Re: CHAT: San Marino

Padraic Brown wrote:

> >Equivalent, or actually the same?   I looked up that fact, and the book
> >said "Italian lira". This book has been known to be wrong before, but
> >I had been under the impression that San Marino had signed a monetary
> >union treaty with Italy, effectively making the Italian lira the same currency
> >as San Marino's official currency.  Argentina, FWIW, had wanted to do
> >the same with the US dollar some several months back.
>
> 1 San Marino lira = 1 Italian lira. So not really the same.
>
> Ecuador did exactly that. No more sucres; only dollars. Though I've
> never gotten a clear answer as to what they'll do about dollar
> fractions.
No, what Ecuador did, and what Argentina and actually a goodly number
of other countries have already done, is to use the US dollar as their reserve
currency, in exactly the same way as the US used to use gold bars.  For every
Argentinian peso, there is exactly one US dollar in a vault somewhere.  They
did this to "peg" their currency to the more stable US dollar, to avoid the
recurrent fear of hyperinflation that they have experienced in the past.  To do
all this, they need not sign a treaty with the US; they need only declare that the
currency will not freely float on the open market.  What I was referring to about
Argentina, though, was that they literally wanted to abolish the Argentinian peso
entirely, and use the US currency as the official currency.  In doing this, they would
be effectively ceding a significant amount of sovereignty, because they would not
be able to value their currency to the needs of their economy.  Greenspan told
them if they did this, they should not expect him to adjust US monetary policy
to help out their economy.

So, that was what I was asking about San Marino.  I had assumed that since
San Marino is so very small, that they didn't even bother to print their own
currency, with "San Marino" printed on it and all, and then peg it to the Italian
lira.  It seemed much easier for me to see them using Italian liras outright.

[BTW, is the Italian plural of "lira"  "lire"?]

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Tom Wier   |     "Cogito ergo sum, sed credo ergo ero."
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