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Monetary chaos


Monetary chaos

It is hard to imagine today but for several centuries until 1850 there was complete chaos monetary in Switzerland. At that time, a numerous authorities such as the cantons, municipalities and even monasteries had the privilege of production and issue their own coins. Since this privilege has been widely used without any external oversight it effected plenty of different coins of different denominations, currencies and systems units in circulation. In addition, the chaos was intensified by the influx of foreign money coming from payment of mercenaries. To make the matter worse, first range of notes issued by private banks were introduced as well to the circulation.

Swiss franc was born


Swiss franc was born

Such situation could not last much longer as it complicated daily business transactions. The Swiss Federal Constitution of 1848 provided for the transfer of all rights to mint coins to the Federal Government only. The continuation of this process was the Federal Assembly on 7 May 1850 which established the first Federal Monetary Act. This Act was based on the French model and introduced a uniform standard silver "franc" as a currency for the whole of Switzerland. At that time, no private mint was able to produce coins for the whole country. Therefore, first coins were minted in Paris and Strasbourg. In 1853, the Federal Government took over the former mint canton of Bern to start trial production. Mint Bern renamed the Federal Mint, and in 1890 became an official federal institution.



Foreign coins were still overwhelming 80% of the money in circulation. Although the Monetary Reform of the year 1850-1852 played a key role in the exchange of money it was still not able to nationalize the entire quantity of coins contained in the circuit. Of all the silver coins of high quality only a small percentage was Swiss origin. Most of these coins came from France and Italy. While the coins minted in France, Italy and Belgium were in line with the new Swiss standards, they were recognized as legal payments in Switzerland. At the same time new Swiss coins were also in circulation in these countries.

The Latin Monetary Union


Latin Monetary Union

In 1865, ministers from France, Belgium, Italy and Switzerland signed a treaty monetary (the Latin Monetary Union). This treaty contained detailed regulations on the weight, purity, shape and exchange rate of gold and silver coins. In addition, the treaty had written record that governments have the right to strike fixed amount money per capita. It was also found that these identical minted gold and silver coins will be in free circulation within the Union area. In 1866 the Swiss government announced that the Federal Council considers parity coinage of silver coins from these four countries as a first step towards the the concept of a universal monetary system. Latin Monetary Union remained officially in use until 1926. From this year, the legal tender in Switzerland remained the Swiss franc only.