Swedish PM reignites euro debate

Sweden and the Euro

Swedish PM reignites euro debate

Postby Eurospain » 08 Dec 2009, 20:25

Swedish PM reignites euro debate

Published: Tuesday 1 September 2009

Sweden's floating currency, the crown, is not viable in the long term, although a soft currency provides a stimulus in tough economic times, Swedish Prime Minister Fredrik Reinfeldt said in a newspaper interview published on Monday.

"On a sunny day it is not a problem to have a little currency, but in times of crisis it is a problem even if the country has a sound economy, and I also think Swedes see that," Reinfeldt told the Danish daily Berlingske Tidende.

"We removed the links to the euro during our financial crisis in the 1990s, but I recognise that that is not a long-term solution," said Reinfeldt, who has earlier advocated adopting the euro.

"Even if it immediately can offer stimulus in Sweden, it also causes problems - both in terms of purchasing power domestically but also in relation to our trading partners - and that is what we have said all along," he said.

Sweden joined the European Union in 1995, but Swedes voted against joining the euro zone in a 2003 referendum. Sweden's centre-right government has ruled out holding another referendum during its current term of office, which runs to September 2010, and has said a new vote is unlikely even in its next four-year term, if it wins the next election.

The Swedish crown has firmed in recent weeks, re-approaching ten to the euro from levels above 11 in late July, but it is still nearly 9% weaker than it was towards the end of the third quarter of 2008 before the financial crisis deepened.

The financial crisis has rekindled debate about joining the euro in several countries that remain outside the single currency bloc, including neighbouring Denmark, an important trading partner for Sweden.

The Danish government has said it will not call a referendum on the euro unless it could be sure of a majority in favour.

Reinfeldt said he was watching the situation in Denmark, adding: "A 'yes' in Denmark [for the euro] would certainly have an effect on Swedish conditions."

(EurActiv with Reuters.)
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