The corporate benefits of the euro:
Finnish companies cannot live without a common currency
Finnish Institute of International Affairs
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The costs of euro membership have been a topic of lively political
debate in recent years, and they have received ample media attention. In
contrast, numerical estimates on the benefits of the euro have been
While the corporate benefits of the euro have been widely documented in
the academic literature, the practical value of those publications has
suffered from their technical complexity.
Several experts have linked the fast growth of corporate bond markets in
Europe since 1999 to the introduction of the euro. With growing arm’s
length credit markets in Europe, companies’ access to financing has
Companies from countries with small and unstable legacy currencies, such
as Finland, have benefited comparably more from the widened financial
The cost savings due to the lowered cost of debt are non-trivial. For a
set of large Finnish companies alone, the narrowing spread between their
interest expenses and those of their German counterparties has resulted
in after-tax cost savings of over €400 million each year.
Sweden, Norway, and Denmark may have received some free-rider benefits
while staying outside the currency union. However, it is difficult to
estimate whether such benefits would have been obtainable had Finland
chosen to keep its own currency.
Reductions in the cost of financing should increase companies’ ability
to invest, and thus these savings are likely to have multiplicative
effects on the economy for years to come.