20 Lire – Vatican City

In 1994, the currency situation in Vatican City was defined by its unique status as a sovereign entity with a tiny, non-commercial economy. As a result of the 1929 Lateran Treaty, the Vatican was granted the right to issue its own currency, which it exercised through coins minted for collectors and commemorative purposes. However, for all practical daily transactions, the Italian Lira (ITL) was the de facto circulating currency used within the city-state's walls, in its shops, and for paying its employees. This practical reliance on the Italian monetary system was absolute.

The year 1994 fell within a significant period of European monetary transition. While plans for a single European currency were advancing following the Maastricht Treaty (1992), the Italian Lira remained volatile, having been forced out of the European Exchange Rate Mechanism (ERM) in 1992. Consequently, the Vatican's effective currency was subject to these same fluctuations and instability. Notably, a specific financial agreement between the Vatican and Italy, renewed in 1991, allowed the Vatican to mint its own Lira coins at the Italian Mint, which were legal tender in both territories and interchangeable with Italian coins, further cementing the monetary union.

Therefore, the background of 1994 is one of a hybrid system: the Vatican possessed the formal trappings of monetary sovereignty through its coveted collector coinage, but its operational economy was entirely tied to the Italian Lira. This arrangement was inherently provisional, as European integration promised a future shift. Indeed, just five years later, with the introduction of the Euro, the Vatican would negotiate a new agreement to mint limited Euro coins, transitioning from its dependence on the Lira to a new, fixed relationship with the emerging European single currency.