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 marks, 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.

Mk 20 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.

The mark was introduced in 1860[1] by the Bank of Finland, replacing the rouble at a rate of four marks to one rouble. Senator Fabian Langenskiöld is called "father of the mark". In 1865, the mark was separated from the Russian rouble 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 mark, both the Swedish riksdaler and rouble were used side-by-side for a time.

Up until World War I, the value of the mark fluctuated within +23%/−16% of its initial value, but with no trend. The mark suffered heavy inflation (91%) during 1914–18.[4] Gaining independence in 1917, Finland returned to the gold standard from 1926 to 1931.[3] Prices remained stable until 1940.[4] but the mark 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 mark was replaced by a new mark, equivalent to 100 old marks.

Finland joined the Bretton Woods Agreement in 1948. The value of the mark was pegged to the dollar at Mk 320 = US$1, which became New Mk 3.20 = US$1 in 1963 and devalued to Mk 4.20 = 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 mark 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 mark 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 mark 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 mark was floated.[6] Its value immediately decreased 13% and the inflated nominal prices converged towards German levels. In total, the value of the mark 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 mark'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 mark. Nokia, formerly traded in mark, was in 2000 the European company with the highest market capitalization.[8]

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

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

In this final banknote series, Bank of Finland used a photograph of Väinö Linna on the Mk 20 note without permission from copyright holders. This was only revealed after several million notes were in use. The Bank paid Mk 100,000 (€17,000) compensation to the rights holders.[12]

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 Mk 10, K. J. Ståhlberg on the Mk 50, J. V. Snellman on the Mk 100 and, controversially, Urho Kekkonen on the Mk 500, added in 1975 to commemorate the president's 75th birthday.[13] 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 Mk 10 note, ending up with something resembling a mouse, said to be the only animal illustration in the entire series.

Finnish Mk 5,000 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.[14]

By the end of 2001, Finland was a relatively cashless society. Most transactions were paid either using the Mk 100 banknote or by debit card. There were 4 million banknotes apiece of the Mk 500 and Mk 1,000 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.[15] 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)