The path of the escudo has traced Portugal's history as a modern republic. It replaced the real after the overthrow of the monarchy in 1910 but its value declined alarmingly during the 1910s and 1920s.

Its plight was worsened in 1925 with the circulation of several hundred thousand counterfeit 500 escudo notes. The fraud had been perpetrated by people inside the Bank of Portugal, and was a major cause of the collapse of the democratic republic in a military coup in 1926.

By 1928 the escudo had been stabilised and remained pegged to the UK pound until the 1950s, then later to the US dollar. In 1992 it joined the European Exchange Rate Mechanism - the staging post on the way to monetary union - but suffered some hard bumps and had to devalue twice.

With the advent of the euro, Portugal's currency will return - at least in design - to its royal roots. The new coins will depict Portugal's castles and take their inspiration from original royal seals. The Portuguese are generally welcoming towards the euro, with 59% declaring themselves in favour and 30% against.

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