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

32 Pages Posted: 14 Feb 2002

See all articles by Andreas M. Fischer

Andreas M. Fischer

Swiss National Bank; Centre for Economic Policy Research (CEPR)

Thomas Jordan

Swiss National Bank

Caesar P. Lack

Swiss National Bank

Date Written: January 2002

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 5000 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.

Keywords: Seigniorage, Swiss National Bank, the euro

JEL Classification: E58, E62, H22

Suggested Citation

Fischer, Andreas M. and Jordan, Thomas and Lack, Caesar P., Giving Up the Swiss Franc: Some Consideration on Seigniorage Flows Under Emu (January 2002). Available at SSRN: https://ssrn.com/abstract=300447

Andreas M. Fischer (Contact Author)

Swiss National Bank ( email )

Borsenstrasse 15
CH-8022 Zurich
Switzerland
+41 1 631 3294 (Phone)
+41 1 631 3901 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Thomas Jordan

Swiss National Bank ( email )

Borsenstrasse 15
CH-8022 Zurich
Switzerland

Caesar P. Lack

Swiss National Bank ( email )

Borsenstrasse 15
CH-8022 Zurich
Switzerland
+4 11 631 3111 (Phone)
+4 11 631 3911 (Fax)

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