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Comment by Octokiddie | Hacker News Reader

Unless the peg breaks, the currency doesn't "slide."

The peg usually is in the period just before the switch to the euro, if the period is longer then invariably the peg breaks and the local currency will slide, sometimes quite a bit in a very short period.

The DKK has been pegged to the euro since '99. The rate has changed by 0.03 over the last 15 years.

Yes. But Denmark could have easily joined in all those years, they chose not to and that's their right. But for countries struggling to keep parity with the Euro today being in the Euro would have immediate advantage (Poland, Bulgaria, Romania, and to a lesser extent Hungary and Czechia). Denmark negotiated an exception and the fact that in 22 years it hasn't made any difference in terms of valuation means that they simply missed out on some international commerce.

All that is besides the point. The issue was if a peg can be indefinitely - and it can.

> But for countries struggling to keep parity with the Euro today being in the Euro would have immediate advantage (... Czechia)

ČNB actually intentionally weakened CZK in 2013 and for several years after. And in the long term CZK appreciates against EUR rather than the opposite.

"struggling to keep parity" is just not true.

> The peg usually is in the period just before the switch to the euro

> if the period is longer then invariably

That totally incorrect for most currencies in the countries which joined the EU in 2004 or later. The Croatian Kuna was never free floating and pegged to the Euro/DM since it was introduced 1994.

IIRC, in the case of Poland people had mortgages pegged to the Swiss Franc. A central bank can only peg to one currency.

Depended on the bank. Quite a few in Euros, some in other currencies, even USD. But if you wanted your mortgage in Zloty then suddenly the interest was twice as high.

Hmmm so banks offered a choice to be a forex speculator, and some took the lower interest rate bait. The risk is dramatic forex moves which make it near impossible to make payments.

It makes sense that a currency that is more likely to lose value within the term of the loan would lead to a higher interest rate, no?

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