.5%
 Sweden 1.3% -2.7% 4 35.5% - 4.2%
     criteria fulfilled

     criterion not fulfilled 1 No more than 1.5% higher than the 3 best-performing EU member states.
2 No more than 2% higher than the 3 best-performing EU member states.
3 Values from May 2008 report ECB.int, to be updated each year.
4 Negative value is a surplus.

History

Early monetary unions in Sweden (1873-1914)

All Telia payphones in Sweden accept euro

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 2009, the names of the currencies in each country have remained unchanged.

Joining the European Union

In 1995 Sweden joined the EU and its Accession Treaty[6] has been approved in Sweden by referendum (52% in favour of the treaty). According to the treaty Sweden is obliged to adopt the euro once it meets convergence criteria.

2003 referendum

A referendum held in September 2003 saw 56.1 percent vote against membership in the Eurozone. As a consequence, Sweden decided in 2003 not to adopt the euro for the time being. Had they voted in favour, Sweden would have adopted euro on 1 January 2006.[7]

A majority of voters in Stockholm county voted in favor 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.[8][9]

Usage today

Shop in Stockholm that accepts Euro, in the tourist district. Signs like this one are not common in Stockholm.
This ATM gives out both euro and kronor.

Many shops, hotels and restaurants accept euro, but cash only. 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.

Municipalities

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.

Cards can be debited in euros, if the shop has prepared for it.[10]

Haparanda

The only Swedish city near the eurozone is Haparanda,[11] where almost all shops accept euros as cash and often display prices in euros. Haparanda has become an important shopping city with the establishment of IKEA and other shops. 200,000 Finns live within 150 km distance.

Some municipalities, especially Haparanda, wanted to have euro as a legally official currency,[12] and, for example, pay salaries in euros to employees from Finland. However, this is illegal due to tax laws[citation needed] and salary rules.[citation needed] Haparanda's budget is presented in both currencies.[13] Haparanda has a close cooperation with the neighbour city of Tornio, Finland.

Höganäs

The town of Höganäs fully adopted the euro for shops on 1 January 2009.[14] From that date, all residents can use either kronor or euros in restaurants and shops, as well as in payments of rent and bills. Dual pricing is used everywhere and ATMs dispense either currency without additional charge. 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.[15] This decision was approved and agreed by municipality of Höganäs.[16] Höganäs has developed a special euro logo for the city. This has been a rather successful PR coup, and it has been referred also in foreign newspapers[17]

Helsingborg and Malmö

Price tags in euros exist in Helsingborg and Malmö. The fall of the value of the krona has attracted many Danish shopping tourists to Helsingborg and especially Malmö. For their sake, price tags in DKK is sometimes used (but not so often).

Pajala and Övertorneå

These two minucipalities 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 rejected political proposal to officially adopt the euro in Pajala. [18] [19][citation needed] Mining industry will start in Pajala, with close cooperation with nearby mines in Finland.

Sollentuna

According to officials from Sollentuna Municipality, the municipality adopted the euro as its parallel currency in 2010 (but again, see the section about offficial currency status above).[20][21]

Stockholm

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. All taxi services in Stockholm can be paid in euro.[22][citation needed]

Cash machines

Some cash machines may dispense foreign currency. Usually EUR is the foreign currency dispensed, but sometimes GBP, USD, DKK or NOK is dispensed instead. All of these cash machines also dispense SEK. 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. 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.[23][24] The Swedish government has made an amendment[25] which states that the directive also applies to SEK transactions. This means, for example, that euros can be withdrawn without fees from Swedish banks at any ATM in the eurozone, and that SEK+EUR 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 EUR transfers to Eurozone countries. This is different from e.g. Denmark where banks are required to set the price for international EUR transactions within the EEA to the same price as for domestic Danish EUR transactions (which doesn't have to be the same as the price for Danish domestic DKK transactions). However, banks in Sweden still decide the exchange rate, and so are able to continue charging a small percentage for exchanging between SEK and EUR when using card payments. It is also now possible for limited companies (companies limited by shares) to have their accounts and share capital denominated in the euro.[26][27]

Future plans

Most major political parties in Sweden, including the governing Alliance for Sweden (except the Centre Party), which won the 2006 election and the former governing Social Democratic party, are in principle in favour of introducing the euro.

The effect of a Danish referendum

The Sydsvenska Dagbladet reported 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.[28]

Swedish politician Olle Schmidt in an interview with journalists from the European Parliament 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."[29]

The social democratic party leader Mona Sahlin, who according to previous polls was likely to be the prime minister of Sweden in 2010, has stated that a new refererendum will not occur in the period 2010-2013, because the 2003 refererendum still counts.[30]

2009 European elections

Ja till euron slogan. Part of the 2009 European Parliament election campaign.

During the election campaign for the European Parliament elections, Liberal People's Party and Christian Democrats expressed interest to hold a second referendum on euro adoption. However, Moderate Party and Centre Party thought that the time was ill-chosen.[31]

Economic research

A recent economic study 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 follow closely the euro rates, even during economic crisis times. This shows that Sweden would not lose in terms of monetary policy autonomy as the Swedish Central Bank already follows closely 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."[32]

Opinion polls

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.[33].

As a result of this, unlike most other member states that do not use the euro, Sweden has no set timetable for adoption.

In recent months, however, polls have changed with the latest opinion polls showing a majority in favour of adopting the euro, (see table of polls below). This change in opinion is claimed to have been affected by the Krona's low value during the economic crisis.[34]

Results

Polls on the question whether Sweden should abolish the krona and join the euro is regularly done usually by state statistic agency - Statistiska centralbyrån. Later the results are always published in press or internet.

Date (when published) YES NO Unsure Number of participants Held by Link
May 2004 38 % 51 % 11 % 6687 SCB SCB.se
May 2005 40 % 47 % 13 % SCB SCB.se
May 2006 38 % 49 % 13 % SCB SCB.se
24 March 2007 37 % 60 % 3 % Skop DN.se
May 2007 33.3 % 53.8 % 12.9 % SCB SCB.se
November 2007 35.0 % 50.8 % 14.2 % SCB SCB.se
May 2008 34.6 % 51.7 % 13.7 % SCB SCB.se
November 2008 37.5 % 47.5 % 15 % 6687 SCB SCB.se
December 2008 44 % 48 % 7 % 1006 SCB Ibiblio.org
1 March 2009 45 % 51 % 4 % Skop DN.se
19 April 2009 47% 45% 8% Sifo Xinhuanet.com
12 May 2009 51% 49% 0% 1000 Novus Opinion Expressen.se
25 May 2009 47% 44% 9% 1000 Novus Opinion DN.se
1 June 2009 42.1 % 42.9 % 15.1 % 6506 SCB SCB.se
15 December 2009 43,8 % 42.0 % 14 % 6398 SCB SCB.se

* Everyone was able to express their opinion an unlimited amount of times.

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-krona 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 krona coins in 2001 as the national side on Swedish 1 and 2 euro coins.[35]

Only the national banks 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.[36] Swedish euro coins will not be designed or issued without a firm timetable for adoption.[citation needed]

See also

References

  1. ^ EU4Journalists.eu, Economic and Monetary Union and the Euro eu4journalists, accessed 8 January 2008
  2. ^ EC.Europa.eu
  3. ^ "Swedish Parliament EU Information". Swedish Parliament. 2009-12-04. http://www.eu-upplysningen.se/Amnesomraden/EMU/Sverige-och-EMU/. Retrieved 2010-01-16. 
  4. ^ "Information on ERM II". European Commission. 2009-12-22. http://ec.europa.eu/economy_finance/euro/adoption/erm2/index_en.htm. Retrieved 2010-01-16. 
  5. ^ Summary of hearing of Olli Rehn - Economic and Monetary Affairs
  6. ^ "European Union Agreement Details". Council of the European Union. http://www.consilium.europa.eu/cms3_Applications/applications/Accords/details.asp?cmsid=297&id=1994028&lang=EN&doclang=EN. Retrieved 26 December 2008. 
  7. ^ "Heikensten: The Riksbank and the euro". Sveriges Riksbank. 17/06/2003. http://www.riksbank.se/templates/speech.aspx?id=8127. Retrieved 2008-12-26. 
  8. ^ "Sweden. Euro Referendum 2003". Electoral Geography. http://www.electoralgeography.com/new/en/countries/s/sweden/sweden-euro-referendum-2003.html. Retrieved 2008-12-26. 
  9. ^ "Riksöversikten" (in Swedish). Valmyndigheten. http://www.val.se/val/emu2003/resultat/slutresultat/table_00F.html. Retrieved 2009-05-17. 
  10. ^ Facts about card acceptance package from the bank, read about "Multicurrency"
  11. ^ Near could be defined as within 50 km or 30 min driving. Norrtälje is 80 km and more than two hours travel from Mariehamn. Regarding definition of "city" see Stad (Sweden) and List of traditional Swedish cities (in Swedish).
  12. ^ "Swedish mayor wants to abolish the kronor". EUobserver. 2001-12-20. http://euobserver.com/9/4626. Retrieved 2008-12-26. 
  13. ^ "The introduction of euro banknotes and coins: one year on". Europa. 2006-06-29. http://europa.eu/scadplus/leg/en/lvb/l25058.htm. Retrieved 2008-12-26. 
  14. ^ HD.se
  15. ^ TheLocal.se
  16. ^ Anette Rantala (5 September 2008). "Euron blir gångbar valuta i Höganäs" (in Swedish). Helsingborgs Dagblad. http://hd.se/hoganas/2008/09/05/euron-blir-gaangbar-valuta-i/. Retrieved 2008-12-26. 
  17. ^ Swedish town aims to be 'euro-city'
  18. ^ Sammanträdesprotokoll. Motion införande av euro-zon i Pajala
  19. ^ SR.se
  20. ^ SVD.se
  21. ^ Sollentuna.se
  22. ^ TaxiStockholm.se TakiKurir.se Taxi020.se
  23. ^ "Lag (1999:268) om betalningsöverföringar inom Europeiska ekonomiska samarbetsområdet" (in Swedish). Sveriges riksdag. 1999-05-12. http://www.riksdagen.se/webbnav/index.aspx?nid=3911&bet=1999:268. Retrieved 2008-12-26. 
  24. ^ "EU directive". http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexplus!prod!CELEXnumdoc&numdoc=301R2560&lg=EN. 
  25. ^ "Lag (2002:598) om avgifter för vissa gränsöverskridande betalningar" (in Swedish). Sveriges riksdag. 2002-06-13. http://www.riksdagen.se/webbnav/index.aspx?nid=3911&bet=2002:598. Retrieved 2009-01-08. 
  26. ^ "Lag (2000:46) om omräkningsförfarande vid beskattning för företag som har sin redovisning i euro, m.m." (in Swedish). Sveriges riksdag. 2000-02-10. http://www.riksdagen.se/webbnav/index.aspx?nid=3911&bet=2000:46. Retrieved 2008-12-26. 
  27. ^ "Aktiebolagslag (2005:551)" (in Swedish). Sveriges riksdag. 2005-06-16. http://www.riksdagen.se/webbnav/index.aspx?nid=3911&bet=2005:551. Retrieved 2008-12-26. 
  28. ^ "Denmark and Sweden on the path to the euro?". Courrier international. http://europe.courrierinternational.com/eurotopics/article.asp?langue=uk&publication=26/11/2007&cat=ECONOMY&pi=1. Retrieved 2007-11-26. 
  29. ^ "The strengthening Euro - is it good or bad for Europe's economy?". European Parliament. 02-07-2008. http://www.europarl.europa.eu/news/public/story_page/043-32905-182-06-27-907-20080627STO32879-2008-30-06-2008/default_en.htm. Retrieved 2008-12-26. 
  30. ^ "Intresse för euro i Sverige och Danmark" (in Swedish). Rundradion Ab. 2008-11-02. http://svenska.yle.fi/nyheter/artikel.php?id=143214. Retrieved 2008-12-26. 
  31. ^ DN.se
  32. ^ Economics.ox.ac.uk
  33. ^ "Glöm euron, Reinfeldt" (in Swedish). Aftonbladet. 2007-12-02. http://www.aftonbladet.se/nyheter/article1377536.ab. Retrieved 2008-12-26. 
  34. ^ Angus-Reid.com
  35. ^ "The Euro in the Swedish Financial Sector – Banknotes and Coins". Sveriges Riksbank. September 2001. http://www.riksbank.com/upload/Dokument_riksbank/Kat_publicerat/Rapporter/Lagesrapport7eng.pdf. Retrieved 2008-12-26. 
  36. ^ "Swedish Euro Coins?". Chard Limited. http://www.eurocoins.co.uk/sweden.html. Retrieved 2008-12-26. 

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