What tools does Danish Central Bank have to protect currency peg to euro?

  • Huge upward pressure on krone - 2 main tools to protect the peg:
  • Lowering of interest rates (now at record low of -0.75%) to make currency less attractive.
  • Neutralise impact by meeting any krone demand (i.e. selling krone and buying euros) - problem though if they run out of krone.

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