The Speed of Euro Adoption

This paper estimates the speed and determinants of euro adoption across Italian provinces by exploiting the natural experiment in early 2002 when euro and lira dually circulated as legal tender. A unique data set with daily observations on the net flows of euro banknotes from the branches of the Bank of Italy, province by province, is used. The speed of euro adoption differs according to the availability of transaction technology and demographic characteristics. Lessons for countries adopting a new currency are obtained.