Another challenge for pegged exchange rates

After the Swiss government, in an impressively surprise move, decided to allow the peg between the Swiss franc and the euro to dissolve the Danes seem to be determined to try and prevent the same thing happening to their peg between the krone and the euro.  Although there are advantages to exchange rate stability might the inability to manage your own monetary policy prove to be too high a cost for the Danes, as it did for the Swiss?  Only time will tell…….

http://www.telegraph.co.uk/finance/economics/11363148/Denmark-cuts-interest-rates-to-defend-krone-against-euro-weakness.html

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