Danish PM pushes for new referendum on euro

November 7, 2008

, the Prime Minister of Denmark, said on Tuesday that he will seek broad parliamentary support for a national referendum on joining the, the common currency of the.

"I'm convinced that we need broad support in parliament to hold a referendum, because it's about the Danish currency and about stability and safety," he said, speaking at his weekly press conference. "Recent events have shown the necessity to give the population the opportunity to vote on Denmark joining the euro."

 is reporting that Rasmussen is meeting with political leaders to negotiate support for the referendum.

In 1992, Danish voters rejected the in a. It was only able to the following year after the  granted Denmark an opt-out of the third stage of the  (EMU).

In 2000, Denmark again rejected the common currency in a. The current currency of the country is the. As part of of the EMU, the exchange rate of the krone is allowed to fluctuate within a ±2.25% range to the euro.

In order to maintain this peg, the , adjusts interest rates and performs foreign exchange operations by buying and selling currency. To do this, Danmarks Nationalbank has had to raise rates twice, even as other central banks, including the European Central Bank (ECB), were lowering rates to deal with the. As a result, interest rates in Denmark are now 175 higher than the ECB's rates. As recently as May, the difference was only 25 basis points.

Rasmussen heads the which leads a minority coalition government. The main opposition party, the, also support adopting the euro as the nation's currency.

While there has long been support among the politicians, the euro has failed when it has been put before the voters. However, recent opinion polls have shown a growing support for the euro among Danes. The most recent of these have seen those in favor just topping the 50% level needed to pass a referendum.

Rasmussen has said he wants a referendum put before voters before 2011. His government had originally planned to hold a referendum this past September to abolish the EMU opt-outs, but that was scrapped when Ireland voted down the.

On October 30, while in, Sweden, Rasmussen said: "The euro ensures political and economical stability in Europe and the current financial turmoil makes it evident that Denmark has to join the Euro."

Analysts consulted by  have said that an endorsement from the (SF) could prove to be the tide-turner.

"If there was a vote, then I would vote Yes. But I am of the opinion that it is stupid to hold a vote unless we first have a real debate. We haven't had a debate in eight years and all arguments need to be tested," said of SF.