Note: This currency has been replaced by the Euro.
Overview
The Luxembourg Franc was the official currency of Luxembourg from 1854–1940 and 1945–1999. The theory of "no obligation and no prohibition" meant that the country’s transactions could be in Euros or Francs, but payments could only be made in Francs.
Economy
The Luxembourg economy is stable, with high incomes, low unemployment, low inflation, and solid growth.
The industrial sector was originally based on steel, but has expanded and diversified into mainly chemicals and rubber products.
The gradual growth in the financial sector has compensated for the reduction in steel production.
The economy is based on foreign and trans-border employees, which account for 30% of the workforce.
Luxembourg is a member of the European Union (EU) and has traditionally been affiliated with the Netherlands and Belgium. The advantages of the open European market have benefitted Luxembourg.
History
The French invasion of other western European countries resulted in the French Franc circulating in many of them, including Luxembourg.
Luxembourg adopted the Belgian Franc in 1842 and again in 1848, after Belgium gainied independence from the Netherlands in 1839.
From 1842 — 1848, Luxembourg used the Prussian thaler as a currency.
In 1854, the Luxembourg franc and the Belgian Franc were circulated at par.
In 1940, the Reichsmark became the official currency in Luxembourg, and in January 1941, it was declared the only currency in Luxembourg.
In 1944 the Luxembourg Franc was re-introduced and pegged at par with the Belgium Franc.
On January 1, 1999, a fixed rate of 1 Euro = 40.3399 Francs was established. Later the next year, banknotes and coins of the same denominations as the Luxembourg Franc were issued. By February 28, 2002 the old banknotes and coins had lost their value.
