Modern Period
Monetary circulation in the Romanian Provinces in the 17th-18th centuries
In the mid-17th century, as a consequence of their political decline, Wallachia and Moldavia minted their own coins only occasionally. Therefore, numerous currencies issued throughout Europe circulated in the Romanian Principalities.
At this time, the circulation of the Dutch lion-thaler (Leeuwendaalder) spread widely. It was a silver coin very popular all over the Ottoman Empire due to its high silver content and to its well-defined ensigns. It had circulated in the Romanian Principalities until the second half of the 18th century when it was replaced by the Maria Theresa and Spanish thalers. The popularity of the lion-thaler was so high that, after it ceased being issued, the thaler was identified with the very notion of money. Thus, in the Romanian Provinces appeared a unit of account called leu (meaning ‘lion’ in Romanian), divided into 40 parale, a fictitious coin with no real circulation. Consequently, prices were expressed in lei and parale, whereas payments were made in various gold or silver coins, of different origins, such as Austria, Turkey, Russia or Spain.
Although the name leu made reference to the Dutch coin, the fractions parale were of Ottoman inspiration. Starting with 1687, the sultan Süleyman II, trying to solve the monetary crisis underwent by the Ottoman Empire at that time, issued a high value silver coin, known as the piaster (Turk., guruş), divided into 40 parale (Turk. para) that were widely spread throughout the Romanian Principalities.
The first common issue of Wallachia and Moldavia took place during the Russian-Turkish War when, between 1772-1774, at Sadagura (in northern Bukovina), was minted a series of coins having on the obverse the coat of arms of the two Romanian provinces illustrated under the Russian imperial crown and on the reverse the monogram of Empress Catherine II.
The Organic Regulations (1831-1832)
The Organic Regulations attempted a new unification of the exchange rates in the Romanian Principalities. The exchange rate was regulated in a unique way for both Wallachia and Moldavia. There were two benchmarks associated to the leu as unit of account, divided into 40 parale. The gold benchmark was the Dutch ducat worth 31 lei and 20 parale, whereas the silver benchmark was the Austrian 20 kreuzer coin, worth 2 lei and 10 parale.
Român and romanat
Despite the existence of the leu as unit of account, when Prince Al. I. Cuza was elected ruler of the United Principalities, Romanian monetary market was still dominated by the foreign currencies’ chaotic exchange rates. Therefore, a draft for a national currency was initiated.
At the time, there were numerous debates concerning the name of the national currency. The first suggested name was român (meaning Romanian), after the model of the French franc. This was the name for which support from several French banks had been obtained, for crediting the first issue of the United Romanian Principalities.
Nevertheless, the 1860 final project settled a different name, romanat, divided into 10 decime or bani and 100 centime or bănișori. The gold and silver coins would have the effigy of the prince with the inscription ALEXANDRU IOAN I. DOMNU PRINCIPATELOR-UNITE (“Alexandru Ioan I. Prince of the United Principalities”) on the obverse and the coat of arms with the inscription ÎN UNIRE TĂRIA (“Strength in union”) on the reverse. The project failed to materialize since Napoleon III did not support the issue of a Romanian national currency after all because he did not want to cause a hostile reaction from the Ottoman Empire.
The Law for the establishment of a new monetary system and the issue of national coins, 22 April 1867
This is the birth certificate of the national monetary system. Closely resembling the definition of the French franc of 27 March 1803 (the Germinal franc), Romania’s official currency was described as weighing “five grams of silver, out of which 835‰ were fine silver and 165‰ alloy”. According to the decimal metric system of the Latin Monetary Union, the leu was divided into a 100 units called bani, thus ending the former subdivision into 40 parale. Art. 11 stipulated that the gold and silver coins of France, Belgium, Italy and Switzerland “shall be accepted by all exchange offices, the same as the country’s official currency”, representing the desire to adapt the Romanian monetary system to the norms of the Latin Monetary Union.
Latin Monetary Union
The Latin Monetary Union was established on 23 December 1865 on the initiative of Emperor Napoleon III, uniting France, Belgium, Italy and Switzerland around the principle that reference currency in each country of the Union would have the same weight in fine gold. The weight was determined at 4.5 grams silver or 0.29 grams gold, with a fixed exchange ratio of silver to gold of 1:15.5. These coins together with their fractional coins could be used in all member states of the Union, while still keeping their national symbols.
Later on, Greece also joined the Union in 1865, while numerous other states adopted its principles without formally acceding. Romania was one of these states, alongside Spain, Serbia or the Vatican. The Latin Monetary Union was dissolved in 1926, but the gold standard had already been abandoned in 1914.
The first Romanian coins
The monetary law of 22 April 1867 stipulated the issue of gold coins (20, 10 and 5 lei), silver coins (2 lei, 1 leu and 50 bani) and bronze coins (10, 5, 2, 1 bani). The mintage of gold and silver coins was delayed for lack of financial means and also due to the dependence relations of the Romanian state on the Ottoman Empire.
Taking all these into consideration, the 1867 monetary law stated that only bronze coins were to be minted at first. Therefore, until the State Mint was established in 1870, the coins were produced at the Watt & Co. and Heaton mints in Birmingham, as well as the Brussels mint. In the first decade after the law had been passed, only small quantities of gold coins were issued (102,000 lei) compared to the bronze issues (4 million lei only on the first order of 1867) or to the silver issues (approximately 14 million lei during 1873-1876).
Promissory notes: the first Romanian banknotes
The Independence War forced the Romanian state to face unprecedented financial difficulties, caused by the need to finance military operations and by the impossibility to obtain foreign financing.
The 1877 Law authorized the Ministry of Finance to issue promissory notes with a maximum value of 30 million lei. Having the denominations of 5, 10, 20, 50, 100 and 500 lei, the notes “will be payable to the bearer, will have a compulsory exchange rate and will be received as payment in all public exchange houses at their face value”, according to the law’s text. Furthermore, the circulation of the promissory notes would be limited to a determined period and would be traded-in 10% above their nominal value. The printing of the notes was assigned to the Bank of France.
The first banknote issue of the National Bank of Romania
The establishment of the National Bank of Romania was confirmed by the publishing of a law on 17 April 1880, stating the bank’s “exclusive right to issue notes payable to the bearer”. The National Bank was the sole body deciding the form, quantity and issue method of the notes whose value could not be lower than 20 lei.
Moreover, the NBR had to withdraw the existing promissory notes from circulation within four years after its establishment. However, the notes were only taken off the market in 1888 through a special law. Between 1880 and 1888, the promissory notes circulated having on the obverse a stamp with the name of the National Bank, the date 9 September 1880 and the authorized signatures of the central bank. Without having been the bank’s own issue, the stamped promissory notes represent the first banknotes that have the ensigns of the National Bank of Romania.
The first banknotes issued by the National Bank of Romania were dated 19 January 1881 and had the nominal value of 20 lei. The issue was printed in the NBR workshops in Bucharest, using stereotyped plate and watermark paper provided by the Bank of France. The same year were issued, in the same conditions, the 100 and 1,000 lei banknotes. The notes’ design was realized by the Georges Duval and the copper plates’ engraving by Pierre Dujardin, the same artist that had worked on the promissory notes. The NBR banknotes had the same characteristics as the 1881 issue and were printed until 1895 (20 lei banknote), 1906 (1,000 lei banknote) and 1907 (100 lei banknote).
The issue of the NBR banknotes represented the final step in the formation of the Romanian monetary system, ensuring sufficient currency for the development of the young independent Romanian state.
1890: the adoption of the monometallic gold standard
The law of 17 March 1890 maintained the definition of the national monetary unity that had been adopted in the 1867 monetary law (0.3226 grams gold, 900‰ fine gold), but revoked the silver definition of the leu. Silver coins became fractional coins. They could be given as payment up to the amount of 50 lei. The monometallic gold standard was thus introduced as the foundation of the national monetary system, in line with the global tendency at the end of the 19th century.
Currency in Transylvania, Banat and Bukovina (1867-1914)
In the Romanian provinces of the newly constituted Austrian-Hungarian monarchy, two types of silver coins continued to circulate legally: the Austrian florin (1fl = 100 Neukreuzer) and the union thaler (Vereinsthaler), issued by the Privileged National Austrian Bank as early as 1857. The so-called ‘commercial coins’ were also used, such as the ‘Levantine thaler’ or the ‘Theresian thaler’, a silver coin with the effigy of Maria Theresa. The gold coins with the widest circulation were the ducat (= 4.80 fl) and the crown (= 13 fl). According to the 1867 Romanian monetary law, 1 ducat equaled 11.75 lei.
The central Austrian-Hungarian bank was established only in 1878, with two headquarters in Vienna and Budapest. The new central bank also had branches in Transylvania, in Cluj and Arad. In 1892 took place a new monetary reform replacing the silver Austrian currency with a gold coin called the crown. Nevertheless, the silver florin still had unlimited payment power and equaled 2 crowns. The banknotes were bilingual (German and Hungarian) and the name of the denomination was written in the languages of all the nationalities subjected to the double monarchy.