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Finland could leave euro zone, hinted the finance minister. She said that Finland will prefer to leave the zone rather than pay the debt of others.

Also other statements are not so supportive: Sayings such as “solidarity has limits” are aimed at the Finnish public who is reluctant to help the southern states. Finland stood out by requesting collateral from Greece and then from Spain, in case the programs fail in these countries.

The Finnish Prime Minister also said that the ESM has preferred creditor status – a preferred status for the ESM, or seniority, is exactly the thing that scared investors after the Greek restructuring. The ECB wants to address the issue of seniority, and Finland is not on the same page.

How real is the threat?

Here are some points to consider:

  • Finland is in the northeast corner of the euro-zone and has a lot of trade with non-euro-zone countries such as Russia, Norway, Sweden and Poland. So, perhaps it doesn’t make sense for Finland to “Hang itself to the euro” as they said.
  • Finland is the euro-zone country with a perfect AAA rating that didn’t receive a negative outlook by Moody’s. This adds to the confidence of the northern country.
  • Contrary to Germany, Finland has low costs of leaving the zone, making such a move not only positive for the Finnish population but also not disastrous for the economy.
  • On the other hand, Finland did approve the recent agreements and its representative in the central bank did support Draghi’s conditional QE program and didn’t side with Germany on this topic.

It will be interesting to follow Finland’s statements and actions during August.

Further reading: Spain Opens Door to Asking for Help