The history of the Swedish krona and its future of becoming part of the euro
The Swedish krona (SEK, kr) is the official currency of Sweden. Referring to this currency as the “Swedish crown” in English is rather common, because krona literally translates to “crown”.
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The Treaty of Accession of 1995 required Sweden to eventually convert its currency to the euro. However, the people of Sweden did not agree. A 2003 referendum that saw an overall turnout of 82.6%, with 56% voters opposed the adoption of the euro. In 2009 it was decided that there wouldn’t be a new referendum on the acceptance of the euro until there was support from the all political parties and the public. As of 2016, public opinion of the euro has not improved and there are no plans of replacing the Krona.
Swedish krona’s exchange rate against other countries has long depended on the country’s monetary policy at the time. It has followed the managed float system since November 1992.
Value and exchange rates of the Swedish krona
Sweden was not an active participant of WWII, so it didn’t go through the process of rebuilding its banking system and economic base, as was the case with several European nations. As of 2016, Sweden has the second highest tax revenue in Europe, after Denmark.
The Swedish Riksbank, founded in 1668, is the oldest operating central bank in the world, and it is responsible for issuing currency in Sweden. The timeline of krona’s history in regards to its value looks something like this.
|May 1873||Upon the krona’s introduction, it took to the gold standard, where 2,480 kronor equalled one kg. of gold.|
|August 1914||Sweden did away with link to gold.|
|November 1922||It de facto re-established the link to gold.|
|April 1924||It de jure re-established the link to gold.|
|September 1931||It abolished the gold link again, and switched to the floating rate regime.|
|June 1933||Sweden introduced a tie between the krona and the British pound, when one British pound valued at SEK19.40.|
|August 1939||The krona linked to the US dollar, valued at SEK4.20 to the dollar.|
|July 1946||The krona underwent a controlled appreciation of over 14% against gold and all other currencies. At this point one US dollar valued at SEK3.60.|
|September 1949||This time around the krona witnessed a controlled depreciation of more than 30% against the US dollar, trading at SEK5.17 against the dollar.|
|August 1951||Sweden took to the Bretton Woods system and also became a member of the International Monetary Fund.|
|December 1971||There was a controlled appreciation of 7.5% against the US dollar and 1% depreciation against gold.|
|February 1973||There was a controlled appreciation of 5.6% against the US dollar and 5% depreciation against gold.|
|March 1973||Sweden became a member of the European ‘currency snake’.|
|October 1976||There were exchange rate adjustments within the snake, and the krona saw a 3% controlled depreciation against the Deutsche mark.|
|April 1977||The krona underwent another controlled depreciation, this time of 6% against the Deutsche mark.|
|August 1977||The krona exited the snake, and went through a controlled depreciation of 10% against the ‘currency basket’.|
|September 1981 and October 1982||The krona witnessed a controlled depreciation of 10% and 16% against the currency basket.|
|May 1991||Sweden introduced a unilateral tie to the European Currency Unit (ECU), where one ECU valued at SEK7.40.|
|November 1992||Sweden switched to the floating exchange rate system.|
The table below gives you an indication of the krona’s changing fortunes against some major currencies in recent times.
These are yearly averages.Back to top
History of the Swedish krona
The use of silver currency during the medieval period was quite common in Sweden. In 1625, the country introduced the use of copper coins and switched its currency system to a bimetallic standard. In 1745, the link to the copper standard ended, causing the country to impose an inconvertible paper standard and issuing banknotes. Economic problems and inflation that followed saw depreciation of the currency, and in 1776 Sweden returned to the silver standard.
Riksdaler was the currency in used in the 17th through much of the 19th century. This system was fairly complex, and included multiple subunits. In 1855, Sweden converted to the decimal system, through which the country introduced the risksdaler riksmynt.
In 1873, the krona saw light of day when Sweden agreed to become a part of the Scandinavian Monetary Union, along with Norway and Denmark. These countries fixed their currencies with gold, and were at par with each other. This union ended after WWI, and Sweden held onto the krona.Back to top
Coins and banknotes of the Swedish krona
From 1873 to 1876, Sweden issued coins in denominations of 1, 2, 5, 10, 20 and 50 öre, as well as 1 krona and 2, 10 and 20 kronor. The 1, 2 and 5 öre coins made use of bronze; the 10, 25, 50 öre and 1 krona and 2 kronor coins came in silver; and 10 and 20 kronor coins were made using gold. In 1881, gold 5 kronor coins entered circulation.
Since then there were several changes in kroner coins, which included the use of different materials like iron, nickel-bronze, cupronickel and aluminium-brass.
In December 2008, the Swedish central bank, Riksbank decided to phase out the 50 öre coin, the last öre coin, by 2010, and it gave people the option to exchange their coins at banks until the end of March 2011. In September 2012, Riksbank announced that a new series of coins would enter the market by October 2016.
In 1874, Riksbank began circulating banknotes in denominations of 1 krona and 5, 10, 50, 100 and 1,000 kronor. Production of the 1 krona note stopped in two years, but it reappeared again in between 1914 and 1920. Riksbank issued 10,000 kronor notes in 1939 and 1958. It discontinued the 5 kronor note in 1981, and introduced the 500 kronor note in 1985. In 1991, production of 10 kronor notes stopped, and circulation 20 kronor notes began. In 2006, a new 1,000 kronor note made it in to circulation.