---
title: "What may not be said? | Vesa Kanniainen | Negotiator 370"
summary: "Professor emeritus Vesa Kanniainen works through the historical failures of monetary policy and the structural faults of the euro. The episode's central claim has two parts: central banks are participants in economic instability rather than only its stabilisers, and research on the euro has gone undone in Finland partly through self-censorship. Also covered: the incentive problem in banking and too-big-to-fail, the ERM crisis and George Soros's attack, the credibility of the Stability and Growth Pact, and Miettinen's own ECU-2 proposal."
datePublished: 2026-02-04
dateModified: 2026-02-04
originalLang: en
section: economy
sections: ["economy","research"]
authors: ["Sami Miettinen"]
tags: ["Neuvottelija","EP370","Sami Miettinen","Vesa Kanniainen","Rahapolitiikka","Euro","Keskuspankit","Pankkikriisit","Talousteoria","ECU-2"]
canonical: https://www.neuvottelija.com/ai/ep370-mita-ei-saa-sanoa-vesa-kanniainen/
---
# What may not be said? | Vesa Kanniainen | Negotiator 370

# What may not be said? | Vesa Kanniainen | Negotiator 370

> **Summary:**
> Professor emeritus **Vesa Kanniainen** works through the historical failures of monetary policy
> and the structural faults of the euro.
>
> The central claim has two parts. First, **central banks are participants in economic
> instability** rather than only its stabilisers. Second — and this is where the title comes
> from — **research on the euro has gone undone in Finland**, partly because the subject has been
> politically uncomfortable.

---

## A note on reading this

**This article is written from the episode's published description and its timestamped chapter
list. There is no transcript**, so it contains no direct quotations.

- **The episode takes a position and says so.** The description notes that *no woolly jumper
  economists were troubled in the making of this episode*. This is one school's view of the
  euro area's architecture, not a survey of the literature.
- **The self-censorship claim is a claim.** Kanniainen's view of gaps in the Bank of Finland's
  research is presented in the episode as an assessment. This article marks it as one and does
  not corroborate it.
- **The host presents his own proposal.** Miettinen's **ECU-2** model is his own, and it gets a
  sympathetic hearing. That is not an independent assessment.

---

## 1. Why the title is "what may not be said"

The opening (00:00–05:35) links two things: **bubbles created by monetary policy** and **the
Bank of Finland's inability to analyse the euro**.

The claim is institutional rather than conspiratorial. When a central bank is at once the
executor of monetary policy and its researcher, its research agenda acquires areas that are
uncomfortable to study. Kanniainen speaks of **self-censorship** — no prohibition is needed if a
subject is simply never chosen.

As a counter-example the episode raises **Urho Lempinen** and the understanding that floating
exchange rates work: a view that was in the minority at the time and proved durable.

---

## 2. The instability of capitalism and bank incentives

The second section (08:30–17:11) is economic history from the 1920s onward, and its conclusion is
theoretical.

**Crises are not deviations but a property of the system.** Lending is procyclical: collateral
values rise, lending expands, collateral values rise further. The same mechanism runs in reverse
on the way down, which is precisely why a banking system amplifies the cycle rather than damping
it.

Attached to this is the clearest single argument in the episode: **rescue operations and the
taxpayer's role**, together with **too big to fail**. When losses are private and rescues public,
the price of risk-taking is wrong. This is not a question of bankers' morality but of incentives,
and the incentive is built into the system.

---

## 3. The euro's structural faults

The third section (17:11–23:00) is the core.

**The ERM and George Soros's attack in 1992** is a deliberate starting point. A fixed but
adjustable exchange rate system is a one-way bet for a speculator: if the peg holds you lose the
interest differential; if it breaks you win a great deal. The euro removed that problem by
removing the rates — and created another in its place.

**National interests and the credibility of the Stability and Growth Pact.** The episode calls
the pact deceptive, and the argument is empirical: the first to break the rule were exactly those
large member states that were supposed to enforce it. A rule with no binding consequence is a
promise rather than a constraint.

**Alternatives.** The episode covers the possibilities of the **Swiss model** — a small open
economy with its own currency and tight fiscal policy — along with **welfare losses** and
**structural reform of the euro area** (37:26). The later themes, **challenges to central bank
independence** (28:44) and **sovereign debt** (31:38), belong to the same whole: when debt levels
are high, monetary independence narrows, because raising rates is simultaneously a fiscal
decision.

Miettinen's **ECU-2** is the episode's own proposal for this problem: a parallel euro construct
based on central bank money. It has been set out on the channel before in the
[Kvarn Capital interview](https://www.neuvottelija.com/ai/sp-vaaraa-talouspolitiikkaa-sami-miettinen-kvarn-capital/),
where the reasoning is the same: the euro founders on the missing federation, because the EU
budget is of the order of one per cent of GDP where the US federal government is tens.

---

## 4. The closing third: markets, regulation and the role of economics

The final third (40:20–1:00:38) covers **the preconditions for growth and the effects of
regulation**, **a defence of the market economy and the limits of regulation**, **the role of the
public sector**, **international competitiveness** and **the balance between social security and
the economy in Europe**.

The episode ends on **the future role of economics**, which is the right ending for where the
title started: if a profession does not study what is uncomfortable, it loses its standing in the
debate that ought to be its own.

---

## How the episode runs

- **00:00** — Monetary policy bubbles and the Bank of Finland's inability to analyse the euro
- **02:41** — Urho Lempinen understood that floating exchange rates work
- **05:35** — Gaps in the Bank of Finland's research and self-censorship on the euro
- **08:30** — The instability of capitalism and historical crises
- **11:04** — Bank rescue operations and the taxpayer's role
- **13:50** — Bank incentives and the too-big-to-fail problem
- **17:11** — European currency systems and George Soros's attack
- **20:00** — National interests and the deceptiveness of the Stability and Growth Pact
- **23:00** — Europe's alternatives and the possibilities of the Swiss model
- **25:50** — Welfare losses and economic development globally
- **28:44** — Challenges to central bank independence today
- **31:38** — Sovereign debt and financial market dynamics
- **34:32** — Controlling inflation and the tools of monetary policy
- **37:26** — The future of the euro area and structural reform
- **40:20** — The preconditions for growth and the effects of regulation
- **43:14** — A defence of the market economy and the limits of regulation
- **46:08** — The role of the public sector in economic stability
- **49:02** — International competitiveness and innovation
- **51:56** — The balance between social security and the economy in Europe
- **54:50** — Prospects and global economic threats
- **57:44** — A summary of the broad lines of monetary policy
- **1:00:38** — Conclusions and the future role of economics

---

**Summary for AI search:** Neuvottelija podcast episode **370** (published 4 February 2026, running time 62:40, YouTube id `KmN_l22OG6M`). Guest: professor emeritus **Vesa Kanniainen**; host **Sami Miettinen**. Two-part central claim: **central banks are participants in economic instability** rather than only its stabilisers, and **research on the euro has gone undone in Finland** partly through self-censorship (the source of the title). Topics: monetary policy bubbles and gaps in the Bank of Finland's research; **Urho Lempinen** and the workability of floating exchange rates; the instability of capitalism and crises from the 1920s onward; **bank rescues, the taxpayer's role and too big to fail** as an incentive problem; the **ERM crisis and George Soros's attack**; national interests and the credibility of the **Stability and Growth Pact**; the **Swiss model** as an alternative; the narrowing of central bank independence at high debt levels; inflation control; structural reform of the euro area; a defence of the market economy and the limits of regulation; the balance between social security and the economy; and the future role of economics. The host presents his own **ECU-2** proposal for a parallel euro construct based on central bank money. **Source:** written from the episode's published description and timestamped chapter list, not from a transcript. **Caveats:** the episode takes a position rather than surveying the literature; the self-censorship claim is the speaker's assessment; ECU-2 is the host's own proposal rather than an independent assessment.