IDEAS home Printed from https://ideas.repec.org/a/ses/arsjes/2002-i-4.html
   My bibliography  Save this article

Giving Up the Swiss Franc:Some Considerations on Seigniorage Flows under EMU

Author

Listed:
  • Andreas M. Fischer
  • Thomas J. Jordan
  • Caesar P. Lack

Abstract

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.

Suggested Citation

  • Andreas M. Fischer & Thomas J. Jordan & Caesar P. Lack, 2002. "Giving Up the Swiss Franc:Some Considerations on Seigniorage Flows under EMU," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 138(I), pages 61-82, March.
    • Handle: RePEc:ses:arsjes:2002-i-4
    as

    Download full text from publisher

    File URL: http://www.sjes.ch/papers/2002-I-4.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Casella, Alessandra, 1992. "Participation in a Currency Union," American Economic Review, American Economic Association, vol. 82(4), pages 847-863, September.
    3. Hans-Werner Sinn & Holger Feist, 1997. "Eurowinners and Eurolosers: The Distribution of Seignorage Wealth in EMU," CESifo Working Paper Series 134, CESifo.
    4. 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.
    5. Seitz, Franz, 1995. "The circulation of Deutsche Mark abroad," Discussion Paper Series 1: Economic Studies 1995,01e, Deutsche Bundesbank.
    6. 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.
    7. Kenneth Rogoff, 1998. "Blessing or curse? Foreign and underground demand for euro notes," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 13(26), pages 262-303.
    8. 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.
    9. Lorenzo Bini Smaghi & Daniel Gros, 2000. "Open Issues in European Central Banking," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-333-98188-7, March.
    10. Ruth A. Judson & Richard D. Porter, 1996. "The location of U.S. currency: how much is abroad?," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 82(Oct), pages 883-903, October.
    11. Roberto Chang, 2000. "Dollarization: a scorecard," Economic Review, Federal Reserve Bank of Atlanta, vol. 85(Q3), pages 1-12.
    12. Ernst Baltensperger & Thomas J. Jordan, 1998. "Seigniorage and the Transfer of Central Bank Profits to the Government," Kyklos, Wiley Blackwell, vol. 51(1), pages 73-88, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sandrine Levasseur, 2004. "Why not euroisation?," Revue de l'OFCE, Presses de Sciences-Po, vol. 91(5), pages 121-156.
    2. Attila Csajbók (ed.) & Ágnes Csermely (ed.), 2002. "Adopting the euro in Hungary: expected costs, benefits and timing," MNB Occasional Papers 2002/24, Magyar Nemzeti Bank (Central Bank of Hungary).
    3. Beat Spirig & Rolf Weder, 2008. "To Wait or Not to Wait: Swiss EU-Membership as an Investment under Uncertainty," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 144(I), pages 85-114, March.
    4. Spirig, Beat & Weder, Rolf, 2004. "To Wait or Not to Wait: Swiss EU-Membership as an Investment under Uncertainty," Working papers 2004/10, Faculty of Business and Economics - University of Basel.
    5. repec:hal:spmain:info:hdl:2441/3361 is not listed on IDEAS
    6. repec:spo:wpmain:info:hdl:2441/3361 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kamin, Steven B. & Ericsson, Neil R., 2003. "Dollarization in post-hyperinflationary Argentina," Journal of International Money and Finance, Elsevier, vol. 22(2), pages 185-211, April.
    2. Zhang, Cathy, 2014. "An information-based theory of international currency," Journal of International Economics, Elsevier, vol. 93(2), pages 286-301.
    3. Ainura Uzagalieva, 2005. "Fiscal Consequences of Monetary Integration within a Common Economic Area: The Case of Belarus, Kazakhstan and Russia," Post-Communist Economies, Taylor & Francis Journals, vol. 17(4), pages 399-424.
    4. Hans-Werner Sinn & Holger Feist, 2000. "Seignorage Wealth in the Eurosystem: Eurowinners and Eurolosers Revisited," CESifo Working Paper Series 353, CESifo.
    5. Vedran Sosic & Michael Faulend, 2002. "Dollarisation and the Underground Economy: Accidental Partners?," Occasional paper series 15, Institute of Public Finance.
    6. Gene Amromin & Sujit Chakravorti, 2007. "Debit card and cash usage: a cross-country analysis," Working Paper Series WP-07-04, Federal Reserve Bank of Chicago.
    7. Hans-Werner Sinn & Holger Feist, 2000. "The accidental redistribution of seignorage wealth in the Eurosystem," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(03), pages 27-29, October.
    8. Seitz, Franz, 2007. "A simple way to capture transaction balances," Economics Letters, Elsevier, vol. 95(2), pages 230-233, May.
    9. Hans-Werner Sinn & Frank Westermann, 2001. "Why Has the Euro Been Falling? An Investigation into the Determinants of the Exchange Rate," NBER Working Papers 8352, National Bureau of Economic Research, Inc.
    10. Daniel Gros, 2004. "Profiting from the Euro? Seigniorage Gains from Euro Area Accession," Journal of Common Market Studies, Wiley Blackwell, vol. 42(4), pages 795-813, November.
    11. Hans-Werner Sinn & Frank Westermann, 2001. "Why Has the Euro Been Falling?," CESifo Working Paper Series 493, CESifo.
    12. Brian M. Doyle, 2000. "\"Here, dollars, dollars ...\"estimating currency demand and worldwide currency substitution," International Finance Discussion Papers 657, Board of Governors of the Federal Reserve System (U.S.).
    13. M. Borchert, 1999. "The euro and the large banks' behaviour within the EMU – Entrepreneurial strategies and monetary policy," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 52(208), pages 39-68.
    14. repec:bla:jcmkts:v:45:y:2007:i::p:999-1010 is not listed on IDEAS
    15. Camera, Gabriele, 2001. "Dirty money," Journal of Monetary Economics, Elsevier, vol. 47(2), pages 377-415, April.
    16. Stephanie Schmitt-Groh√ & Mart√Çn Uribe, 2012. "Foreign Demand for Domestic Currency and the Optimal Rate of Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(6), pages 1207-1224, September.
    17. Sinn Hans-Werner, 2019. "Der Streit um die Targetsalden : Kommentar zu Martin Hellwigs Artikel „Target-Falle oder Empörungsfalle?“," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 20(3), pages 170-217, September.
    18. Edgar L Feige, 2003. "Dynamics of Currency Substitution, Asset Substitution and De facto Dollarisation and Euroisation in Transition Countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 45(3), pages 358-383, September.
    19. Rösl, Gerhard & Seitz, Franz, 2023. "Uncertainty, politics, and crises: The case for cash," IMFS Working Paper Series 186, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    20. repec:spo:wpecon:info:hdl:2441/10059 is not listed on IDEAS
    21. Holger Feist, 2001. "The Enlargement of the European Union and the Redistribution of Seigniorage Wealth," CESifo Working Paper Series 408, CESifo.
    22. Rösl, Gerhard & Seitz, Franz, 2021. "Cash and crises: No surprises by the virus," IMFS Working Paper Series 150, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).

    More about this item

    Keywords

    Seigniorage; Swiss National Bank; the euro;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ses:arsjes:2002-i-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kurt Schmidheiny (email available below). General contact details of provider: https://edirc.repec.org/data/sgvssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.