Historical Sketch

The Luxembourg dynasty dominated central Europe until its extinction in 1443, after which the lands fell to Burgundy and Habsburg, thus becoming the Austrian Netherlands. Napoleonic France conquered and annexed them in 1795. The 1815 Congress of Vienna partitioned the territory between its neighbors Netherlands and Prussia, leaving a small buffer in the middle that was constituted as Grand-Duchy of Luxembourg in personal union with the Netherlands, also a member of the German Confederation. After the foundation of the Kingdom of Belgium in 1830 another partition further reduced the Luxembourg territory when the western part joined the new state a few years later. In 1866, Luxembourg left the German Confederation, and the dynastical union with the Netherlands ended with Wilhelmina's succession to the Dutch throne in 1890, as Luxembourg was at that limited to male succession. During both two World Wars, Luxembourg got occupied by Germany, at the second instance in 1940, it was dissolved and annexed. Each time after the German defeat, Luxembourg was restored Since the end of World War II, Luxembourg has become part of the Euro integration.

Monetary History Overview

After its constitution in 1815, Luxembourg did not introduce a distince monetary order. The accounting used was Dutch, while the circulating money was dominated by French coinage, later also Belgian. Already member of the German Confederation, Luxembourg also joined the German Customs Union that regulated tariffs. In consequence, the North German (Prussian) Thaler was admitted as secondary unit of account beside the Dutch Guilder. In December 1848 finally, a currency law was passed to introduce the Luxembourgish Franc as national currency. It was at par with the French and Belgian Franc, and the coins of the two neighbouring countries made up the circulating medium. Local subsidiary coins were issued in small amounts after 1854, and a commercial bank began issuing paper money in 1856. The secondary accounting in Prussian currency remained in place, after 1876 replaced by German Reichsmark. After the First World War, Luxembourg demonetized all German money to separate from the starting inflation. In May 1922, an economic union with Belgium came into force which also put the Luxembourgish and Belgian currencies to parity. In March 1935, Belgium and Luxembourg devalued their currencies at different rates, after that the Luxembourgish Franc noted 25% higher than the Belgian. In 1940, Germany occupied both Belgium and Luxembourg, the latter was de facto annexed. In February 1941, the German Reichsmark became sole legal tender and the Luxembourgish currency was abolished. The Allied liberation of 1944 restored Luxembourg as a state. In October, also the Luxembourgish currency was restored, and with parity with the Belgian Franc reinstated. The de facto currency union remained in place until the adoption of the European currency. The private paper money of the International Bank in Luxembourg continued to be current, but the majority of the circulating medium was now issued by the government which handed over the authority to the Currency Institute of Luxembourg in 1983. Luxembourg is a founding member of the European Monetary Union and has introduced the European Euro in 1999. The Luxembourgish banknotes and coins were withdrawn in 2002.

Luxembourg joined the International Monetary Fund (IMF) on 27.12.1945 as a founding member.

Currency Units Timeline

Currency Institutes Timeline

Monetary History Sources