What the Latin Monetary Union – Europe’s forgotten currency – can teach us about the euro

The euro isn’t the continent’s first flawed single currency, says Jonathan Compton. The Latin Monetary Union lasted 61 years.

Louis Napoleon Bonaparte
Louis-Napoléon oversaw the creation of the LMU © Getty
(Image credit: © De Agostini via Getty Images)

An economist from the Anglosphere is likely to tell you that the euro is structurally flawed and must implode. An economist in one of the 19 eurozone countries would say it is a work in progress and will survive. As the euro is the most widely used currency in foreign-exchange markets and central bank reserves after the US dollar, an implosion would have devastating effects within and outside the EU and thus on all of our finances.

Geeks are often derided for their arcane interests – Jeremy Corbyn collected manhole covers – but obscure hobbies can be useful. For money and history geeks like me there are clear lessons from the last European common-currency experiment. Now all-but forgotten, it lasted 61 years (the euro is in its 21st year), from 1866 to 1927, though in reality it was effective for a much shorter period. This was the Latin Monetary Union (LMU).

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Jonathan Compton was MD at Bedlam Asset Management and has spent 30 years in fund management, stockbroking and corporate finance.