Press briefing 29 March 2022

Urgent law proposal must close loopholes

Published 29-03-2022

At today's press conference, the focus was on sanctions and the Danish economy. One of the strongest weapons we have against Russia is the harsh sanctions, but we must make sure that there are no loopholes in the sanctions.

Hosts: Minister for Business and Financial Affairs Simon Kollerup and Chairman of the Board of Governors of Danmarks Nationalbank Lars Rohde.

Restrictions on the Danish krone

Together with the EU, harsh sanctions have been imposed on Russia and the Russian economy, and they have had a big impact - the value of the Russian ruble has decreased and pictures have shown Russian citizens withdrawing cash.

The sale of euros to Russians has been closed, but not the sale of the Danish krone. This means that the Danish krone can be misused to store Russian fortunes. We thus risk that the Danish krone could become a loophole for Russians who want to circumvent EU sanctions. This loophole must be closed. Therefore, the Government will introduce the same restrictions for the Danish krone that already apply to the euro. Therefore, an urgent law proposal has been submitted for processing in the Danish Parliament, so that we avoid misuse of the Danish krone.

The fixed exchange rate policy means that the value of the krone is fixed against the euro, and therefore the Danish krone can be used as a possible replacement currency for the euro. But it is crucial that economic sanctions are effective and cannot be circumvented by Russia. Therefore, it is necessary to introduce the same restrictions on the possibility of using the Danish krone as have been introduced for the euro.

The sanctions and the economic effects

Since Russia's invasion, the EU and other G7 countries have imposed coordinated and unprecedented economic sanctions. They have had an immediate and significant impact on Russia's economy. But it is not only the Russian economy that is affected by the sanctions. The war in Ukraine will also have economic consequences for companies and households in Denmark and for our trading countries.

The war and the sanctions lead to lower supply of energy and other raw materials, which will lead to price increases. And the uncertainty about the further course of the war can have an impact on the desire for consumption and investment.

The Danish economy is well equipped

As a starting point, the Danish economy is strong, employment is high, there are large savings in the private sector, and we have sound public finances.

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