The lira (plural lire) was the currency of Italy between 1861 and 2002. Between 1999 and 2002, the Italian lira was officially a “national subunit” of the euro. However, physical payments could only be made in lire, as no euro coins or notes were available.
The lira was also the currency of the Napoleonic Kingdom of Italy between 1807 and 1814.
The term originates from the value of a pound weight (Latin: libra) of high purity silver and as such is a direct cognate of the British pound sterling; in some countries, such as Cyprus and Malta, the words lira and pound were used as equivalents, before the euro was adopted in 2008 in the two countries. "L", sometimes in a double-crossed script form ("₤"), was usually used as the symbol. Until the Second World War, it was subdivided into 100 centesimi (singular: centesimo), which translates to "one hundredth".
The lira ultimately dates back to Charlemagne. Like the pound sterling, it represented one pound weight of silver, and was equal to 20 soldi or 240 denari. Before unification, many of the Italian states used the lira as their currency.
In 1807, the Napoleonic Kingdom of Italy (occupying the north of the current state) introduced the lira as its currency. Equal to the French franc, it was divided into 20 soldi or 100 centesimi. The lira circulated until 1814 when the kingdom was divided up into smaller states.
Upon the creation of the Kingdom of Italy under Vittorio Emanuele II (1861), a unified lira was established, at 4.5 grams of silver or 290.322 milligrams of gold. This was a direct continuation of the Sardinian lira. Other currencies replaced by the Italian lira included the Lombardy-Venetia pound, the Two Sicilies piastra, the Tuscan fiorino, the Papal States scudo and the Parman lira. In 1865, Italy formed part of the Latin Monetary Union in which the lira was set as equal to, among others, the French, Belgian and Swiss francs: in fact, until the introduction of the euro in 2002, people speaking the Gallo-Italic dialects in north-western Italy usually called "franc" the lira.
World War I broke the Latin Monetary Union and resulted in prices rising severalfold in Italy. Inflation was curbed somewhat by Mussolini, who, on August 18, 1926, declared that the exchange rate between lira and pound would be £1 = 90 lire—the so-called Quota 90, although the free exchange rate had been closer to 140-150 lire per pound. In 1927, the lira was pegged to the U.S. dollar at a rate of 1 dollar = 19 lire. This rate lasted until 1934, with a separate "tourist" rate of US$1 = 24.89 lire being established in 1936. In 1939, the "official" rate was 19.8 lire.
After the Allied invasion of Italy, an exchange rate was set at US$1 = 120 lire (1 British pound = 480 lire) in June 1943, reduced to 100 lire the following month. In German occupied areas, the exchange rate was set at 1 Reichsmark = 10 lire. After the war, the value of the lira fluctuated, before Italy set a peg of US$1 = 575 lire within the Bretton Woods System in November 1947. Following the devaluation of the pound, Italy devalued to US$1 = 625 lire on 21 September 1949. This rate was maintained until the end of the Bretton Woods System in the early 1970s. Several episodes of high inflation followed until the lira was replaced by the euro.
The lira was the official unit of currency in Italy until January 1, 1999, when it was replaced by the euro (euro coins and notes were not introduced until 2002). Old lira denominated currency ceased to be legal tender on February 28, 2002. The conversion rate is 1,936.27 lire to the euro.  All lira banknotes in use immediately before the introduction of the euro, as all post WW2 coins, are still exchangeable for euros in all branches of the Bank of Italy until February 29, 2012.
Although Italian banknotes became unwieldy because of the large number of zeros, efforts at redenomination were unsuccessful for political reasons until the introduction of the euro which had the effect of lopping off excessive zeros.
The Napoleonic Kingdom of Italy issued coins between 1807 and 1813 in denominations of 1 and 3 centesimi and 1 soldo in copper, 10 centesimi in 20% silver alloy, 5, 10 and 15 soldi, 1, 2 and 5 lire in 90% silver and 20 and 40 lire in 90% gold. All except the 10 centesimi bore a portrait of Napoleon, with the denominations below 1 lira also showing a radiate crown and the higher denominations, a shield representing the various constituent territories of the Kingdom.
Kingdom of Italy, 1861-1946
In 1861, coins were minted in Florence, Milan, Naples and Turin in denominations of 1, 2, 5, 10 and 50 centesimi, 1, 2, 5, 10 and 20 lire, with the lowest four in copper, the highest two in gold and the remainder in silver. In 1863, silver coins below 5 lire were debased from 90% to 83.5% and silver 20 centesimi coins were introduced. Minting switched to Rome in the 1870s.
Apart from the introduction in 1894 of cupro-nickel (later nickel) 20 centesimi coins and of nickel 25 centesimi pieces in 1902, the coinage remained essentially unaltered until the First World War.
In 1919, with a purchase power of the lira reduced to 1/5 of that of 1914, the production of all earlier coin types except for the nickel 20 centesimi halted, and smaller, copper 5 and 10 centesimi and nickel 50 centesimi coins were introduced, followed by nickel 1 and 2 lire pieces in 1922 and 1923, respectively. In 1926, silver 5 and 10 lire coins were introduced, equal in size and composition to the earlier 1 and 2 lire coins. Silver 20 lire coins were added in 1927.
In 1936, the last substantial issue of silver coins was made, whilst, in 1939, moves to reduce the cost of the coinage lead to copper being replaced by aluminium bronze and nickel by stainless steel. All issuance of coinage came to a halt in 1943.
In 1946 coin production was resumed, although only in 1948, with a purchase power of the lira reduced to 1/50 of that of 1939, did numbers minted exceed 1 million. To begin with, four denominations were issued in aluminium, 1, 2, 5 and 10 lire: these coins were in circulation together with the AM-lire and some of the old, de-valuated kingdom's coins. In 1951, the government decided to replace all the circulating coins and bills with new smaller-sized 1, 2, 5 and 10 aluminium lire (although the 2 lire wasn't minted in 1951 or 1952) and in 1954-1955, an Acmonital (stainless-steel) 50 and 100 lire coins were introduced, followed by aluminium-bronze 20 lire in 1957 and silver 500 lire in 1958. Rises in the silver bullion price lead to the 500 lire coins being produced only in small numbers for collectors after 1967. The 500 lire (and later the 1000) were also used for a number of commemorative coin issues, such as the centennial of Italian unification in 1961.
In 1977, aluminium-bronze 200 lire coins were introduced, followed in 1982 by the bi-metallic 500 lire. This was the first bi-metallic coin to be produced for circulation, minted using a system patented by IPZS. It was also the first to feature the value in braille.
Production of the 1 and 2 lire coins for circulation ceased in 1959; their mintage was restarted from 1982 to 2001 for collectors coin sets. Production of the 5 lire was highly reduced in the late 1970s and ceased for circulation in 1998. Analogously, in 1991 the production for the 10 and 20 lire coins was limited. The sizes of the 50 and 100 lire coins were reduced in 1990 but were then increased somewhat in 1993. A bimetallic 1,000 lire coin was introduced in 1997 and stopped in 1998.
Coins still minted for circulation at the time of the changeover to euro (in 2000 and 2001 only liras for collectors coins sets were minted) were:
- 10 lire (only for collectors)
- 20 lire (only for collectors)
- 50 lire (2.58 cent)
- 100 lire (5.16 cent)
- 200 lire (10.33 cent)
- 500 lire (25.82 cent)
- 1,000 lire (51.65 cent)
In 1882, the government began issuing small value paper money bearing the title "Biglietto di Stato". To begin with, there were 5 and 10 lire notes, to which 25 lire notes were occasionally added from 1895. The government also issued notes titled "Buono di Cassa" between 1893 and 1922 in denominations of 1 and 2 lire. Production of Biglietto di Stato ceased in 1925 but resumed in 1935 with notes for 1, 2, 5 and 10 lire being introduced by 1939.
The Bank of Italy began producing paper money in 1896. To begin with, 50, 100, 500 and 1,000 lire notes were issued. In 1918-1919, 25 lire notes were also issued but no other denominations were introduced until after the Second World War.
In 1943, the invading Allies introduced notes in denominations of 1, 2, 5, 10, 50, 100, 500 and 1,000 lire. These were followed in 1944 by a series of Biglietto di Stato for 1, 2, 5 and 10 lire, which circulated until replaced by coins in the late 1940s. In 1945, the Bank of Italy introduced 5,000 and 10,000 lire notes.
In 1951, the government again issued notes, this time simply bearing the title "Repubblica Italiana". Denominations were of 50 and 100 lire (replacing the Bank of Italy notes) and they circulated until coins of these denominations were introduced in the mid 1950s. In 1966, 500 lire notes were introduced (again replacing Bank of Italy notes) which were produced until replaced in 1982 by a coin.
In 1967, 50,000 and 100,000 lire notes were introduced by the Bank of Italy, followed by 20,000 lire in 1975 and 500,000 lire in 1997.
Notes in circulation when the euro was introduced were:
- 1,000 lire, Maria Montessori, (€ 0.516)
- 2,000 lire, Guglielmo Marconi, (€ 1.03)
- 5,000 lire, Vincenzo Bellini, (€ 2.58)
- 10,000 lire, Alessandro Volta, (€ 5.16)
- 50,000 lire,Gian Lorenzo Bernini, (€ 25.82)
- 100,000 lire, Caravaggio, (€ 51.65)
- 500,000 lire, Raffaello, (€ 258.23; rarely used)
Currencies formerly related to the Italian lira
The Vatican lira (plural lire) was the official unit of the Vatican City State. It was on par to the Italian lira on the terms on the concordat with Italy. Italian lira notes and coins were legal tender throughout the Vatican City State. Specific Vatican coins were minted in Rome, being legal tender also in Italy and San Marino.
The Vatican City state has switched to the euro like Italy. As with old vatican lira coins, the Vatican City has its own set of euro coins.
The Sammarinese lira (plural lire) was the official unit of San Marino. It was on par to the Italian lira.
Italian lira notes and coins were legal tender in San Marino, but specific San Marinese coins were minted in Rome, being legal tender in Italy, as well as the Vatican City.
San Marino has switched to the euro like Italy. As with old San Marino lira coins, this country has its own set of euro coins.
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