crisis, while other central banks were cutting their rates, for good reasons. there are also implications of the choice of exchange rate regime that go beyond macroeconomic outcomes. financial stability considerations, for example, play a role too. but this topic is for another day. * * * the future is uncertain – underscores need for stable anchor * * * the advantages of the regime are likely to become even more important and valuable when looking ahead. we are facing uncertain times and a potentially more volatile global economy than what we had become used to in the years of the so - called great moderation. globalisation may be on retreat and protectionist tendencies are gaining ground. these tendencies are reinforced by the pandemic, russia ’ s war in ukraine and broader geopolitical developments. but they were already in train before. climate change is causing disruptions. high temperatures, droughts and limited wind in europe increased existing energy supply disruptions this summer. the energy transition and climate events will become increasingly disruptive in the years ahead. see e. g. rey, helene 2013. “ dilemma not trilemma : the global financial cycle and monetary policy independence. ” proceedings – economic policy symposium – jackson hole, federal reserve bank of kansas city : 285 – 333. page 6 of 7 as we are hit by shocks and volatility, it is important to have sound economic structures supported by strong institutions. many of the shocks that we currently face are global in nature. they will impact the euro area as well as denmark. aligning ourselves closely with the euro area while ensuring a credible and stability - oriented framework for fiscal policy is therefore likely to continue to be desirable. conclusion to conclude, the danish economy has been on a remarkable journey over the last four decades. while the reasons are many, as well reflected in our conference today, i am convinced that the decision to adopt a fixed exchange rate regime has played a central role. i have focused on the many advantages we experience with our system. but it is also clear that the fixed exchange rate regime is not a one - sizefits - all panacea. as we have heard, there are a number of ways monetary stability can be achieved, and any regime has trade - offs. but advantages in my view outweigh drawbacks for denmark. i am convinced this is also the case in the years to come. it has stood the test of time over forty years – and it is as relevant as ever. thank you for your

speech governor signe krogstrup ’ s speech at danmarks nationalbank conference marking the 40th anniversary of the danish fixed exchange rate regime check against delivery introduction ladies and gentlemen, first and foremost, i want to thank all our participants today. those who have travelled far in order to be with us. those who spoke. those who asked questions. those who listened. our media representatives. i have enjoyed our lively and open exchange of views. i am grateful for your willingness to share experiences and for the insightful discussions. i will address some of my key takeaways from the conference, and comment on the current situation of high inflation and how we address inflation in a fixed exchange rate regime. i will finish with some considerations about future challenges and why i expect the peg to continue to be an important pillar in danish macroeconomic policy in the future. key takeaways from the conference let me first summarise my main takeaways from today ’ s programme : first, after widespread economic instability in the 1970s and early 80s, the introduction of the fixed exchange rate regime and a stabilityoriented focus for economic policy transformed the danish economy. the fixed exchange rate regime still remains in operation 40 years later. not by chance, but through effort and commitment. when put to the test through the years, we have reconfirmed the ability and the willingness to keep the krone stable against the euro. page 1 of 7 31 october 2022 and this brings me to a second takeaway, namely that the success of the fixed exchange rate regime is also rooted in the broad political support it has enjoyed since its inception. barry eichengreen pointed out how exchange rate pegs are often fragile ; that lasting exchange rate pegs are rare. he noted several reasons why it has worked for denmark. political support is one of them. i think in our case, it is key. any monetary policy regime is dependent on political support to remain credible. specifically, some form of political commitment to debt sustainability is needed to reduce pressures for monetary financing. but in the case of a peg, debt sustainability is a hard constraint. market participants will typically speculate against the peg if they perceive fiscal policy to be unsustainable. a successful fixed exchange rate regime also relies on fiscal policy taking an active role in stabilising the economy over the business cycle. when domestic economic developments deviate from those of the anchor currency economy – in our case, the eurozone – monetary policy of the anchor