YES WE SHOULD!

Last week I attended an open lecture by Harry Flam, Professor of International Economics at Stockholm University. The theme of the lecture was “Should Sweden introduce the euro?”.

In a convincing way Mr. Flam presented his view on the question, which is based on the research that has been conducted on the topic for the past ten years. Although he did emphasize that "in principal there is no simple answer to the question" he also emphasized the fact that the past ten years can provide valuable guidance. He illustrated the experiences from within and outside the euro area concerning:

• Monetary Policy
• Financial Policy
• Trade and Investment
• Financial integration and Interest rates

The essence of his conclusions:
1. It is mainly an issue of weighing the losses of an independent monetary policy against the winnings of an increased financial integration, increased trade and increased foreign direct investments in Sweden.
2. Trade would increase approximately by 12% and likely bring increased FDI in Sweden.
3. Sweden’s economy is so closely knitted with the euro area that having an independent monetary policy has not been necessary. In addition, the need for an independent monetary policy will most likely be reduced in the future.

Harry Flam finally concluded by stating that “Sweden would therefore likely win financially/economically by joining the monetary union”.

So...based on the available research of the past ten years, it seems reasonable to assume that the answer to the question “Should Sweden introduce the euro?” ought to be: YES WE SHOULD!
/Robert