Most countries in the European Union use the euro as their currency, but a few countries have chosen to keep their own. Sweden is one of them — voters there rejected adopting the euro back in 2003. Now, the country is once again considering ditching its krona for the euro.
Before Sweden voted on the euro, Lars Calmfors, now an economics professor at Stockholm University, argued that adopting it wasn’t a good idea. He chaired the government commission that analyzed whether Sweden should adopt the common currency.
“We stressed very much the dangers of joining the monetary union when we were not ready for it,” he said.
Sweden was coming out of a financial crisis it wanted to solve on its own, and the majority of Swedish voters agreed. But a lot has changed since then, including Calmfors’ opinion.
“The economic benefits in terms of stimulating trade, foreign direct investment, seem to be much greater than before,” Calmfors said.
That’s because Sweden is a small country — about the size of Los Angeles County — but it’s got a lot of big companies that do lots of business abroad, including Volvo, H&M, and Ikea.
“If you have a small economy, you want to have a stable exchange rate,” said Anders Åslund, senior fellow at the foreign policy think tank Stockholm Free World Forum. He said international business is a lot easier when it doesn’t rely on a bunch of different currencies.
But currency isn’t just an economic tool. It’s a political one too.
“Sweden is the odd man out,” Åslund said. “Sweden was proud of being it. Now, we are afraid.”
Consider the last five years. Russia invaded Ukraine, the U.S. started talking about taking Greenland from Denmark, plus all the tariffs. So, we’ve got big countries with big economies threatening small countries with small economies.
“The geopolitics of our time are such that Sweden needs to feel safe and united with the rest of Europe,” said Kathleen McNamara, who teaches government at Georgetown University.
Amid all this uncertainty, she said smaller states are feeling pressured to pick sides for protection. Sweden might pick Europe because, yes, the U.S. dollar has historically been the port in international economic storms.
But today, “it’s very possible that people start to doubt the economic stability and sustainability of the American economy, and so people may flee the dollar,” McNamara said.
And that creates an opening for Europeans — and their euro — to become political and economic leaders. McNamara said she’s waiting to see not just if Sweden adopts the euro, but if Denmark will follow suit.
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