Two days before Christmas 1865, a ceremony was held in Paris to mark the signing of the foundation treaty for a new and exciting development in Europe, the so-called Latin monetary union.

This new union was proposed and led by France — the biggest economy in the grouping — and included Belgium, Italy and Switzerland. Not long afterwards Greece and Bulgaria signed up. At one time 20 countries were effectively tied to the “gold franc” zone, in which each nation’s gold and silver coins were legal tender in the others.

When it started there were questions over Italy, the weak member of the union, then running a budget deficit of 10% of gross domestic product. Italy, indeed, found it hard to cope, suspending certain aspects of its monetary union membership six months after the Paris treaty was signed.

But the union soldiered on, before finally being brought to its knees by the impact of the first world war and the subsequent problems for the gold standard. It was finally buried in 1926.

The 19th century was a boom time for monetary unions, particularly in Europe. An international monetary conference was held in 1867 to discuss the launch of a new world currency. That did not happen but, meanwhile, countries got on with their own monetary unions.

There was a Scandinavian monetary union between Sweden, Denmark and Norway, which lasted from 1873 to 1920. There was also the Austro-Hungarian monetary union, which many experts see as the closest parallel to the euro. It was a customs union, like the European Union, and it had a common central bank, like the European central bank. But the two countries were not required to co-ordinate their tax and spending policies. The union lasted from 1867 to 1914.

What killed these monetary unions off and does history have any implications for the future of the euro? Gerard Lyons, head of research at Standard Chartered Bank, has studied the history of previous monetary unions and has no doubt.

“Here in the UK people often look at the euro as a short-term political cost for a long-term economic gain,” he says. “On the Continent they tend to think of it as a short-term economic cost for a long-term political gain, that of ever-closer union.

“The problem has been that those short-term economic costs have been much greater than anybody expected. And if monetary union is to survive there has to be political union; no ifs, no buts. There is no example of a monetary union between large countries surviving without political union.”

Pro-euro economists point to the Zollverein, which came into existence in 1834. It started as a common market and customs union, like the EU (zollverein means customs’ union). But it was also effectively a monetary union run by the Prussian central bank.

The Zollverein, however, led to the political union of what became Germany in 1871, followed a few years later by the launch of the Reichsmark, its single currency. Political union was not needed for the launch of monetary union, but it did follow.

Others argue that the monetary union between Britain and Ireland, which lasted from 1921 to 1979, was an example of a long-running currency union without the accompanying political union. But it was also an example of a small country, Ireland, effectively piggybacking on a larger one, in the way that west African countries took part in the franc zone from 1948.

Previous monetary unions were, it should be said, killed off by dramatic events, most notably war. Surely if European integration has brought peace to a once-bloody continent it can also make a single currency work? That, until recently, was the unanimous view within Europe. The euro, which came into being as an electronic currency at the start of 1999 and as a paper currency three years later had, it seemed, done the hard part. The big political heave was getting the single currency established.