The Principality of Liechtenstein is a dwarf state in central Europe, bordering Austria and Switzerland. The country's population speaks German. Despite the existence of a constitution, the prince is actually an absolute monarch. The territory of the tiny state totals 160 square kilometers, the population is 37 thousand people.
"A quiet harbor"
Liechtenstein is one of the most economically developed and prosperous countries in the world. The principality partially owes its financial prosperity to its state sovereignty, which allows creating favorable conditions for attracting foreign investment and business. The tourism industry brings big income to the treasury. As in other alpine countries, the natural conditions in the principality are well suited for winter sports.
Dynasty foundation
Liechtenstein's independent status is rooted in the distant past. In the 17th century, the representative of the current ruling dynasty, Hans-Adam I, acquired the lands of the principality, which were under the direct control of the monarch of the Holy Roman Empire. Thanks to this fact, the feudal clan received special rights and privileges. Representatives of the Liechtenstein dynasty occupied the position of vassals only in relation to the emperor. In 1719, the monarch officially recognized the head of the clan Anton Florian as a sovereign prince. Over the course of three centuries, the dynasty repeatedly entered into political unions, but managed to maintain the independent status of its territory.
The early history of the principality
An interesting fact is that during the first hundred years, representatives of the Liechtenstein clan did not visit their possessions. Land acquisition pursued purely political goals. Thanks to the presence of a sovereign princedom, the ruling clan occupied a higher position in the hierarchy of the Holy Roman Empire.
The Napoleonic Wars put an end to the feudal system. At the beginning of the 19th century, the Holy Roman Empire ceased to exist. The Principality of Liechtenstein no longer had obligations with respect to any feudal overlord outside its borders. The dwarf state came under the protection of the Austro-Hungarian Empire. During the 19th century, the first banking institutions and industrial enterprises appeared on the territory of the principality. The army of Liechtenstein, which consisted of only a few dozen people, was abolished due to the inappropriateness of its content.
In 20th century
After the First World War, the principality ceased to hope for the protection of the defeated Austro-Hungarian Empire and entered into a customs and monetary union with another neighboring state - Switzerland. This decision saved Liechtenstein from occupation by Nazi Germany. The rulers of the Third Reich did not want complications in relations with Switzerland and did not invade the territory of the small defenseless principality. However, after the war ended, the castles, palaces and lands belonging to the Liechtenstein dynasty located in Bohemia, Moravia and Silesia were expropriated by the governments of Czechoslovakia and Poland.
Economy
The number of commercial companies registered in the principality exceeds the number of its citizens. Having no natural resources, the dwarf state was able to develop the industrial and financial sectors of its economy. The secret to a tiny country’s success lies in its low taxes and simple business registration process. On the territory of the principality there are large enterprises for the production of electronics, precision instruments, ceramics and pharmaceutical products. The head of the ruling dynasty ranks sixth on the list of the richest monarchs, and the standard of living of his subjects is one of the highest in the world.
Finance center
The Principality has a developed banking system. Low taxes effectively attract capital from around the world. In the past, the state treasury received significant income from foreign funds, which were registered in the names of lawyers who are subjects of the principality, with the aim of concealing the real owners. For many years, Liechtenstein has been on the list of countries helping citizens of other states avoid taxation in their homeland. The governments of Germany and the United States accused the bank of the princely dynasty directly.
National currency
It is quite difficult to figure out which currency in Liechtenstein is considered official. After concluding an agreement on a single trading space with Switzerland, the main legal tender in the principality is the franc issued by the central bank of the confederation. In addition, Liechtenstein's own currency was issued in limited quantities. Coins and banknotes of a tiny sovereign country are of interest mainly to collectors.
The dwarf state joined the Schengen Agreement, but did not become a member of the European Union. The integration of the principality was limited to entry into the common economic space and did not reach the euro. The currency of Liechtenstein remained the same, although the EU currency to some extent has circulation in the country. Unlike Euros, US dollars in a dwarf state are not accepted practically anywhere.
The first currency of Liechtenstein
At an early stage of its existence, the principality minted gold ducats, as well as silver thalers and cruisers. On the obverse of all the coins was a portrait of the head of the dynasty. During the reign of Prince Johann the Second, the minting of the so-called allied thalers began. This large silver coin was in circulation in most German-speaking states of that time. The ruling prince was also depicted on the front side of the union thaler. Unlike other German countries, the early currency of Liechtenstein was minted not only from silver, but also from gold.
Austrian guilders, crowns and hellers
Like all dwarf states, the principality has always enjoyed the patronage of one of its larger neighbors. It is worth noting that a special name for the currency of Liechtenstein never existed. From its founding until the First World War, the principality maintained close relations with Austria. This country led the Holy Roman Empire and until the beginning of the 20th century had a great influence in Europe. Austrian guilders until 1892 served as Liechtenstein's main currency. As a result of the monetary reform, they were replaced by crowns and hellers. At that time, the empire began to gradually lose its power, and its currency ceased to inspire confidence. After World War I, the principality refused to use Austrian banknotes because of their instability.
Franks
In 1920, Liechtenstein's only paper currency in history was issued. She had an Austrian name - Geller. A total of three series of notes were printed. Nowadays, you can only see photos of the currency of Liechtenstein of that period, since these banknotes are a big numismatic rarity.
Switzerland allowed the dwarf state to issue a limited number of francs, but only in the form of commemorative coins made of precious metals. Usually they are minted on the occasion of the transfer of power to the new prince. Liechtenstein gold and silver francs are not in circulation, as they are intended only for collectors.