Finnish markka

The name "markka" was based on a medieval unit of weight. Both "markka" and "penni" are similar to words used in Germany for that country's former currency, based on the same etymological roots as the Deutsche Mark and pfennig.

Although the word "markka" predates the currency by several centuries, the currency was established before being named "markka". A competition was held for its name, and some of the other entries included "sataikko" (meaning "having a hundred parts"), "omena" (apple) and "suomo" (from "Suomi", the Finnish name for Finland).

With numbered amounts of markkaa, the Finnish language does not use plurals but partitive singular forms: "10 markkaa" and "10 penniä" (the nominative is penni). In Swedish, the singular and plural forms of "mark" and "penni" are the same.

20 Mk banknote issued in 1862 for the Grand Duchy of Finland. The banknote's obverse depicts the coat of arms of Finland on a Russian double-headed eagle, and was personally signed by the director and the cashier of the Bank of Finland. The text on the obverse is in Swedish, whereas the reverse is primarily in Russian and Finnish.

5 Mk banknote of the Grand Duchy of Finland (1897)

500 Mk banknote of the Grand Duchy of Finland (1909)

The markka was introduced in 1860[1] by the Bank of Finland, replacing the Russian ruble at a rate of four markkaa to one ruble. Senator Fabian Langenskiöld is called "father of the markka". In 1865, the markka was separated from the ruble and tied to the value of silver.[2] From 1878 to 1915, Finland adopted the gold standard of the Latin Monetary Union.[3] Before the markka, both the Swedish riksdaler and ruble were used side-by-side for a time.

Up until World War I, the value of the markka fluctuated within +23%/−16% of its initial value, but with no trend. The markka suffered heavy inflation (91%) during 1914–18.[4] Gaining independence in 1917, Finland returned to the gold standard from 1926 to 1931.[3] While prices remained stable until 1940,[4] the markka suffered heavy inflation (17% annually on average[4]) during World War II and again in 1956–57 (11%).[4] In 1963, in order to reset the inflation, the markka was redenominated and replaced by a new markka worth 100 old markkaa.

Finland joined the Bretton Woods Agreement in 1948. The value of the markka was pegged to the dollar at 320 Mk = US$1, which became New 3.20 Mk = US$1 in 1963 and devalued to 4.20 Mk = US$1 in 1967. After the breakdown of the Bretton Woods agreement in 1971, a basket of currencies became the new reference. Inflation was high (over 5%) during 1971–85.[4] Occasionally, devaluation was used, 60% in total between 1975 and 1990, allowing the currency to more closely follow the depreciating US dollar than the rising German mark. The paper industry, which mainly traded in US dollars, was often blamed for demanding these devaluations to boost their exports. Various economic controls were removed and the market was gradually liberalized throughout the 1980s and the 1990s.

The monetary policy called "strong markka policy" (vahvan markan politiikka) was a characteristic feature of the 1980s and early 1990s. The main architect of this policy was President Mauno Koivisto, who opposed floating the currency and devaluations. As a result, the nominal value of the markka was extremely high, and in the year 1990, Finland was nominally the most expensive country in the world according to OECD's Purchasing Power Parities report.[5]

Koivisto's policy was maintained only briefly after Esko Aho was elected Prime Minister. In 1991, the markka was pegged to the currency basket ECU, but the peg had to be withdrawn after two months with a devaluation of 12%. In 1992, Finland was hit by a severe recession, the early 1990s depression in Finland. It was caused by several factors, the most severe being the incurring of debt, as the 1980s economic boom was based on debt. Also, the Soviet Union had collapsed, which brought an end to bilateral trade, and existing trade connections were severed. The most important source of export revenue, Western markets, were also depressed during the same time, in part due to the war in Kuwait. As a result, by some opinions years overdue, the artificial fixed exchange rate was abandoned and the markka was floated.[6] Its value immediately decreased 13% and the inflated nominal prices converged towards German levels. In total, the value of the markka had decreased 40% as a result of the recession. Also, as a result, several entrepreneurs who had borrowed money denominated in foreign currency suddenly faced insurmountable debt.[7]

Inflation was low during the markka's independent existence as a floating currency (1992–1999): 1.3% annually on average.[4] The markka was added into the ERM system in 1996 and then became a fraction of the euro in 1999, with physical euro money arriving later in 2002. It has been speculated that if Finland had not joined the euro, market fluctuations such as the dot-com bubble would have reflected as wild fluctuations in the price of the markka. Nokia, formerly traded in markka, was in 2000 the European company with the highest market capitalization.[8]

This section covers the last design series of the Finnish markka, designed in the 1980s by Torsten Ekström and Finnish designer Erik Bruun and issued in 1986.[10]

Denomination	Value in euros (€)	Image	Main colour	Obverse	Reverse	Remark
10 Mk	€1.68		Blue	Paavo Nurmi (1897–1973), athlete and Olympic winner	Helsinki Olympic Stadium	Discontinued upon the introduction of the 20 Mk note in 1993.
20 Mk	€3.36		Aqua	Väinö Linna (1920–1992), author and novelist	Tammerkoski	Introduced in 1993 to replace the 10 Mk note.
50 Mk	€8.41		Brown	Alvar Aalto (1898–1976), architect	Finlandia Hall
100 Mk	€16.82		Green	Jean Sibelius (1865–1957), composer	Swans
500 Mk	€84.09		Red	Elias Lönnrot (1802–1884), compiler of Kalevala	Forest hiking trail
1,000 Mk	€168.19		Purple	Anders Chydenius (1729–1803), priest and statesman	Kuninkaanportti gate in Suomenlinna
5,000 Mk[11]	€840.94	[12]	Pink	Mikael Agricola (1510–1557), priest and linguist (based on the statue by Oskari Jauhiainen in front of Turku Cathedral)	Turku Cathedral	The note was never introduced. It was only a backup plan for inflation.[13]

In this final banknote series, the Bank of Finland used a photograph of Väinö Linna on the 20 Mk note without permission from copyright holders. This was only revealed after several million notes were in use. The Bank paid 100,000 Mk (€17,000) compensation to the rights holders.[14]

The second-to-last banknote design series, designed by Tapio Wirkkala, was introduced in 1955 and revised in the reform of 1963. It was the first series to depict actual specific persons rather than allegorical figures. These included Juho Kusti Paasikivi on the 10 Mk, K. J. Ståhlberg on the 50 Mk, J. V. Snellman on the 100 Mk and, controversially, Urho Kekkonen on the 500 Mk, added in 1975 to commemorate the president's 75th birthday.[15] Unlike Erik Bruun's series, this series did not depict any other real-life subjects, but only abstract ornaments in addition to the depictions of people. A popular joke at the time was to cover Paasikivi's face except for his ear and back of the head on the 10 Mk note, ending up with something resembling a mouse, said to be the only animal illustration in the entire series.

Finnish 5,000 Mk markka banknotes (1940), seen in OP Financial Group's museum in Vallila, Helsinki

The still-older notes, designed by Eliel Saarinen, were introduced in 1922. They also depicted people, but these were generic men and women, and did not represent any specific individuals. The fact that these men and women were depicted nude caused a minor controversy at the time.[16]

By the end of 2001, Finland was a relatively cashless society. Most transactions were paid either using the 100 Mk banknote or by debit card. There were 4 million banknotes apiece of the 500 Mk and 1,000 Mk denomination banknotes for a country with a population of over 5 million people. There were about 19 banknotes per individual of the smaller denomination, adding up to €241 per inhabitant. For the introduction of the euro, ECB produced €8,020 million in banknotes before the changeover.

During the first weeks of 2002, Finland's replacement of previous national banknotes with euro banknotes was among the fastest in the euro area. Of the cash payments, three-fourths were paid in euro already at the end of the first changeover week.[17] Coins and banknotes that were legal tender at the time of the markka's retirement could be exchanged for euros until 29 February 2012. Today, the only value that markka coins and banknotes have is their value as collectibles.

• Bank of Finland
• Scandinavian Monetary Union
• Finnish euro coins
• Economy of Finland

• Overview of markka from the BBC
• Historical Finnish banknotes and coins at the Bank of Finland
• Main outlines of Finnish history-thisisFINLAND
• History of the Finnish Markka (1860–2002)
• Historical banknotes from Finland (in English and German)