Belgium already adopted the
French franc when it became independent in 1830. The LMU was a natural
extension of this franc zone and, as the two teamed up with Switzerland
in 1848, they encouraged others to join them. Italy followed suit in
1861. When Greece and Bulgaria acceded in 1867, the members established
a currency union based on a bimetallic (silver and gold) standard.
The LMU was considered sufficiently serious to be able to flirt with
Austria and Spain when its Foundation Treaty was officially signed in
1865 in Paris. This despite the fact that its French-inspired rules
seemed often to sacrifice the economic to the politically expedient, or
to the grandiose.
The LMU was an official subset of an unofficial "franc area" (monetary
union based on the French franc). This is similar to the use of the US
dollar or the euro in many countries today. At its peak, eighteen
countries adopted the Gold franc as their legal tender (or peg). Four
of them (the founding members of the LMU: France, Belgium, Italy and
Switzerland) agreed on a gold to silver conversion rate and minted gold
and silver coins which were legal tender in all of them. They
voluntarily limited their money supply by adopting a rule which forbade
them to print more than 6 franc coins per capita .
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