The lira (; plural lire) was the currency of Italy between 1861 and 2002. It was introduced by the Napoleonic Kingdom of Italy in 1807 at par with the French franc, and was subsequently adopted by the different states that would eventually form the Kingdom of Italy in 1861. It was subdivided into 100 centesimi (singular: centesimo), which means "hundredths" or "cents". The lira was also the currency of the Albanian Kingdom from 1941 to 1943.
The term originates from libra, the largest unit of the Carolingian monetary system used in Western Europe and elsewhere from the 8th to the 20th century. The Carolingian system is the origin of the French livre tournois (predecessor of the franc), the Italian lira, and the pound unit of sterling and related currencies.
In 1999, the euro became Italy's unit of account and the lira became a national subunit of the euro at a rate of €1 = Lit 1,936.27, before being replaced as cash in 2002.
History
Etymology
The Carolingian monetary system divided the libra into 20 solidi (singular: solidus) or 240 denarii (singular: denarius). These units translate in Italian to lira, soldo and denaro; in French to livre, sou and denier; and in English to pound, shilling and penny.
In France, the "franc" referred to a coin worth one livre tournois. This term was also adopted in various Gallo-Italic languages in north-western Italy to refer to the Italian lira.
Notation and symbols
There was no standard sign or abbreviation for the Italian lira. The abbreviations Lit. (standing for Lira italiana) and L. (standing for Lira) and the signs ₤ or £ were all accepted representations of the currency. Banks and financial institutions, including the Bank of Italy, often used Lit. and this was regarded internationally as the abbreviation for the Italian lira. Handwritten documents and signs at market stalls would often use "£" or "₤", while coins used "L." Italian postage stamps mostly used the word in full but some (such as the 1975 monuments series) used "L."
The name of the currency could also be written in full as a prefix or a suffix (e.g. Lire 100,000 or 100,000 lire).
The ISO 4217 currency code for the lira was ITL.
Introduction of the lira
The Napoleonic Kingdom of Italy introduced the Italian lira in 1807 at par with the French franc, worth 4.5 grams of fine silver or 0.29032 gram of fine gold (gold-silver ratio 15.5). Despite the kingdom's demise in 1814, this new lira would eventually replace the currencies of the different Italian states until their unification in 1861, replacing, among others: The Piedmontese scudo, Sardinian scudo and the Genoese lira after 1800, by the Italian lira; The Milanese lira, Venetian lira, Lombardo-Venetian lira and Parman lira after 1814, at the rate of 270 Milanese lire = 45 Milanese scudi = 405 Venetian lire = 855 Parman lire = 207.23 Italian lire; The Tuscan fiorino and the Tuscan lira in 1859, at 1 francescone = 4 fiorini = Tuscan lire = 5.6 Italian lire; The piastra of Naples and Sicily in 1861, at 1 piastra = 1.2 ducat di regno = 5.1 Neapolitan lire, the latter at par with the Italian lira; and The scudo of Rome and the Papal States in 1866, at 1 scudo = 5.375 Papal lire, the latter at par with the Italian 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. The U.S. dollar was worth approximately 5.18 Italian lire until 1914.
20th century
World War I broke the Latin Monetary Union and resulted in prices rising severalfold in Italy. Inflation was curbed somewhat by Mussolini, who, on 18 August 1926, announced a new exchange rate between the lira and sterling of £1 = Lit 92.46 (the so-called Quota 90) although the free exchange rate had been closer to Lit 140150 to the pound, causing a temporary deflation and widespread problems in the real economy. In 1927, the lira was pegged to the U.S. dollar at a rate of $1 = Lit 19. This rate lasted until 1934, with a separate "tourist" rate of $1 = Lit 24.89 being established in 1936. In 1939, the "official" rate was Lit 19.80.