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Giving Up the Swiss Franc: Some Consideration on Seigniorage Flows Under EMU

  • Fischer, Andreas M
  • Jordan, Thomas J.
  • Lack, Caeser P

The monetary debate in Switzerland about joining the European Monetary Union (EMU) has primarily focused on the gains in terms of transaction costs and lower uncertainty from using a common currency versus the sacrifice of giving up an independent monetary policy. This Paper considers an additional factor in this debate, namely the decrease of seigniorage for Switzerland in the case of joining EMU. Our calculations reveal that this loss of revenues is not trivial. Swiss currency holdings per capita are among the largest in the world. They are estimated to be 5'000 Swiss francs per capita in 2002. If Switzerland joined EMU at that time, about half of the seigniorage stemming from the previous Swiss franc currency circulation would be redistributed among the EMU member countries in the worst case. Our results indicate that Switzerland would be the third largest contributor of seigniorage in absolute terms after Germany and Spain. In relative terms, the Swiss per capita contribution would be more than four times as high as the German contribution.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3156.

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Date of creation: Jan 2002
Date of revision:
Handle: RePEc:cpr:ceprdp:3156
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  1. Pablo E. Guidotti & Carlos A. Rodriguez, 1992. "Dollarization in Latin America: Gresham's Law in Reverse?," IMF Staff Papers, Palgrave Macmillan, vol. 39(3), pages 518-544, September.
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  5. Sinn, Hans-Werner & Feist, Holger, 1997. "Eurowinners and Eurolosers: The distribution of seigniorage wealth in EMU," Munich Reprints in Economics 19567, University of Munich, Department of Economics.
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  7. Dooley, Michael, 1998. "Speculative Attacks on a Monetary Union?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 3(1), pages 21-26, January.
  8. Sinn, Hans-Werner & Feist, Holger, 1997. "Eurowinners and Eurolosers: The distribution of seigniorage wealth in EMU1," European Journal of Political Economy, Elsevier, vol. 13(4), pages 665-689, December.
  9. Baltensperger, Ernst & Jordan, Thomas J, 1998. "Seigniorage and the Transfer of Central Bank Profits to the Government," Kyklos, Wiley Blackwell, vol. 51(1), pages 73-88.
  10. Seitz, Franz, 1995. "The circulation of Deutsche Mark abroad," Discussion Paper Series 1: Economic Studies 1995,01e, Deutsche Bundesbank, Research Centre.
  11. Ernst Baltensperger & Thomas J. Jordan, 1997. "Principles of Seigniorage," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 133(II), pages 133-152, June.
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