Finding common ground: rebuilding the Scandinavian Monetary Union in the interwar years

Abstract

The Scandinavian Monetary Union (SMU) of Denmark, Sweden and Norway has been labelled ‘the most successful of the pre-World War I monetary unions’. It functioned smoothly throughout the first era of globalisation but is considered to have disintegrated during the Great War. However, attempts at rebuilding the union in the interwar years, in a spirit of increased intra-Scandinavian central bank cooperation, have been overlooked. In fact, the Scandinavian central banks frequently convened trying to re-establish the SMU. This paper is the first comprehensive account of these efforts. Based on archival material from these three central banks, it will answer questions on three different levels of analysis: How did the central banks consider future cooperation through the union despite interwar economic turmoil? As ending the leading symbol of Scandinavian cooperation would be politically costly, was it the central banks or governments who were the main actors in re-establishing the union? Given both the need to balance between national primacy and to cooperate to counter economic turmoil, and the fact that all Scandinavian countries followed suit as England abandoned gold in 1931, how are we to consider aspects such as isolationism versus cooperation and small state behaviour versus great power policies?