Italy hopes to cash in on euro issue

Date: 08/10/1998

By Peter Chapman

EU FINANCE ministers are set to thrash out a deal to allow the tiny territories of San Marino and the Vatican City to issue their own versions of the euro when the single currency notes and coins begin circulating in 2002.

The minuscule enclaves within Italy currently issue very small amounts of their own versions of the lira, mainly in the form of commemorative notes and coins, as part of a deal with the monetary authorities in Rome.

Finance ministers must now decide whether to allow this tradition to continue once the single currency is in place.

Some member states, including France, have voiced reservations about the principle of allowing countries outside the single currency zone to issue their own versions of the euro without having to meet the tough requirements imposed on those which have signed up to economic and monetary union.

“It is a matter of policy that we do not think non-EU members should be allowed to issue euro,” said one.

French diplomats also fear that allowing San Marino and the Vatican City to issue euro might open the door for their own tiny neighbour, Monaco, to do the same.

But diplomats from other member states suggest that France's objections could be overcome by stipulating that any notes and coins produced by these mini countries would not be legal tender outside their own territory.

“San Marino and the Vatican issue a very minor quantity of money at the moment in terms of lira,” said an Italian official. “I understand that ministers might agree that the euro they issued could circulate in a limited area.”

The subject will be discussed by EU finance ministers at their meeting in Luxembourg next Monday (12 October), but they are not expected to take a final decision until the European Central Bank has given its formal opinion on the proposal.