Historical Sketch

In the 16th century, the Ottoman Empire conquered the eastern Balkans, including the territories of Moldavia and Wallachia. Numerous Russian interventions beginning in the mid-18th century gradually weakened the Ottoman suzerainty so that in 1829 a larger autonomy got attained. In 1859, Moldavia and Wallachia became united in a personal union, and two years later also in a state union, when also the Ottoman nominal suzerainty was ended. In 1866, both finally merged into the Principality of Romania, which in 1881 became restyled into kingdom. The Austro-Hungarian defeat in World War I resulted in the Romanian annexation of Transylvania and Bukovina, which had been part of the Habsburg Empire since the 17th century. In the east, the Russian Bessarabia was gained, as well, but had to be ceded back after World War II. The defeat of 1945 and subsequent Soviet occupation led to the abolition of the monarchy and establishment of a People's republic. Communist rule ended in 1989, and Romania joined the European Union in 2007.

Monetary History Overview

Historically, three different accounting standards existed in the territories of Moldavia and Wallachia. In September 1859, the Walachian accounting prevailed over the two others used in Moldavia. The money in circulation was Turkish and Russian, supplemented by Austrian ducats. Two attempts at creating a national currency called "Romanat" had failed in the 1860s before the 1st Romanian Leu became the national currency beginning of 1868. It was bimetallic in the standard of the Latin Monetary Union. The National Bank of Romania began operations in 1880 and took over the central bank role. Like other countries before, Romania abandoned bimetallism in 1890, and the Leu switched to the gold standard. The outbreak of the First World War triggered the suspension of the gold peg, and the Leu began to depreciate massively. The economic crisis lasted into the mid-1920s, and in 1929, a largely devalued Leu was pegged to gold again. Only for three years, then the gold standard had to be abandoned for good during the economic crisis of the 1930s. In the Second World War, Romania allied with the Axis powers, and the Leu got de facto pegged to the German Reichsmark. In the post-war economic crisis and during the occupation by the Red Army, hyperinflation set in. The Leu lost more than 99% of its value within two years. Remediation was achieved in two steps. In August 1947, a first currency cut was made by removing four zeros and massively confiscating the circulating cash. The 2nd Romanian Leu was devalued by another 80% and got pegged to the US Dollar. In January 1952, a second currency reform removed another two zeros. Again, only a limited amount of cash was exchanged into the 3rd Romanian Leu, the surplus being confiscated. The new currency was again devalued by more than 90% and pegged to the US Dollar. This last devaluation was mostly reverted in February 1954, when the Leu repegged to the Soviet Ruble. The official rate remained frozen until the end of the communist rule. Since the late 1950s, effective rates for transactions with capitalistic countries began to emerge. Beginning of 1990, the official rate was abolished and got replaced by a floating effective rate, which corresponded to a nominal 76% devaluation. The Leu now depreciated rapidly at a rate of around 50% per year until the early 2000s, when the economy finally began to stabilize. In 2005, a currency reform was carried out. Four zeros were cut, and the 4th Romanian Leu became the new unit. The currency has remained more or less stable since then.

Romania joined the International Monetary Fund (IMF) on 15.12.1972.

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