Denmark to ban trade in kroner with Russia to prevent sanctions loophole

Denmark is to pass a law banning the trade of cash and securities in kroner to Russia and Belarus, the Danish Ministry of Industry, Business and Financial Affairs said on Tuesday.

danish money
Denmark is to rush through a new law banning trade with Russia and Belarus in kroner. Photo Kristian Djurhuus/Ritzau Scanpix

Under economic sanctions put in place following Moscow’s invasion of Ukraine, a ban on selling cash and tradeable financial assets in euros to Russia and Belarus has been put in place by the EU.

Copenhagen will now act to pass an emergency bill preventing similar transactions using the Danish krone, the business ministry confirmed in a statement.

The fixed exchange rate policy with the euro means that the krone can be used as a shadow currency for the euro, meaning it can be used to circumvent sanctions placed on Russia in response to the invasion of Ukraine.

“The hard economic sanctions are a strong weapon against Putin and we support the hardest possible sanctions in Denmark,” business minister Simon Kollerup said in the statement.

“We can see that Russia’s economy has been hit hard and the Russian currency has dropped in value with the effect that rich Russians are looking out for other places to move their fortunes,” he said.

“We have already closed the door to the EU and the euro, and with this bill we ensure that Denmark will not become a loophole,” he said.

The government has requested expedited processing through parliament of the bill, which would apply equivalent restrictions on trade with the krone to those already in place with the euro.

The bill will be tabled on Tuesday, the ministry said.

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Russian warship violates Danish waters

A Russian corvette twice violated Denmark's territorial waters in the Baltic Sea on Friday, the Danish armed forces said.

Russian warship violates Danish waters
The Russian vessel first crossed into the Danish waters north of the island of Christianso, south of Sweden, at 1230 am GMT.
“A few hours later, the same corvette crossed into Danish waters again, also north of Christianso,” the Danish military said in a statement.
“Following a call on civilian VHF radio from the Navy’s maritime operations unit, the Russian ship immediately left Danish territorial waters,” it added. The military said it had “nothing further to add”.
Denmark’s foreign ministry later said it had been in talks with the Russian ambassador, and noted that the incursion occurred after a Russian military spy plane violated its airspace in late March.
“Russia is again ignoring the international rule book by not respecting borders. It has been communicated in very clear terms to the Russian ambassador that this kind of action is completely unacceptable,” foreign
minister Jeppe Kofod said in a separate statement.

“A deeply irresponsible, gross and completely unacceptable Russian provocation in the middle of #fmdk,” Kofod added on Twitter, referring to the democracy festival, Folkemødet.
Prime Minister Mette Frederiksen, as well as several members of her cabinet and opposition leaders are currently attending the four-day festival discussing climate, defence policy and other matters.
Denmark is a member of NATO and has sent both anti-tank launchers and an anti-ship missile system to Ukraine since Russia’s invasion in February.
Christianso is located some 300 kilometres (190 miles) from the Russian exclave of Kaliningrad.