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

Andreas Fischer (), Thomas Jordan and Caesar Lack

No 3156, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Seigniorage; Swiss national bank; The euro (search for similar items in EconPapers)
JEL-codes: E58 E62 H22 (search for similar items in EconPapers)
Date: 2002-01
New Economics Papers: this item is included in nep-eec, nep-ifn and nep-mac
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Citations: View citations in EconPapers (6)

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