how customers of the bankrupt Banque Nationale burned their newly worthless banknotes in protest on the Place d’Armes. But burning bills is not just for angry account-holders: more than 117 years later, the Luxembourg state indulged in the same exercise… in utter secrecy.

The story begins in 1992, during the crisis of the European exchange rate mechanism, which almost dragged down the fledgling Maastricht Treaty—the treaty paving the way for a single EU currency. Under pressure from the markets, in September 1992, the British withdrew (sound familiar?) from the European exchange rate mechanism. The pressure on the markets affected other countries, who were also considering withdrawing from the future single currency. Germany and the Netherlands, for example, felt that their economic fundamentals were far stronger than those of France and other countries and refused to be drawn into the crisis.

The unfortunate precedent of the 1982 devaluation

In Luxembourg a very young finance minister, , was in charge. While he conducted negotiations in good faith to save the Maastricht Treaty and the future single currency, he also prepared for the worst. As one expects from a responsible politician.

What was the worst? That other countries would be tempted to follow Germany and the Netherlands, especially Belgium, with which Luxembourg had a severely imbalanced monetary union. Famously, Brussels devalued the Belgian franc in 1982 without consulting anyone from Luxembourg, which left a mark on the grand duchy’s politicians. Thus wanting to assert Luxembourg’s autonomy in the face of European monetary developments, the Luxembourg legislator established the Institut Monétaire Luxembourgeois (IML) in 1983, the forerunner of the Banque Centrale du Luxembourg.

This is how Luxembourg was to print—in perfect secrecy—€50 million of a new currency: the Luxembourgish franc. “We even put the image of Grand Duchess Charlotte, who died in 1985, on the front of the banknotes in order to conceal our intentions as much as possible. Because we said to ourselves: nobody will believe that we are launching a new currency in Europe with the image of the former Grand Duchess,” recalls Jean-Claude Juncker.

Bonfire

And if the man who later became “Mr Euro” and then president of the commission now considers such conduct “unthinkable, irresponsible and imprudent in our monetary union”, he nevertheless recalls the reasoning at the time: “depending on the currency of another country, on Belgium in Luxembourg’s case, and being exposed to the risks of the markets, we had to cover ourselves against all eventualities. Fortunately, the Luxembourgish franc never had to be used and, standing here today decades later, I strongly reject this kind of behaviour!”

This story remained secret until Jean-Claude Juncker told it in a speech given in June 2019 at the European Central Bank forum celebrating 20 years of economic and monetary union.

And the printed notes? They ended up being burnt by the Luxembourg army on the day the euro was introduced: 1 January 1999.

This article in Paperjam. It has been translated and edited for Delano.