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The official currency of Denmark, Greenland and Faroe Islands is the Danish Krone. Krone is a Danish word for crown and the currency has been in use since the late 19th century. One interesting thing about the Danish currency market is that the country has been pegging its currency to the euro for quite a long now.
Denmark is not part of the euro zone but has a fixed exchange rate of the Danish currency against the euro which fluctuates by no more than a few basis points. Denmark’s central bank, Danmarks Nationalbank, closely tracks this peg and intervenes in currency markets and adjusts interest rates as needed to keep the exchange rate constant. That peg has been around for decades and is one of the world’s most respected fixed exchange rate regimes.
Example: The Swiss National Bank ditched its franc peg in 2015 with European currencies soaring up and down, and the Danish Krone staying relatively stable. The Nationalbank took the bull by the horns, cutting interest rates to unprecedented lows in an attempt to help the peg to the euro. This illustrated both the reason and the cost of backing the peg in an era of increased external pressures.
