Ambrose Evans-Pritchard used to be the Telegraph‘s man in Washington, and he was always great fun. Now he’s roaming around Europe looking for signs of life, and he has found it in the form of regional currencies that people use instead of euros. It’s a great story. Locals–Ambrose tells of currencies in Austria, Germany and Italy, with many more en route–who for one reason or another don’t like the euro have just issued their own money, with a fixed depreciation rate. In essence, it’s like having a credit card, because merchants who redeem this scrip are charged a fee roughly equal to that charged by the credit card companies.
Ambrose quotes some authorities who say this is the first time wildcat currencies have been seen in Europe since the Great Depression, but that’s not quite right. We used some in Rome, back in the 1970s, as part of the “exact change crisis” that hit Italy at the time.
In those medieval times, you couldn’t pay for anything with a check or a credit card, you had to pay cash, and you paid your rent and utilities at the Post Office. Long lines, lousy service, etc. etc. And it got even worse when the lira devalued to the point where small coins, for fifty or a hundred lire, got to be worth less than blazer buttons. At which point the coins vanished. Everybody believed that the Japanese had gobbled them all up to use them on blazers (I have no idea if that was true; I could never get it verified), but wherever they went they weren’t in circulation. Which made it difficult to shop, because nobody could make small change. For a while, merchants gave you some hard candies instead of fifty lire, and we all went for that, but it didn’t last, because the Post Office didn’t take candy.
And then the Post Office demanded ‘exact change.’
This was a big problem, because you ended up overpaying, and ‘forgetting about’ the change. But that was obviously unfair, people complained, and the upshot was that if you didn’t have exact change you just couldn’t pay your bills. Obviously unacceptable.
So local banks starting printing fifty- and one hundred-lire banknotes on paper just this side of toilet paper quality. And since the Post Office accepted them, they spread like topsy. The banks did very well, because in relatively short order the banknotes dissolved (and of course the banks wouldn’t convert ten tattered 100-lire notes into a shiny new 1000-lire note). After a while, as mysteriously as they had disappeared, the small coins reappeared, and everything went back to ‘normal.’
If it had happened in Naples–and no doubt it has–everyone would have ‘known’ that the local mafia, the very entrepreneurial Camorra was behind it. But in Rome, in those days, this explanation wasn’t offered. At least I never heard it.
Just to say, local currencies are probably more common than we imagine, and I’m indebted to Ambrose for this excellent report. Bottom line? Money is worth whatever you think it is.