What would be the impact of a return to the franc?


More and more players are now calling for the dissolution of the euro and, thus, a return to the franc. Although the strength of the euro is positive on various levels, an overpriced euro reduces the competitiveness of French industry. But if the country returned to the franc, what would be the real impact? Zoom on the subject

Negative impacts

    1. A stock market devaluation

A return to the franc would automatically lead to a devaluation of this currency on the stock market. In this situation, traders could, indeed, change their attitude towards this new currency and will be much more sceptical about the euro. Investments are necessarily decreasing in volume and, in one way or another, the franc would then lose value against other currencies.

    1. Unavoidable inflation

Due to this loss of value on the stock market, the return to the franc would have an impact on the price of daily life. The costs of consumer products would automatically be much higher in the country, given an unavoidable decline in the standard of living.

    1. A difficult import

In the event that France abandons the euro to return to the franc, the country would also be affected by import problems. With a weak currency at the international level, it would be difficult for it to import. This purchasing problem concerns in particular energies such as gas and oil.

    1. A decline in the value of savings

As the French are large savers, the devaluation of their currency would also impact the value of their economy. An uprising could then occur, with significant consequences for some organizations.

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Positive impacts

    1. An ease of export

However, a return to the franc would not only have negative consequences. In particular, French industry could gain more competitiveness on the international market. Indeed, with reduced production costs, the results would automatically be more tangible.

    1. A reduction in taxes

French citizens, on the other hand, could benefit from a tax cut after a return to the franc. A weaker currency simply cannot allow too high taxes.

    1. Easier debt discharge

The devaluation of a currency can also be a way to erase its domestic debt more easily. By paying off its domestic debt with this devalued currency, the country can then boost its national economy.

    1. A more independent economy

And of course, a return to the franc would automatically mark a new economic independence for France. By holding its own currency, the government could establish its own economic policy without having to comply with the rules of a common currency.

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