Finland would do itself a disservice by withdrawing from the euro, says Kenneth Rogoff, a professor of economics at Harvard University and former chief economist at the International Monetary Fund (IMF).
“Finland is a country where the fundamentals are okay. If it were to leave the euro alone, it would be a dangerous decision. Why would Finns want to do that?” he stated in an interview with Uusi Suomi in Stockholm.
Rogoff revealed that his students have devised a number of scenarios for how an exit from the monetary union could unfold. “All of the [scenarios] indicate that it'd be a messy divorce. What would happen to bank accounts and mortgages? The technical transition back to a national currency alone would be a very difficult and laborious process,” he said.
He admitted, on the other hand, that the situation would be entirely different if Germany surprised everyone by deciding to abandon the single shared currency. “I think that'd be a good time also for Finland to leave the euro.”
Rogoff is nonetheless somewhat pessimistic about the future of the single shared currency and estimates that some of the eurozone countries will have abandoned the currency one-and-a-half decades from now.
“One of such countries will be Italy,” he predicted.
He also reminded that leaving the euro should not be compared to the United Kingdom's withdrawal from the European Union, the realisation of which he considers very unlikely. “They don't know what they're doing. Brexit will be very painful, if they really see it through. I doubt it'll happen, it's such an absurd idea,” said Rogoff.
The European Union, he pointed out, is a union of nation states and a trade agreement as opposed to a monetary union.
“Walking away from trade agreements is very difficult. The Brexit negotiations alone will take five years. I personally think that it'll take another five years to carry out the Brexit in practice,” he estimated.
Aleksi Teivainen – HT
Photo: Philippe Huguen – AFP/Lehtikuva
Source: Uusi Suomi