5 Lire – Italy

In 1901, Italy's currency situation was defined by its membership in the Latin Monetary Union (LMU), a continental system it had helped found in 1865. The country was officially on a bimetallic standard, with the lira pegged to both gold and silver. However, this parity was largely theoretical. Decades of fiscal strain, driven by ambitious unification projects and military expenditures, had led the government to issue excessive paper money (carta moneta) not fully backed by specie. Consequently, a wide gap existed between the face value of coins and paper notes and their actual metallic worth, creating a de facto "forced currency" (corso forzoso) regime where convertibility was suspended.

This financial instability manifested in a persistent premium on gold, meaning gold coins traded at a value higher than their official face value in paper lire. While ordinary silver coins circulated domestically, high-value silver scudi were often hoarded or exported. The result was a fragmented and inefficient monetary circulation, with a distrust of state-issued paper and a preference for metallic currency in everyday transactions, especially in the more economically developed north. The government struggled to restore true convertibility and stabilize the lira's value, objectives seen as crucial for national prestige and international trade.

The situation placed Italy in a vulnerable position within the LMU, as its chronically depreciated paper lira strained the union's rules. Domestically, the currency instability exacerbated regional economic divides and complicated industrial financing. The period around 1901 was thus one of transition and tension, as policymakers, including Finance Minister Luigi Luzzatti, grappled with the legacy of past deficits while laying the groundwork for a eventual return to the gold standard, a goal that would be partially achieved later in the decade.