if the domestic Central bank is not able to. The exchange rate of the euro is determined through the supply and demand of the Danish currency relative to euro. To avoid going beyond the fluctuation limits the domestic Central bank has two tools to adjust the money supply and exchange rate. The first tool is intervention through the purchase and selling currencies to adjust the available money level. The second tool is an adjustment of the interest rate. The European Central Bank is conducting monetary policy independently from the national governments from the eurozone countries and has the aim of price stability. This means that the ERM II countries as well as EMU countries are giving up sovereignty in monetary policies to instead have price stability. When governments lose the autonomy in monetary policy, they lose the ability to respond to domestic economic shocks. Denmark's currency is pegged to the currency of the eurozone which is not an optimal currency area because the participating countries have asymmetric business cycles. Therefore, the monetary policy conducted in the eurozone is not necessarily beneficial for the economic situation in Denmark. The policy-aim of keeping a fixed exchange rate policy is to keep stable economic development and stable prices. Stable prices can be translated into low inflation. Fixed exchange rate policy based on the euro creates a framework for low inflation in the long run. The role of the ECB is set up in the Treaties and the monetary policy conducted should have price stability as its main aim. The ECB has defined price stability as a yearly growth in consumption prices under, but close to 2% in the middle to long run. The policy competences of the ECB are heavily influenced by the German Bundesbank policies and therefore have as main goal to have price stability and to be independent from national governments. The loss of autonomy in monetary policy in Denmark is not significant, as Denmark has had a fixed exchange rate since the end of the Second World War and has participated in several monetary cooperation systems. Therefore, the adoption of ERM II is not a change in this sense or a loss of autonomy in monetary policy as it has been limited since the creation of the Bretton Woods system. Denmark has even gained more influence in the decision-making process through the EU and the ERM II than it had