100 Lire – Italy

In 1979, Italy’s currency situation was defined by its participation in the European Monetary System (EMS), launched that March. The EMS aimed to create a "zone of monetary stability" in Europe by reducing exchange rate fluctuations between member currencies. Italy, with its historically weak and inflation-prone lira, joined but under a special concession: it was allowed a wider fluctuation band of ±6%, compared to the ±2.25% band for stronger currencies like the German Deutsche Mark. This reflected the acknowledged fragility of the lira and the significant economic challenges Italy faced.

Domestically, these challenges were severe. Italy was grappling with persistently high inflation, which peaked at around 21% in 1980, driven by the second oil shock and powerful wage-indexation mechanisms (scala mobile). The country also carried a massive public debt and faced chronic political instability. These factors placed the lira under constant downward pressure, as markets doubted Italy's ability to maintain its EMS parity. Maintaining the lira within its band required frequent and costly interventions by the Banca d'Italia, draining foreign currency reserves and keeping interest rates high.

Thus, the lira in 1979 was caught in a tense duality. On one hand, Italy was formally committed to European monetary discipline and stability through the EMS, a political choice to anchor its economy to stronger partners. On the other, its domestic economic reality made it the system's weakest link, testing the very mechanisms of the EMS. This precarious position foreshadowed the recurring crises that would force multiple lira devaluations within the EMS throughout the 1980s and early 1990s, ultimately leading to its exit in 1992.