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How to Leave the Eurozone: The Case of Finland

51 Pages Posted: 25 Aug 2017  

Tuomas Malinen

HECER, University of Helsinki

Peter Nyberg

Independent

Heikki Koskenkylä

Bank of Finland

Elina Berghäll

VATT Institute for Economic Research

Ilkka Mellin

Aalto University

Sami Miettinen

Independent

Jukka Ala-Peijari

Independent

Stefan Törnqvist

Independent

Date Written: August 23, 2017

Abstract

This article provides thoughts and guidelines on how a country could exit from the Economic and Monetary Union (EMU) and its currency the euro. We take the hypothetical exit of Finland as a concrete example. Although there is a way out of the euro for Finland and other member countries, exit would not be easy, nor would its short-term costs be known beforehand with any clear margin. We find the lack of a domestic payments system and uncertainty concerning the redenomination costs to be the biggest risks associated with the cost of Finland’s exit. Still, the costs of Finland’s exit need not be very large, around 10 billion euros in the best-case scenario, but we also acknowledge a very costly scenario for the exit. Any member country considering exit from the euro should weigh the short-term costs of an exit against the possible long-run benefits of having a domestic currency.

Keywords: Eurozone, Payment System, Domestic Currency, Exchange Rate

JEL Classification: E61, F45, H12

Suggested Citation

Malinen, Tuomas and Nyberg, Peter and Koskenkylä, Heikki and Berghäll and Mellin, Ilkka and Miettinen, Sami and Ala-Peijari, Jukka and Törnqvist, Stefan, How to Leave the Eurozone: The Case of Finland (August 23, 2017). Available at SSRN: https://ssrn.com/abstract=3024551

Tuomas Malinen (Contact Author)

HECER, University of Helsinki ( email )

Helsinki, 00014
Finland

Peter Nyberg

Independent ( email )

No Address Available

Heikki Koskenkylä

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

Elina Berghäll

VATT Institute for Economic Research ( email )

Arkadiankatu 7
P.O Box 1279
Helsinki, FIN-00531
Finland

HOME PAGE: http://www.vatt.fi

Ilkka Mellin

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland

Sami Miettinen

Independent ( email )

No Address Available

Jukka Ala-Peijari

Independent ( email )

No Address Available

Stefan Törnqvist

Independent ( email )

No Address Available

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