Denmark's central bank is willing to use extreme measures including capital controls to defend its currency peg to the euro, which it considers a "holy" policy, said the head of the Economic Council, a body that advises the government.
Since the Swiss National Bank stunned the market by scrapping its cap on the franc on January 15 there has been upward pressure on the crown as some speculators believe Denmark could be next to change its currency regime.
But Hans Jorgen Whitta-Jacobsen said it was a fallacy to draw parallels with the three-year-old Swiss franc cap because Denmark's central bank had other means available to defend the peg "to the last drop of blood".
"If it takes restrictions on free capital movement for a period to defend the fixed exchange rate, I assess that the central bank would be willing to go that far," Whitta-Jacobsen said.
But he said the central bank's current tools - rate cuts and interventions - should be enough to defend the peg, the cornerstone of Danish monetary policy since the crown was tied to the German mark in 1982.
"I believe it can use the tools it has already used to an unimaginably higher degree, and that would probably be enough," the professor said in an interview on Thursday at Copenhagen University.
If that is not enough, the next step for the central bank would be to buy Danish securities in the market and if that were still not enough it could resort to tougher methods to defend the peg policy which he described as sacred.