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DW • 36 A Eurozone named Latin Monetary Union (LMU) existed in the 19th century ! The Latin Monetary Union was a 19th With the tacit agreement of Napoleon III The LMU eventually failed for a number century attempt to unify several European of France, Giacomo Cardinal Antonelli, the of reasons. Some members began to debase currencies, at a time when most circulat- administrator of the Papal Treasury, embarked their currency. They minted coins with an inad- ing coins were still made of gold and silver. on an ambitious increase in silver without the equate amount of silver and then exchanged It was established in 1865 and disbanded in prescribed amount of metal. The papal coins them for coins from other countries. More 1927. By a convention dated 23th December quickly became debased and excessively cir- importantly, the fixed LMU exchange rate 1865, France, Belgium, Italy and Switzerland culated in other union states, to the profit of eventually overvalued silver relative to gold. formed the Latin Monetary Union and agreed the Holy See, but eventually Swiss and French German traders, in particular, were known to to change their national currencies to a stand- banks rejected papal coins and the Papal bring silver to LMU countries, have it minted ard of 4.5 grams of silver or 0.290322 gram States were ejected from the Union. This is into coinage then exchanged those for gold of gold (a ratio of 15.5 to 1) and make them a somewhat identical story than the rating of coins at the discounted exchange rate. These freely interchangeable. The agree- Italy being downgraded. destabilizing tactics eventually forced the ment came into force on 1st LMU to convert to a pure gold standard for August 1866. Fearing an influx of its currency (in 1878). Surprisingly comparable silver coinage, the to today Eurozone crisis, Greece was ejected The four nations member nations of from the LMU in 1908, for decreasing the were joined by the Union agreed amount of gold in their coins. Spain and Greece in Paris on 30th in 1868, and by January 1874, Even though the minting of new silver Romania, Bul- to limit the free coinage ceased, the existing silver coins con- garia, Venezue- conversion of tinued in circulation, and the fluctuations in la, Serbia and silver tempo- the values of gold and silver were somewhat San Marino in rarily. From of a nuisance. The political turbulence of the 1889. In 1904, 1873 onwards, early 20th century which culminated in the the Danish the Union was First World War brought the LMU to its final West Indies on a de facto end in practice, even though it continued de were also placed gold standard. jure until 1927, when it came to a formal on this standard In1878, with no end. The last coins made according to the but did not join the recovery in the silver standards of the Union were the Swiss fifty- Union itself. When price in sight, minting centime, one-franc, and two-franc pieces of Albania emerged from of silver coinage was sus- 1967. the Ottoman Empire as an in- pended absolutely. dependent nation in 1912, coins of the Latin Monetary Union from France, Italy, Greece and Austria-Hungary began to cir- culate in place of the Ottoman lira. Albania did not however mint its own coins, or issue its own paper money until it adopted an independent monetary system in 1925. The LMU served the function of facilitating trade between different countries by setting the standards by which gold and silver cur- rency could be minted and exchanged. In this manner a French trader could accept Italian liras for his goods with confidence that it could be converted back to a comparable amount of francs. .

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