Today, the Danish monetary policy regime is one of the longest running fixed exchange rate regimes in the world. And it is somewhat unique. Over the years, the regime has become a cornerstone of economic policy in Denmark. And it has contributed to a remarkable transformation of the Danish economy.
Nevertheless, deflation makes it more difficult to achieve fiscal targets. Although I do not believe that we are headed for euro-wide deflation, a protracted period of low inflation has the potential to make deflation a reality. As ECB President Draghi has recently made clear, we are aware of the risks and are prepared to respond should the need arise.