Historical Sketch

The Norwegian state was founded in the late 9th century, gradually expanding throughout Scandinavia and the Northern Atlantic. In the late 14th century, Denmark and Norway were united in a personal union, which after 1397 also included Sweden. The so-called Kalmar Union broke apart with Sweden’s departure in 1521. The Danish-Norwegian personal union was dissolved in the aftermath of the Napoleonic wars. Norway declared independence in May 1814, and after a 6-months’ interlude under kingship of the former Danish crown prince, the Norwegian parliament opened the way for another personal union, this time with Sweden. In 1905, Norway finally elected a king of its own, the termination of the Norwegian-Swedish state union was decided by referendum in August of the year.

Monetary History Overview

During the time of the personal union, the Danish monetary system prevailed in Norway. The Danish paper money inflation that had led to the 1813 state bankruptcy did not spread to Norway, where the circulation had remained based on specie. Therefore, the Norwegian currency law of 1816 maintained the Danish silver standard of 1671 for the Norwegian Thaler (Speciedaler) as national currency. The Bank of Norway began operations in 1817, paper money issuance remained moderate. In December 1872, the three neighboring countries Denmark, Norway and Sweden concluded the Scandinavian Currency Union that created a uniform gold standard. Beginning of 1874, Norway introduced the Norwegian Crown on year before its neighbors, although at that time, the Monetary Union and the adoption of the gold standard had not yet been ratified by the Norwegian parliament. Therefore, the Crown circulated in parallel with the Thaler, and the first new coins carried both denominations. On October 1875 finally, Norway formally joined the currency union, more than ten months after the two other members. Beginning of 1877, the revised currency law entered into force, and the Thaler got demonetized within the year. The Scandinavian currencies remained stable for the next 40 years. At the outbreak of the First World War, the gold parity was suspended everywhere, and the mutual acceptance of banknotes and coins ceased. The post-war recovery of the Norwegian monetary system took until 1928 when the Scandinavian gold standard was re-instated. But the economic crisis of the early 1930s finished the gold standard for good. The Crown got pegged to the Pound Sterling and remained more or less stable, even during the German occupation of the 1940s. After liberation in 1945, the wartime cash surplus was partly confiscated during an exchange of banknotes. The Sterling peg remained in place, and the Crown also followed the 1949 devaluation. The second Sterling devaluation of 1967 was not applied, and the Crown repegged to the US Dollar afterwards. In 1973, the Crown got floated, and Norway loosely followed the development in the European currency system. In the 2010s, the Crown has depreciated against the Euro by some 20%.

Norway joined the International Monetary Fund (IMF) on 27.12.1945 as a founding member.

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