Latin Monetary Union

Latin Monetary Union in Europe

Description of Latin Monetary Union

The Concise Encyclopedia of the European Union describes latin monetary union in the following terms: [1] In a rare previous attempt to achieve monetary union without political union, (another of the same epoch was the Scandinavian Currency Union), France, Belgium, Italy and Switzerland, soon joined by the Papal States and Greece, determined in 1865 to use the French franc as their common unit of account, while nominally retaining their own national metal currencies, each with gold and silver coins of identical weight and value (see more in this European encyclopedia). Britain and Germany were urged to join, but the system soon came under pressure when Italy printed paper money to finance military expenditure and over-production of silver led to its price falling below its value as legal tender (see more in this European encyclopedia). The resultant rush to mint silver coins and exchange them for hard currency led to unsuccessful demands for France to guarantee unconditionally the gold value of the other countries’ reserves. The Union finally collapsed some 20 years after its inception, by which time the gold standard had replaced bimetallism and Germany had not only defeated France in battle but also unified the currencies of the German empire and centralised control of paper money.

Some have suggested a parallel between the Latin Monetary Union and EMU, with speculation against, for example, the lira leading to demands for a German guarantee of value (see more in this European encyclopedia). Striking as some of the similarities are, however, the dissimilarities are far too important to warrant such conclusions.

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Notas y References

  1. Based on the book “A Concise Encyclopedia of the European Union from Aachen to Zollverein”, by Rodney Leach (Profile Books; London)

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