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Setelinleikkaus: When Finns snipped their cash in half to curb inflation
On the last day of 1945, with World War II finally behind it, Finland's government announced a new and very strange policy. All Finns were r...
Source: Hallitus kansan kukkarolla, by Antti Heinonen Setelinleikkaus was Finland's particular response to the post-War European problem of "monetary overhang," described in a 1990 paper by economists Rudi Dornbusch and Holger Wolf. In a recent retrospective on Operation Gutt, the NBB describes the reform as a gamble that paid off over time, eventually inspiring the " Belgian Economic Miracle", a period of low inflation and fast growth lasting from 1946-1949. To rein in a jump in inflation, central bankers will require commercial banks and companies like PayPal to impose temporary quantitative freezing on their clients' accounts, but unlike Finland's 1945 blockade, the authorities will be able to rapidly and precisely define the criteria, say by allowing for spending on necessities — food, electricity, and gas— while embargoing purchases of luxury cars and real estate.
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