The Bank of Italy was founded in 1893 but it was only in 1926 that it became the only institution authorized to issue banknotes. Until then, the Banco di Napoli and the Banco di Sicilia were also authorized to issue notes.

In modern monetary systems, the banknote - also known as paper money - is a payment instrument with legal tender status. This means that a banknote can be used and accepted in economic transactions regardless of its intrinsic value or its convertibility into precious metals.

The quality of the watermark used in producing banknotes, the refinement of the designs, and the attention given to the security features of the banknotes are a good indication of the degree of a country's development. This makes the banknote a symbol of the country that issues it.

In this section we describe the main features of the lira-denominated banknotes issued by the Bank of the Italy and of the notes specially produced for the Italian colonies in Africa and for the National Bank of Albania.


The Bank of Italy was established under Law 449/1893, following the merger of the Banca Nazionale nel Regno with the Banca Nazionale Toscana and the Banca Toscana di Credito.

The creation of the Bank of Italy brought to a close a long period of plans and studies, beginning immediately after the proclamation of the Kingdom of Italy, to put some order back into the complex panorama of issuing banks inherited from the pre-unification states.

However, the approval of the 1893 law was mainly in response to the crisis in the issuing banks, in particular the Banca Romana. Under the new law, the State authorized the Bank of Italy, together with the Banco di Napoli and the Banco di Sicilia, to issue lira banknotes, while retaining control over this activity and setting the maximum amount in circulation.

The principle that Bank and State should together issue banknotes, so that neither one of them could produce a complete note alone, led to a State stamp being placed on all banknotes. It was only following a regulation of 1981 (Regulation 811/1981) that the State stamp became part of the lira banknote production process and no longer a separate operation.

While the models for the new banknotes were being prepared, the Bank of Italy was authorized to create and issue notes using the clichés of the old Banca Nazionale del Regno d'Italia. The Bank of Italy became operational in January 1894 and in the October of the same year took on the management of Italy's provincial treasury services, a function it still performs today.

A fundamental technical feature of the banknotes issued in this early period was the placing of the counterfoil - a security feature - on the left-hand side of the note. This meant that at the moment of issue, the banknote was detached from its counterfoil by an irregular cut - which remained with the issuing bank - and so the exact match of the banknote with its counterfoil constituted proof of its authenticity.

Royal Decree 321/1895 was passed to regulate better the delicate operations of production and safe-keeping of the new banknotes and to ensure more careful control of the withdrawal from circulation of worn or damaged notes and their ensuing destruction by burning. These provisions were then reviewed and partly changed by Regulation 508/1896 which marked a significant stage in the reorganization of the production process for banknotes - both those issued by the State and those issued by the Bank.

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The law that established the Bank of Italy also lay down the term of two years for replacing the old paper money in circulation with the new kind of banknotes.

The Bank quickly began to work on the new banknotes project, and by the autumn of 1894, the Head of the Banknote Printing Office, Giulio Cesare Carraresi, was ready to entrust Rinaldo Barbetti, a famous goldsmith from Siena working in Florence, with the task of designing the new notes.

Barbetti's proposal to put portraits of illustrious people on one of the sides of the banknotes was rejected in favour of reproductions of complex decorative motifs which were more difficult to falsify.

The choice of allegorical representations fell on subjects of a general nature such as Art (50 lire), Science (100 lire), Justice (500 lire), Industry, Trade and Agriculture (1,000 lire) and Credit (50, 500 and 1,000 lire). Then, to make it more difficult to falsify the new notes, they were printed in two or more colours, according to denomination, on white watermarked paper.

On the basis of Barbetti's designs, the Bank's printing works worked on engraving the wooden clichés, from which the metal clichés were produced to print the notes using a special (galvanoplastico) process. The manufacturing of the clichés was entrusted to the engraver Ballarini, of the Istituto S. Michele, famous for having worked on the banknotes issued by the Banca Nazionale nel Regno. The printing was done exclusively in the Printing Works.

The new "Banca d'Italia" banknotes were issued as of 1896.

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The first banknotes issued by the Bank of Italy and designed by Barbetti received some criticism. Besides some defects of an aesthetic nature, other, more serious, technical defects were noted, i.e. the combination of colours "did not pose any real difficulties for counterfeiters". As early as 1898, even before all the denominations had been issued, proposals for new designs were requested from Rome's Circolo Artistico Internazionale, but none of the designs was satisfactory.

In 1900 the Director General of the Bank, Bonaldo Stringher, made informal inquiries to find the names of at least three artists to create the new designs. In the end the choice fell on Giovanni Capranesi, a well-known artist of some repute, who was the President of the Accademia di San Luca in Rome.

Work on the new sketches was underway by 1910. On the front of the higher denomination notes were the two Nicola Cantalamessa-Papotti sculpture groups that decorated the façade of Palazzo Koch (later removed in the 1930s because of building stability concerns). The choice of the two groups of figures was dictated by a desire to give the new designs "a particularly Italian character of simplicity and purity, eliminating any concession to bizarre forms of art which might offend the balanced taste of the Italian people".

As regards the choice of subjects and the production of the new banknotes, a special commission was formed in 1910, chaired by Tito Canovai who became Deputy Director General in 1914, and Tommaso di Lorenzo, Andrea Bianchi and Ettore Filosini as members. The commission aimed to guarantee both aesthetic and technical criteria to ensure the success of the new banknotes.

Tommaso di Lorenzo, Director of the Regia Calcografia, and Andrea Bianchi were put in charge of the hand engraving of the clichés for the new banknotes, while the machine engraving and all the other work requiring special technical skills was done by Ettore Filosini, the Technical Director for the production of Bank of Italy notes. The paper mill was managed by Enrico Galliani who had previously been the director of large paper mills in the North of Italy.

The large number of counterfeit banknotes in circulation, the diffidence that was beginning to emerge in some of the provinces towards paper money, and the discovery in Milan in 1910 of the production of counterfeit 1,000-lira notes, led the Bank to examine the possibility of creating new notes that were more difficult to falsify and were more aesthetically pleasing.

The strong point of the innovation campaign was the search for new subjects, the improvement of the production systems for watermarked paper and the introduction of intaglio printing; counterfoils were discontinued. The new banknotes went into circulation in 1915.

In 1926, with the unification of the banknote issuing service, the Bank of Italy became the only bank authorized to print notes (Royal Decree 1926/812, ratified by Law 1926/1262).

In 1928 the State Printing Works was established with the task of meeting all the printing needs of the public administration, including printing State notes, postage stamps, revenue stamps, and revenue stamped paper.

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Over the years, the defences against counterfeiting, initially aimed only at the production systems and printing techniques, also began to focus on incentivizing the police forces to act more incisively. International links were also important, especially the "International Convention for the Suppression of Counterfeiting Currency", which entered into force in Italy under Royal Decree 1518/1935.

During the Second World War, the establishment of a new banknote printing works in L'Aquila allowed banknotes to be printed in the same way. Production continued although more slowly and with great difficulties even after the bombing of December 1943, which practically destroyed all the machinery and claimed the lives of 3 men and 16 women.

While the printing works in L'Aquila were producing the latest series of banknotes and those for circulation only in Italian East Africa and in Albania, the State Printing Works' banknote section, which then had inadequate machinery, was exclusively producing the old kind of Bank of Italy notes designed by Barbetti.

From October 1943, the State Printing Works suspended all activities after the German Army carried away some of its Roland engraving machines and other printing materials to the Istituto geografico militare in Florence. The Printing Works in Rome began work again only in November 1944, following the liberation of the city by the Allied forces, after which the seized machinery was returned.

As a result of pressure from the Government of the Italian Social Republic, in October 1943 some of the offices of the Bank's Head Office were transferred to Moltrasio on Lake Como. The production of currency was outsourced to private companies, under the control of the State Printing Works and representatives of the State General Superintendency and the Bank of Italy.

In July1943, following the Sicily landing, the first issues of Allied Military Currency (AM lire) went into circulation with distribution increasing with the advance of the Allied forces.

In 1942 the Washington Bureau of Engraving and Printing had started a project to introduce paper money for the American occupation. In March 1943 the new banknotes were designed, and printing began in June by the Forbes Lithograph Manufacturing Company. The Bureau then overstamped the banknotes with the necessary details (face value, series, and country of use). On 24 September 1943, the regulations for the circulation and exchange of Allied Military Currency were published, establishing equal value for the allied banknotes and Italian lira notes.

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The war had brought the drastic depreciation of the Italian lira which showed the need to adjust the scale of the denominations to the changed purchasing power of the currency.

For this reason, on 4 August 1945 the Bank of Italy was authorized to issue provisional notes, for a total value of 217.5 billion lire. These notes functioned as regular banknotes, in denominations of 5,000 and 10,000 lire, making up for the lack of notes with a face value greater than 1,000 lire.

The agreement of 24 January 1946 between the Italian Government and the Allied Military Government allowed the Bank of Italy to issue AM lire in order to unify circulation of the latter with the Bank's own notes. AM lire ceased to be legal tender on 30 June 1950 (Ministerial Decree of 18 February 1950), extended to 31 December 1951 (Ministerial Decree of 16 April 1951). The long story of American occupation currency was concluded with Law 3598/1952, authorizing the Treasury Ministry to issue the Bank of Italy with Treasury bills for a total amount equivalent to the AM lire withdrawn from circulation and destroyed after the 1946 Convention was signed.

Following the success of the provisional 5,000 and 10,000-lira notes, in 1948 the Bank of Italy was this time authorized to issue official notes and paper in denominations of 5,000 and 10,000 lire which went into circulation in 1951.

To save time, for the reverse of both banknotes, the allegorical group representing Genoa and Venice was reproduced. This group had already been used for the new type of 1,000-lira note, designed by Capranesi. Mrs Celeste Capranesi, daughter and heir of the dead artist, sued the Bank for having damaged the honour and reputation of her father because of changes made to the original drawings. She claimed damages of 15 million lire and the destruction of all the banknotes printed.

The dispute was resolved by an agreement requiring the Bank to honour the memory of the deceased artist with a suitable donation and allowing the banknotes to go into circulation. Despite criticism in the press - on several occasions announcing the imminent withdrawal of the notes because the public did not like them at all, mostly because they were inconveniently large - the new banknotes remained in circulation until 30 June 1969 (Ministerial Decree of 20 April 1968).

Lastly, the "Staderini case" is worth mentioning. This had to do with the printing of the 1944 series of 500 and 1,000-lira banknotes by the Staderini Printing Works in Rome. When the first issue of banknotes was put into circulation, it was discovered that some of the films used to produce the two highest denomination notes had gone missing. The Staderini firm in Rome and Arte Grafiche of Bergamo immediately had their authorization to produce the incriminated notes revoked, and the notes in question were withdrawn and destroyed. The 50 and 100-lira notes, produced by the State Printing Works, were regularly issued and put into circulation in August 1946. They remained legal tender until June 1953.

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At the start of the 1960s the banknotes in circulation, all created immediately after the Second World War, were beginning to show their age, especially in terms of security. Once again, the range of denominations available no longer met the changed needs of the country, making higher-value notes necessary. Because of price increases between 1938 and 1964, the lira was worth one hundredth of its initial value.

The Bank of Italy commissioned Fiorenzo Masino Bessi to create a new series of banknotes which, according to a report of 8 April 1960, would honour Italian inventiveness in its many forms. In principle, portraits of Verdi, Raphael (later replaced by Christopher Columbus) and Michelangelo were proposed for the 1,000, 5,000 and 10,000-lira notes. Leonardo da Vinci was chosen for a higher value note, 10,000 lire, since he was the precursor of scientific research and the triumphs of modern technology.

To harmonize the whole series, Bessi also reworked the designs for the 5,000 and 10,000-lira notes which had already been prepared by the Bank's artist, Lazzaro Lazzarini. The size of the notes was also studied to take account of the need to keep them in a normal wallet without having to fold them and to standardize them with the notes circulating in the other European Community member states.

For the first time since the end of the Second World War, there was a change in the symbol of the Italian State. The previous Medusa's head which had been printed typographically was substituted by a new intaglio print depicting the winged lion of St. Mark, taken from the high relief on the façade of the Doge's Palace in Venice and the coats of arms of the other three Maritime Republics: Pisa, Genoa and Amalfi (Ministerial Decree of 23 February 1971).

The numbering also took account of the banknotes' new size. The previous larger-sized notes carried the series number on the two opposing corners of the note and the progressive number on the other two whereas the new banknotes had only one alphanumeric code incorporating both the series and the number.

To combat counterfeiting more effectively, at the end of the 1960s the Bank of Italy decided to introduce some new features in the production of 1,000 and 5,000-lira notes, such as a metal security thread incorporated into the watermarked paper.

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At the beginning of the 1970s, the Bank of Italy designed and produced two banknotes of intermediate value - the 2,000 and the 20,000 notes - in order to extend the range of denominations.

In the second half of the 1970s, changes were made to the denominations already in circulation to completely renew the notes from an aesthetic point of view and to reduce the scope for counterfeiting. Surveys conducted by the Bank had in fact shown that an effective defence against forgery should be based not only on the continuous updating of printing systems and improvements in the production techniques for watermarked paper, but also on the public's greater attention to the notes it was using.

To encourage people to look at the banknotes passing through their hands, it was decided to replace the instantly recognizable portraits of famous people with anonymous faces invented by the designer or based on works of art. This task was entrusted to the Bank's engravers, Giovanni Pino and Guglielmo Savino.

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Between 1982 and 1985, the series of banknotes in circulation was completely renewed with the issue of five new banknotes, denominated 1,000 - 5,000 - 10,000 - 50,000 and 100,000 lire.

With the exception of the 1,000-lira note, which was considered "non-returnable", the new series was designed in such a way that the security features would allow the notes to be machine-readable by banknote sorting machines.

In 1985, about 14,000 counterfeit 50,000-lira notes (1977-type) were seized. The banknotes, which had been forged using very traditional techniques, constituted an even more dangerous case than forgeries made more recently using scanners or colour photocopiers. All the parts of the design of the banknote had been very skilfully retouched by hand and had undergone twenty-five rounds of perfectly registered printing. In the section of the Museum dedicated to counterfeits, you can see one of the very small details that distinguished a genuine from a false note.

In the 1990s, in the face of the reduced purchasing power of the lira, work began on a note for a new highest denomination, although the idea had been in the pipeline since the 1980s. The series already in circulation was also renewed with the creation of designs for the new type of banknotes. The last lira banknote, created in 1997 by the Bank of Italy, was the highest denomination note: 500,000 lire depicting the painter Raphael.

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Overseas territories

Italian Somaliland

The Italian colony of Somaliland was formed in 1908 when the commander of the colonial troops, Major Di Giorgio, occupied Mogadishu.

In 1910 the silver rupee was introduced as the colony's currency, equal to one-fifteenth of a pound sterling or 1.68 lire. The crisis that followed the First World War would soon highlight all the disadvantages of pegging to two different currencies. And the rise in the world market price of silver provoked hoarding and the illegal export of rupee coins.

Faced with the fact that metal coinage was clearly uneconomic, the Italian government decided by royal decree (13 May 1920) to authorize the Bank of Italy to issue notes in the denominations of "one, five, ten, twenty and fifty Italian rupees" for a total amount not to exceed 2 million. The notes were made at the Bank's Printing Works in Rome under the oversight of the Treasury.

By decree the notes were convertible into silver, but for obvious reasons convertibility was suspended immediately after issue. All the costs of the issue were charged to the Bank of Italy, which produced a total of 5.6 million rupees (not the 2 million originally envisaged) through 1925.

On 18 June 1925, by royal decree, the notes ceased to be legal tender, and on 1 July the Italian lira became the legal tender of Italian Somaliland.

Italian East Africa

With the end of the seven-month war against Ethiopia, on 9 May 1936 Italy founded a colonial empire officially called Italian East Africa (Africa Orientale Italiana), consisting of Italian Somaliland, Ethiopia and Eritrea, the latter having been an Italian colony since 1890.

The colonial currency was the AOI lira, at par with the Italian lira and with the same exchange rate. The first banknotes were printed in 1938. By ministerial decree (28 March 1938) the Bank of Italy was authorized to issue special series of notes in the denominations of 1,000, 500, 100 and 50 lire that could circulate legally in the territories of Italian East Africa. The larger denominations bore the same drawings as the equivalent Italian notes, designed by Giovanni Capranesi. For the 50-lira notes, however, the Giovanni Pietrucci design was chosen, the reverse bearing the Roman she-wolf. The face of all the notes carried the annotation "Serie Speciale Africa Italiana", later changed to "Serie Speciale Africa Orientale Italiana".

These notes ceased to circulate with the British occupation of Italian East Africa in 1941.


Italy's political, military and economic intervention in Albania lasted from 1925 to 1939. In March 1925 agreements were signed granting Italy oil concessions and assigning it to create a bank of issue, the National Bank of Albania, which was constituted in Rome on 2 September 1925 with the dual role as institute of issue and credit institution.

In 1939, an agreement between the Italian and Albanian governments (20 April) created the "lira area", which meant the abolition of all monetary restrictions between the two countries. A fixed exchange rate between the Albanian franc and the lira was set.

The National Bank of Albania entrusted the production of its banknotes for domestic circulation to the Printing Works of the Bank of Italy. The designs used were in part appropriately modified versions of those on the "second new type" 50-lira and "new type" 100-lira notes.

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The legislative framework

Over time, many series of laws and regulations have governed the circulation of money in Italy and the characteristics of lira banknotes. There are more than 160 legal texts in all, from Ministerial Decree 366 of 26 December 1854 - which specified the distinctive features and characteristics of the 1,000-lira, 500-lira, 250-lira and 100-lira notes of Banca Nazionale nel Regno - to the Ministerial Decree of 6 May 1997 specifying the distinctive features and characteristics of the Bank of Italy's 500,000-lira note, the last lira-denominated banknote issued.

On 1 July 1926 the Bank of Italy became the only institution in Italy authorized to issue banknotes.

Until 1936 issuance was in the traditional manner, i.e. under state concession for a predetermined period of time. In return for the concession, the Bank of Italy was subject to certain financial obligations and administrative and technical controls exercised by the Treasury minister, who relied on a general inspectorate for the actual oversight of the institution of issue. The minister also had regulatory powers over all aspects of the production and use of new banknotes and the replacement and cancellation of worn and damaged notes and the power of approval, by decree, of the format, features and quantity of the banknotes that the Bank intended to produce. The denominations were determined by law.

The Banking Law of 1936 confirmed the Bank's role as "issue institution", and note issue became an institutional function.

With the introduction of the euro, this regulatory framework was radically altered. In large part the Treasury's involvement in banknote production and issuance was abrogated and the European Central Bank, under Article 106 of the EU Treaty, has the "exclusive right to authorise the issue of banknotes" in Eurosystem countries.

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