POSTSCRIPT
Coining a New Future: End of the Lira
Almost a century and a half ago, on August 24, 1862, the Lira was born to Modern Italy, itself a fledgling state that had freshly emerged in 1860. As the national currency of its turbulent economy, the Lira had an eventful and checkered career. Recently, on Thursday, 31 December 1998, it resigned as an independent currency, making way for the current star on the EU horizon, the newly-launched single currency of Europe, the new money of the new year: the Euro.
In Italy, as Treasury Minister Ciampi minted the first Euro, the event was remarked upon by Italy's Director of Mint, Nicolo Ielpo with a mixture of nostalgic regret and optimism: "It is a sad day for the death of the Lira but one of joy for the birth of the Euro."
More than joy, the arrival of the Euro to Italy marks a moment of triumph for a country that almost did not make it to the shared currency of the European Union. Italy was where EU's founding act was signed, in the 1957 Treaty of Rome, and Italy has always been an enthusiast of the European Monetary Union. When the Maastricht Treaty laid down its stringent goals for individual countries to streamline their economies to bring them in line with the common objectives, Italy had a hard time qualifying to meet those conditions.
But with political determination and financial rigour, it lowered its inflation rate and trimmed its budget deficit accordingly to meet the Maastricht standard. For this eager country to have not qualified for the single currency would have been a great disappointment. But it has made the dream possible. And today, the image of Leonardo Da Vinci proudly graces the shining face of the newly minted Euro coin, symbolically bringing to the common European currency, traditional Italian resourcefulness and the wide-ranging creativity and versatility of Leonardo's Renaissance Man.
Never a very strong currency, the lira has found new life and vigour in merging its identity with, and cashing in on the strength of, this artificially created, common currency of Europe. By itself a wobbly entity, the lira in its transformation into Euro, will now get a new lease of life, and more stability.
Economic historian Carlo Maria Cipolla wrote in La Stampa, "During its history, the lira has had moments of weaknesses and strengths. But it has tended to be weaker more often to help exports. The fragility of the currency was an extraordinary asset in the hands of businessmen." He also mentioned, how a shaky lira had helped speculators make a killing in the financial markets.
The Italian premier D'Alema said in La Repubblica, that the age of frequent devaluations was over. "Today, we are witnessing the end of Italian exceptions, a long line of anomalies. Italy is like an animal, which has been on a diet. Now it can start to run again. The only thing it has to overcome is its fear of the future."
This anxiety about the shape of an Euro-driven future, however rosy it seems presently, is something that not just Italy but many other countries in Europe will have to overcome. Italy, of course is only one of eleven countries of the European Union that from Jan 1, 1999, that has agreed to subsume its national currency into becoming a sub-division of the Euro. The other countries are alphabetically, Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain. Greece failed to qualify, and Britain, Denmark and Sweden have opted out, adopting a wait-and-see attitude. Early reports, after the successful launching of the Euro to the financial and stock markets has been a renewed interest among these countries to get back on the wagon. There is a lurking fear in these countries of being marginalised by this energetic young currency, which is already creating a strong impression in a world market dominated for long by the dollar, the sterling and the yen.
The general feeling world wide is enthusiasm for the launching of what is perceived as a much needed element to shift the balance of global economic power in the world's financial and trading market place where dollar's dominance was unchallenged. Countries within Europe whose economies were not very strong feel a surge of potency as part of the EMU because they know that collectively they have an economy, which is equivalent to the US. The GDP of the United States in 1997 was $8.1 trillion, and that of the EMU countries was $6.5 trillion. Also the EMU countries make up a larger share of the international trade market than the US.
Apart from its role in the international market, the euro is foremost an instrument for creating sound economic condition within Europe, facilitating trade and encouraging easy interaction among the member economies, spurring economic growth and stimulating job creation. It is an important and irrevocable step towards the creation of a strong and unified Europe.
The designs on the freshly printed Euro notes and newly-minted coins, reflect the vision that inspired the concept of a shared currency. The 7 notes, of various denominations ranging across 500, 200, 100, 50, 20,10 and 5, all carry designs that show windows and gateways that are symbolic for openness and cooperation in the EU. On the obverse side are bridges from various eras linking the shared architectural heritage of the member countries. Among the 8 Euro coins of various denominations are 2 and 1 Euro coins, and the rest are Euro cents ranging from 50 to 1. All coins have a common European face, while the obverse side gives member countries the freedom to decorate with their own motifs. As regards the common face of the coins, the 1, 2 and 5 cent coins emphasise Europe's place in the world, depicting Europe without frontiers, while 10, 20 and 50 represent the Union as a gathering of nations. The symbol for the Euro itself is inspired by the Greek letter epsilon in reference to the common cradle of European civilisation, as well as to the first letter of Europe.
Of course, neither these coins, nor the new notes are in circulation yet, and Italians like the other participating member-countries of the EU will have to wait till 2002 before they actually pay for a French Brie or a Spanish Sombrero with an Euro. In Italy, while the arrival of Euro is still not being felt on an every-day basis, people are aware that though they cannot yet use it for cash payments of goods and services, they can make payments or receive them into bank accounts by other means, like bank transfers, cheques, credit cards and electronic cards. Not until January 1, 2002 will the lira, like other national currencies of EU member-countries, start to be replaced. By July, 2002 lires will have to be withdrawn totally, though the invalid money may continue to be exchanged for the Euro for a permitted period.
The best part of eliminating the lira will be getting rid of the string of zeroes that come with it. At the same time, one will miss its uniqueness. However, the most welcome part of having a frontier-less currency will be cutting out the time wasted at the CAMBIO or Currency Exchanges trying to get the best exchange rates. All that will be history.
Something else that is now only of historical interest is tracing the uncertain route the lira has traveled so far. At its inception, the Italian lira was pegged to the stronger French franc. Vis-à-vis the dollar it has always been a weak currency. During the post-War years, as in 1949, it was 625 lire to the dollar. Then, in the '80s it fell to its all time low of 2,200 to the dollar! At the end of 1998, which also marked the final day of its existence as the sovereign currency of Italy, it was lire 1,656 to the dollar. Today its value, at a fixed rate of exchange, makes 1,936 lire equivalent to 1 Euro, which in its early days of fluctuations is around 1.17 Euro to the dollar.
It feels strange to have to say goodbye to the mila notes and coins in Italy. But the sentimental feelings of leaving the lyricism of the lira is replaced by an overwhelming 'europhoria' at the conversion to a more practical and potent money: replacing the zeroes with the new hero of the era, the Euro of the hour!
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