Twenty years of national currency

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  • Twenty Years of National Currency

    January 2012

    On 8 October 1991, Slovenia introduced its own currency and set out on a path of monetary independence. The tolar, its official legal tender at the time, was one of the most important attributes of the Slovenian State. Monetary independence was a precondition in gaining the young country's international recognition. On 1 January 2007, the tolar, our trustworthy and stable currency, was replaced by the euro. Slovenia was the first of the ten countries to have joined the EU in 2004 to adopt the euro.

    A start with provisional payment notes

    Pending the issue of the tolar banknotes and coins, the provisional payment notes issued by the Republic of Slovenia were used as legal tender with a view to preventing a potential intrusion into the monetary system. The conversion from Yugoslav dinars to provisional payment notes commenced in every financial institution throughout the country on 9 October 1991 and was concluded three days later; the former dinar was replaced by provisional payment notes at a rate of 1:1.

    The tolar as the first currency unit of independent Slovenia

    The country's monetary independence was established upon the expiry of a three-month moratorium on the implementation of the independence-related decisions agreed upon in the Brioni Agreement; the National Assembly of the Republic of Slovenia adopted the Monetary Unit of the Republic of Slovenia Act, which introduced Slovenia's own currency, and the Use of the Monetary Unit of the Republic of Slovenia Act, which stated that the tolar was to be the only legal tender in Slovenia. The name tolar was chosen from among competitive alternatives including klas, krona, karant, lipa, etc., and was brought into the world soon after midnight on 8 October 1991. It was subdivided into 100 cents. The circumstances in which the tolar was born were far from favourable. In addition to political instability, the former Yugoslav state experienced high rates of inflation and general public mistrust — a foreign currency, namely the Deutsche Mark, was the actual store of value. The initial exchange rate was set at 32 tolars for every Deutsche Mark. The main reasons for the final decision to adopt a floating exchange rate were the insufficient foreign exchange reserves in the Slovenian banking system, the borrowing capacity on the foreign financial markets and a broader social consensus. In several crises that affected some transition countries during the 1990s, this decision was proven to be correct. On 30 September 1992, the Bank of Slovenia put the first tolar banknotes in denominations of 100, 500 and 1 000 tolars into circulation. They were followed by banknotes in other denominations. The largest banknote (10 000 tolars) was dedicated to the author Ivan Cankar (1876–1918), the 5 000-tolar banknote to painter Ivana Kobilca (1861–1926) and the 1 000-tolar banknote featured a portrait of France Prešeren (1800–49), the greatest Slovene poet. The 500-tolar banknote was dedicated to the architect Jože Plečnik (1872–1957), the 200-tolar banknote to the composer Jacobus Gallus (1550–91), and the 100-tolar banknote to the painter Rihard Jakopič (1869–1943). Then came the mathematician Jurij Vega (1754–1802) on the 50-tolar banknote, on the 20-tolar banknote the chronicler Janez Vajkard Valvasor (1641–93) and finally on the 10-tolar banknote the writer of the first book in the Slovene language – the Protestant reformer, Primož Trubar (1508–86).

    Slovenian tolar banknotes were designed by Miljenko Licul and featured portraits by the artist, Rudi Španzel. They were printed by a British company, De la Rue. Tolar coins were issued by the Republic of Slovenia in a range of denominations and with a range of motifs. The Bank of Slovenia decided the date the coins would be put into circulation and was responsible for the professional and technical tasks relating to the issuing of the coins. The coins were designed by Miljenko Licul and Zvone Kosovelj, and modelled by the sculptor, Janez Boljka.

    Money was the projection of the outcome of work, the reflection of newly-created material values

    The Bank of Slovenia and the Slovene Academy of Sciences and Arts chose personalities of importance in the history of the Slovene identity. Licul's fundamental idea was that money is the projection of the outcome of work, the reflection of newly-created material values. This was why the personality chosen was always represented as a motif set in the context of the present time, in the actual relationship between creativity and its reward. Each likeness was set in a triangle which included the person who represented an important innovation in a certain sphere, then the field this person worked in, symbolised by certain tools, and the result of the relation between the person and the tool. The triangle person-tool-product was therefore the basic concept behind the design of the Slovene tolar. The two key ideas — the triangle person-tool-product and an implication of transience, the portrait continuing into a silhouette — were enhanced with colour. The idea of having beautiful and cheerful banknotes for the third millennium was drawn from guilders. The colourful vigour incorporated into the story told by each note was complemented by the tactile features of the paper produced in Radeče. In addition to its pleasant rustle the paper was also very durable. Unlike banknotes that conveyed historical and cultural stories, the coins were characterised by motifs taken from the natural world. The animals depicted were all taken from the ecosystem of this part of the world (e.g. a goldenhorn, swallow, grasshopper, trout and olm).

    The euro as a national currency

    The leading role in the adoption of the euro was played by the member state itself. In its accession negotiations and by signing of the Accession Treaty, Slovenia undertook to commit to join the Economic and Monetary Union and introduce the single currency, the euro, subject to meeting the required conditions. The assessment of a country's compliance with the criteria is published every two years (as a rule in October) in a Convergence Report. According to the provisions of the treaty, a member state can ask the European Commission and the European Central Bank to conduct an early assessment of its compliance with the criteria at any time during this two-year period. Slovenia made this move at the beginning of March 2006.
    At Slovenia's request, the European Commission and the European Central Bank provided separate opinions on 16 May 2006, assessing that Slovenia had met the criteria for adopting the euro on 1 January 2007.

    The European Council (EU heads of state and government) then adopted a political decision on the euro area enlargement at its meeting on 15 and 16 June 2006 in Brussels; the legal basis for joining the monetary union was approved on 11 July 2006 by the EU Economic and Financial Affairs Council (ECOFIN) composed of the member states' economics and finance ministers. The Bank of Slovenia frontloaded 450 000 euro coin starter kits for the public, 150 000 euro coin starter kits for retailers and 100 000 euro coin collector sets for numismatists and collectors. A total of 296.3 million coins worth €103.9 million with a combined weight of approximately 1  460 tonnes were delivered to Slovenia through different channels. In all, 94.5 million banknotes worth €2.175 million with a total weight of 76 tonnes were ordered. The coins, which are owned by the state, were minted by the Mint of Finland, while the euro banknotes were 'borrowed' from the European Central Bank's strategic reserves. From 1 January 2007, Slovenia has been using euro banknotes that share the same design across all countries and they come in seven denominations (5, 10, 20, 50, 100, 200 and 500 euros) and euro coins minted in eight denominations (1, 2, 5, 10, 20 and 50 cents and 1 and 2 euros), which differ slightly in terms of design from country to country. The coins have a common side and a national side with country-specific motifs. Regardless of the issuing country, all coins can be used as a means of payment anywhere in the euro area.

    Euro banknotes share the same design across all euro area countries

    They come in seven denominations: €5, €10, €20, €50, €100, €200 and €500. Each banknote depicts one of the European architectural styles: Classical, Renaissance, Baroque and Rococo, the age of iron and glass and modern twentieth century architecture. The front sides feature windows and gateways symbolising the European spirit of openness and cooperation. The 12 stars of the EU represent the dynamism and harmony of contemporary Europe. The bridges on the back symbolise communication between the peoples of Europe and between Europe and the rest of the world. There are currently 16 different or national coins in circulation; they may be used as legal tender anywhere in the euro area. Thirteen EU and euro area member states are responsible for issuing their national euro coins; in addition, Monaco, San Marino and the Vatican City are also entitled to issue their own euro coins through agreements with the EU. The coins come in eight denominations: 1, 2, 5, 10, 20 and 50 cents, and 1 and 2 euros. Euro area countries may also issue a commemorative 2-euro coin once a year. In March 2007, Slovenia issued 400 000 commemorative 2-euro coins to celebrate the 50th anniversary of the signing of the Treaty of Rome. The national side of the coin features the Slovenian text: Rimska pogodba – 50 let, Evropa, Slovenija and 2007; the coin's edge is the same as that of the Slovenian 2-euro coin.

    The introduction of the euro brought about many benefits. Trade between member states increased, the euro contributed towards increased operational transparency because FX conversions were no longer needed, consumers were able to compare prices, the internal market strengthened, inflation was stabilised and interest rates fell. In the first eight years, the euro area enjoyed one of the longest sustained periods of economic growth in the history of European integration. Unfortunately, Europe has recently been grappling with a serious and persistent debt crisis.

    The way forward

    Most experts agree that the adoption of the euro was a positive move for Slovenia. They also share the view that the euro should continue despite the current debt crisis in the euro area and some predictions that the monetary union will not survive. A stable euro plays an important role in the economic and political stability of European nations. A stable euro offers Slovenia the prospect of economic development and a promising future.

    Text by: Marko Šiška, Government Communication Office; Sinfo, January 2012