What is the currency in Liechtenstein?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The Principality of Liechtenstein is a dwarf state in central Europe bordering Austria and Switzerland. The population of the country speaks German. Despite the presence of a constitution, the prince is actually an absolute monarch. The territory of the tiny state has 160 square kilometers, the population is 37 thousand people.

Safe Haven

Liechtenstein is one of the most economically developed and prosperous countries in the world. The principality partly owes its financial well-being to its state sovereignty, which allows creating favorable conditions for attracting foreign investment and business. The tourism industry brings a lot of income to the treasury. As in other Alpine countries, the principality's natural conditions are well suited for winter sports.

Foundation of a dynasty

The independent status of Liechtenstein is rooted in the distant past. In the 17th century, the representative of the current ruling dynasty, Hans-Adam the First, acquired the lands of the principality, which were under the direct authority of the monarch of the Holy Roman Empire. Thanks to this fact, the feudal clan received special rights and privileges. Representatives of the dynastyThe Liechtensteins held the position of vassals only in relation to the emperor. In 1719, the monarch officially recognized the head of the family, Anton Florian, as a sovereign prince. Over the course of three centuries, the dynasty repeatedly entered into political alliances, but managed to maintain the independent status of its territory.

Early history of the Principality

An interesting fact is that for the first hundred years, representatives of the Liechtenstein family did not visit their possessions. Land acquisition pursued purely political goals. Due to the presence of a sovereign principality, the ruling family occupied a higher position in the hierarchy of the Holy Roman Empire.

The Napoleonic Wars put an end to the feudal order. At the beginning of the 19th century, the Holy Roman Empire ceased to exist. The Principality of Liechtenstein no longer had obligations towards any feudal overlord outside its borders. The dwarf state came under the auspices of the Austro-Hungarian Empire. During the 19th century, the first banking institutions and industrial enterprises appeared on the territory of the Principality. The Liechtenstein army, which consisted of only a few dozen people, was abolished due to the inexpediency of its content.

In the 20th century

After the First World War, the Principality ceased to rely on the patronage of the defeated Austro-Hungarian Empire and entered into a customs and monetary union with another neighboring state - Switzerland. This decisionsaved Liechtenstein from occupation by Nazi Germany. The rulers of the Third Reich did not want to aggravate relations with Switzerland and did not invade the territory of a small, defenseless principality. However, after the end of the war, castles, palaces and lands belonging to the Liechtenstein dynasty located in Bohemia, Moravia and Silesia were expropriated by the governments of Czechoslovakia and Poland.

Economy

The number of commercial companies registered in the Principality exceeds the number of its citizens. Lacking any natural resources, the dwarf state managed to develop the industrial and financial sectors of its economy. The secret of the success of the tiny country lies in the low taxes and the simple procedure for registering a business. On the territory of the principality there are large enterprises for the production of electronics, precision instruments, ceramics and pharmaceutical products. The head of the ruling dynasty is ranked sixth in the list of the richest monarchs, and the standard of living of his subjects is one of the highest in the world.

Financial Center

The Principality has a developed banking system. Low taxes effectively attract capital from all over the world. In the past, the state treasury received significant income from foreign funds, which were registered in the names of lawyers who are subjects of the principality in order to hide the real owners. For many years, Liechtenstein has been on the list of countries helping citizens of other states to evade taxation in their homeland. German and US governmentsa bank owned directly by the princely dynasty was accused of such activities.

National currency

It's quite difficult to figure out which currency is considered official in Liechtenstein. After the conclusion of an agreement on a single trading space with Switzerland, the main legal tender in the territory of the principality is the franc, issued by the central bank of the confederation. In addition, Liechtenstein's own currency was issued in limited quantities. Coins and banknotes of a tiny sovereign country are mainly of interest to collectors.

The dwarf state joined the Schengen agreement, but did not become a member of the European Union. The integration of the principality was limited to joining the common economic space and did not reach the euro. The currency of Liechtenstein has remained the same, although the EU currency is to some extent circulated in the country. Unlike the euro, US dollars are not accepted almost anywhere in the dwarf state.

First currency of Liechtenstein

At an early stage of its existence, the Principality minted gold ducats, as well as silver thalers and kreuzers. On the front side of all the coins was a portrait of the head of the dynasty. During the reign of Prince Johann II, the minting of the so-called allied thalers began. This large silver coin was in circulation in most of the German-speaking states of that time. On the front side of the union thaler, the ruling prince was also depicted. Unlike other Germanic countries, the early currencyLiechtenstein was minted not only from silver, but also from gold.

Austrian guilders, crowns and hellers

Like all dwarf states, the principality has always enjoyed the patronage of one of its larger neighbors. It is worth noting that a special name for Liechtenstein's currency never existed. From its founding until the First World War, the Principality maintained close relations with Austria. This country led the Holy Roman Empire and had great influence in Europe until the beginning of the 20th century. The Austrian gulden served as Liechtenstein's main currency until 1892. As a result of the monetary reform, they were replaced by crowns and hellers. During that period, the empire began to gradually lose its power, and its currency ceased to inspire confidence. After the First World War, the principality abandoned the use of Austrian banknotes due to their instability.

Franks

In 1920 Liechtenstein's only paper currency was issued. She had an Austrian name - heller. In total, three series of banknotes were printed. Today, only photographs of Liechtenstein's currency from that period can be seen, since these banknotes are a great numismatic rarity.

Switzerland allowed the dwarf state to issue a limited number of francs, but only in the form of precious metal commemorative coins. Usually they are minted on the occasion of the transfer of power to a new prince. Liechtenstein gold and silverfrancs are not in circulation as they are for collectors only.