levels of employment and increased prices will also lead to higher wages which will hurt firm's competitiveness on international markets. When firms are less competitive, they will lose market shares and it will lead to an increase of unemployment. In the end, an economy will be worse off with high unemployment just with higher prices and wages. Besides maintaining low inflation levels, keeping a fixed exchange is also beneficial in other ways. It can reduce transaction costs and exchange rate uncertainty in international trade. The decrease in fluctuations of currency reduces uncertainty for traders and therefore stimulates international trade. Status of the level of convergence of the Danish economy History Early monetary unions in Denmark (1873–1914) On 5 May 1873 Denmark with Sweden fixed their currencies against gold and formed the Scandinavian Monetary Union. Prior to this date Denmark used the Danish rigsdaler divided into 96 rigsbank skilling. In 1875, Norway joined this union. A rate of 2.48 kroner per gram of gold, or roughly 0.403 grams per krone was established. An equal valued krone of the monetary union replaced the three legacy currencies at the rate of 1 krone = ½ Danish rigsdaler = ¼ Norwegian speciedaler = 1 Swedish riksdaler. The new currency became a legal tender and was accepted in all three countries. This monetary union lasted until 1914 when World War I brought an end to it. But the name of the currencies in each country remained unchanged. European Monetary System and pre-euro monetary co-operation The collapse of the Bretton Woods system destabilised European markets and delayed the wish to have monetary integration in the member states of the European Economic Community. (Today EU). The Bretton Woods system was a system where exchange rates remained stable while having inflation under control. The dollar was pegged to the gold standard and the 14 European participating countries became convertible with the dollar. In the EU, further monetary cooperation and stable exchange rates were considered necessary to facilitate the creation of the internal market. The Werner Report was a draft proposal in the EU framework to have monetary cooperation to facilitate the internal market. This draft was based on a system where all participating countries’ currencies were already fully convertible, and when the Bretton Woods system collapsed, there were no central currency to peg the currencies on and therefore the idea for monetary integration was postponed. The first step