There are few euro-zone countries with more solid accounts than Finland, which kept its deficit within the European Union’s 3 percent threshold even as its economy contracted 8.4 percent in 2009. Finland stuck by its agreements on the euro, unlike most other members of the currency, and can now name its price for bailing out Spanish banks: the Helsinki government would like shares in Spanish banks as a guarantee on funds it’s contributing toward their bailout, Kati Pohjanpalo reports.
The option of taking shares as collateral on loans is being discussed with Spain, Finnish Finance Minister Jutta Urpilainen said on state-owned broadcaster YLE TV1 yesterday. The country’s share of Spain’s 100 billion-euro bank bailout is about 2 percent, and Finland is seeking collateral that will cover 40 percent of that – or about 800 million euros – based on the risk estimates of Standard & Poor’s, Urpilainen said.
The Finns have been exceptional in several ways throughout the crisis – it’s not just their accounting that is more solid than most. They have made very clear, while demanding more guarantees than any other euro member on bailout funds, that they are totally committed to the euro. They have shown that a refusal to pay others’ debts is compatible with defending the euro – and have been creative in finding ways to preserve their solid accounts while backing the most profligate members of the bloc.
The Finnish way of handling the crisis has been very pragmatic, and in the worst case will land them with a bundle of shares in Spanish banks. They continue to show that the shortcomings of the euro zone can be overcome by sound policy.