<P> The lira was established at 4.5 grams of silver or 290.322 milligrams of gold . This was a direct continuation of the Sardinian lira . Other currencies replaced by the Italian lira included the Lombardy - Venetia pound, the Two Sicilies piastra, the Tuscan fiorino, the Papal States scudo and the Parman lira . In 1865, Italy formed part of the Latin Monetary Union in which the lira was set as equal to, among others, the French, Belgian and Swiss francs: in fact, in various Gallo - Italic languages in north - western Italy, the lira was outright called "franc". This practice has obviously ended with the introduction of the euro in 2002 . </P> <P> World War I broke the Latin Monetary Union and resulted in prices rising severalfold in Italy . Inflation was curbed somewhat by Mussolini, who, on August 18, 1926, declared that the exchange rate between lira and pound would be £ 1 = 90 lire--the so - called Quota 90, although the free exchange rate had been closer to 140--150 lire per pound, causing a temporary deflation and widespread problems in the real economy . In 1927, the lira was pegged to the U.S. dollar at a rate of 1 dollar = 19 lire . This rate lasted until 1934, with a separate "tourist" rate of US $1 = 24.89 lire being established in 1936 . In 1939, the "official" rate was 19.8 lire . </P> <P> After the Allied invasion of Italy, an exchange rate was set at US $1 = 120 lire (1 British pound = 480 lire) in June 1943, reduced to 100 lire the following month . In German occupied areas, the exchange rate was set at 1 Reichsmark = 10 lire . After the war, the value of the lira fluctuated, before Italy set a peg of US $1 = 575 lire within the Bretton Woods System in November 1947 . Following the devaluation of the pound, Italy devalued to US $1 = 625 lire on 21 September 1949 . This rate was maintained until the end of the Bretton Woods System in the early 1970s . Several episodes of high inflation followed until the lira was replaced by the euro . </P> <P> The lira was the official unit of currency in Italy until January 1, 1999, when it was replaced by the euro (euro coins and notes were not introduced until 2002). Old lira denominated currency ceased to be legal tender on February 28, 2002 . The conversion rate is 1,936.27 lire to the euro . </P>

What was italy's currency before the euro