Italy and the Euro

Italy & the Euro A Dichotomy of Bene?cial Proportions May 4, 2012 An analysis of the common European up-to-dateness and its relationship with and effect on the Italian e shirkomy. by Kapish Haldia Table of Contents Italy Before the Euro! Italy: A Troubled Scion of the Euro! In?ation and Interest Rates Competitiveness and Trade Debt and Economic Growth 3 4 5 6 7 A Perilous Future for Italy! An Economic Issue with a Policy Solution 9 10 2 Italy Before the Euro To fully understand the relationship amidst Italy and the Euro, we must ?rst look to what came before: the lira. The Lira was the Italian currency from its independence in 1861 up until the introduction of the Euro in 2002. The whim of a currency that transcended national boundaries was not new to Italy when the Euro came about. The Lira replaced 6 other regional currencies when Italy uni?ed. Soon after its formation, Italy create part of the Latin pecuniary Union in which the lira was set as equal to, among others, the French, Belgian and Swiss francs. The LMU served the responsibility of facilitating trade between different countries by setting the standards by which gold and silver currency could be minted and exchanged.

In this expression a French trader could accept Italian liras for his goods with con?dence that it could be converted back to a comparable amount of money of francs. World War I broke the Latin Monetary Union and resulted in prices rising severalfold in Italy. In?ation was curbed fairly by Mussolini, who, on August 18, 1926, declared that the exchange drift between lira and pound would be £1 = 90 lireâ€"the socalled Quota 90, although the free exchange crop had been closer to 140-150 lire per pound, causing a temporary de?ation and widespread problems in the real economy. In 1927, the lira was pegged to the U.S. buck 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... If you want to get a full essay, order it on our website: Orderessay

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