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EU Economics

Eurozone EXODUS – Economists reveal THIS is how easy it is to quit EU’s failing currency

THE EUROZONE could be facing an exodus after a new report revealed just how easy and beneficial it would be for member states to quit the European Union (EU)’s failing single currency.

Using a hypothetical Finnish exit of the eurozone, the report detailed the surprisingly low cost of quitting the  and highlighted the benefits of having a domestic currency.And economists suggested the best way to leave the euro would be if a members joined together in secret to ambush the  and quit en masse, which would prevent spiteful punishment.

Although the report’s authors stressed it was politically neutral – adding it was neither advocating or discouraging an exit but merely highlighting the need to investigate the issue – it nonetheless threw light on the positives of leaving the eurozone.

The report, entitled ‘How to leave the eurozone: The Case for Finland’, said an exit could lead to “noticeable benefits” for the country.

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EU CRISIS: A new report has revealed how easy it is to quit the eurozone


They began by stating the cost of quitting the Eurozone “need not be very large”, perhaps just £9.1billion (€10bn), and urged EU members to “weigh the short-term costs of an exit again the possible long-term benefits of having a domestic currency”.And they said having their own currency would improve the “democratic control” of the country.

The report, put together by seven Finnish economists, said: “After the Greek crisis in the Summer of 2015, it has been silently acknowledged that a country can abandon the euro.

“[In some areas] countries have had persistent problems with the implementation of structural measures, e.g., improving economic structures, and fiscal and other economic policies.”

Report

Previous studies into countries quitting currency unions, they said, found exits “have not produced any noticeable short-term fluctuations in key economic variables including GDP, investments and government budgets”.The report continued: “In the long run, Finland’s exit from the euro could lead to noticeable benefits. If redenomination was successful, her foreign net position could, over time, improve considerably.

“Finland’s euro membership has provided Finnish small and medium sized businesses access to European goods and financial markets without exchange rate risk. Still, there is no point in denying the benefits Finland and her companies would gain from a rapid adjustment to relative cost shocks through its own floating currency.

“The benefits of not being a part of the euro area also include stepping out from the tendency toward increasing political federalism and reclaiming democratic control over domestic affairs.”

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The report said quitting the eurozone was cheaper and more beneficial than many anticipated


If multiple countries quit the currency together, this would reduce the shared impact and also diminish the extent to which the EU could punish countries who dared to cut ties, the authors said.The report said: “Countries and country groups sufficiently large to destabilise the EU are likely to be provided with the option of continued access to joint systems.

“Small countries may not be offered such terms, particularly if lessons need to be taught to dissuade followers.

“[But] legally, there is no clause in European treaties allowing the expulsion of a country from the EU or the EMU.”

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The report said the Greek crisis made many EU states aware of the benefits of leaving the EU


The report concluded by urging the Finnish government, along with other EU governments, to seriously look into quitting the eurozone – if only to be suitably prepared in the case of an inevitable collapse.It said: “The intention of this report is not to argue whether Finland should continue her membership in the euro. We have envisaged one possible path out of the euro, which may be considered an alternative to the ever louder calls for further integration. It is also a sign of great ignorance to say that political constructions like the euro cannot fail. At some point, they always will, and political moods dictating their fate can change surprisingly quickly, as we have seen recently.

“Benjamin Franklin was quoted as saying: By failing to prepare, you are preparing to fail. After the near miss exit of Greece, this should be the guiding principle of every member of the European common currency. If (when) the breakup or exit of a country or countries from the euro occurs, those not prepared will be the hardest hit. The authors of this report hope that Finland will not be among them.”

http://www.express.co.uk/news/world/844780/eurozone-eu-european-union-quit-currency-report

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