What Is the Albanian Lek (ALL)?
The term Albanian lek (ALL) refers to the national currency of the Republic of Albania. The currency is abbreviated as ALL and is represented in the foreign exchange market by the symbol L. The lek is issued and maintained by the country's central bank. The plural of lek is lekë, with one Albanian lek consisting of 100 qindarka. Qindarka-denominated coins are no longer issued because of inflation but are still accepted as legal tender.
- The Albanian lek is the official currency of Albania and is represented by the symbol L and the abbreviation ALL.
- The currency is issued and maintained by the Bank of Albania, the country's central bank.
- Banknotes are denominated in values from L200 to L5,000 while coins are minted in values from L1 to L100.
- The currency lost value over time against world currencies as the country has been subject to several iterations of regime change and infighting.
- The lek isn't pegged to any currency and no currency is pegged to the lek.
Understanding the Albanian Lek
As noted above, the Albanian lek is the national and legal currency of Albania. Bills are printed in L200, L500, L1,000, L2,000, and L5,000 denominations while coins are minted in values of L1, L5, L10, L20, L50, and L100. One lek is divided into 100 qindarka but these coins are no longer in circulation.
The currency is issued and managed by the country's central bank, Banka e Shqipërisë or the Bank of Albania. Its predecessor, the National Bank of Albania was established in 1925. The bank's current operations were laid out in 1992. Its status is defined by the country's constitution and outlines its duties. Its mission is to achieve and maintain price stability through monetary policy along with keeping the cost of currency circulation low.
The lek is not pegged to any currency and no other currency is pegged to it in the foreign exchange market. According to the Bank of Albania, US$1 was equal to about L114 as of Aug. 2, 2022.
Albania holds a strategic position in the Balkan Peninsula due to its cliff-lined coastline on the Adriatic Sea. Its gross domestic product (GDP) for 2021 was $18.26 billion. It had an annual GDP growth rate of 8.5% with an annual inflation rate of 2% in 2021.
Albania applied for membership into the European Union (EU), with official talks beginning in 2020. If accepted, Albania will likely switch over to the euro. Accession negotiations began in July 2022.
History of the Albanian Lek
The country didn't have its own currency until 1926. Prior to this, Albania adhered to a strict gold standard or relied on foreign money in exchange. The Ottoman Turkish piastre circulated widely in the region before World War I. The first minted lekë were bronze coins introduced in denominations of five and 10 qindarka alongside nickel coins issued in 1/4, 1/2, and 1 lek denominations, and silver one, two, and five franga. Now obsolete, the franga was equal to L5 at the time and was used between 1926 and 1939.
After the war, the country saw a succession of military occupations by various powers that imposed their own currency as legal tender. The gold frang became the most widely used monetary unit during that time. Because Albania had no official money, people also used the currencies of bordering countries pegging the rates of exchange for gold.
The issue of a new series of coins under the direction of Benito Mussolini took place during Albania's capitulation to Italy in WWII. The coins circulated until 1941. After the liberation of Albania from Nazi occupation in 1947, the communist party took control of the country. The new authority removed older coins from circulation and issued new ones displaying the socialist national crest. The new zinc coins have denominations of 1/2, 1, 2, and 5 lekë.
During the Soviet occupation between 1946 and 1965, the lek was pegged to the Soviet ruble at 12.5 lekë to one ruble until 1961 and 1.25 lek to one ruble between 1961 and 1965 after the ruble was redenominated. After 1965, the revaluation of the ruble created inequalities in exchange, causing the issue of a second lek. The second series of lek exchanged with the first lek at a rate of 10 old lekë to one new lek.
The currency derives its name from Alexander the Great, as the shortened form of his name is Leka in Albanian.
History of Albanian Politics and Economics
The area declared independence in 1912 from the Ottoman Empire. There was initially discord between the culturally and religiously separated groups resulting in episodic fighting between factions.
The first republic fell under an authoritarian regime between 1925 and 1928 that sought to restore stability to the region. The Italians forced the regime to accept Italy's influence over trade and shipping, which ended the short life of the first republic and converted it into a monarchy. To tighten its hold on the area, Italy moved troops into the region, occupying the territory until 1943. Albania briefly fell under Nazi Germany's control during WWII. This devastated the country and its population.
As the Axis powers waned, the Soviets moved in and liberated the country. Albania became a communist state, the People's Republic of Albania. During Soviet rule, the area industrialized rapidly and its economy grew. At the same time, the nation ran up debt with its allies, the Soviet Union, China, and Yugoslavia.
With the fall of communist rule in the late 1980s into the 1990s, Albania formed its fourth republic in 1991. Corruption saw much of the country's money wasted on government-supported Ponzi schemes and banking fraud. For instance, many citizens were coerced to sell their homes and take out loans to invest in these scams, which collapsed in 1996. Protests erupted across the nation, which turned violent and ousted the sitting government.