60% devaluation of the Danish Krone?

The Danish krone is no longer what it used to be. From being the star on the European sky, the Danish krone has now apparently been relegated to pariah status.

When a Danish tourist in Thailand goes to the exchange booths to get Thai baht for their – in the eyes of the Danish tourist – good solid Danish kroner, they will be met with a wall of rejections and – if lucky – will be offered a “grey-market” suggestion of around 40 pct. of the official exchange rate.

Currently, a 1000 krone note is worth only 2000 Thai Baht despite the flashing light-board promising 4.970 Baht.

What is going on?

The problem is that the strict Danish money laundering-rules have crippled the foreign cash-exchange between Denmark and abroad. The private Danish banks no longer want to buy back from abroad large amount of cash money due to the risk of violating the tough money laundering regulations. This means that banks in for instance Thailand can no longer sell the Danish cash to the Danish banks like before and consequently they see no reason why they should accept the Danish banknotes.

The situation is grotesque, since the Danish currency happens to be as strong as ever – so strong, that the Danish central bank has to maintain an interest base-rate far below the corresponding interest rate at the European Central Bank, just to avoid excess capital inflow in Denmark.

The Danish Ministry of Foreign Affairs has issued a statement that the Danish authorities are not to be blamed.

“The challenges is not due to rules or guidelines issued by Danish authorities,” the statement says.

Denmark’s Central Bank “Nationalbanken” also rejects any responsibility.

“It is the responsibility of the Danish banks, in cooperation with their foreign partners, to find a solution that meets the rules,” the Central Bank comments.

The commercial banks put the blame on the money laundering rules, shooting themselves in the foot, as the fast expanding fintech-industry – services like “Revolut” and “Wise” among others – are more than wiling to fill the gap with far better exchange rates, faster execution and no nonsense service.

About Flemming Kruhoeffer

Flemming Kruhøffer is Foreign Correspondent for MarketWire

View all posts by Flemming Kruhoeffer

One Comment on “60% devaluation of the Danish Krone?”

  1. The problem is that the other European countries do not follow the Money Laundering Act that they themselves have adopted, because the same rules apply to the Euro, the short of it is that the banks in Europe are not allowed to receive money that might originate from crime and black money, applies to all countries in Europe

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