Lithuania and the euro

From Wikipedia, the free encyclopedia
  (Redirected from Lithuanian euro coins)
Jump to: navigation, search
eurozone participation
  European Union member states (eurozone) - 18
  European Union member state in ERM II scheduled to join on 1 January 2015 - Lithuania
  European Union member states not in ERM II but obliged to join - 7
  European Union member state in ERM II with an opt-out - Denmark
  European Union member state not in ERM II with an opt-out - United Kingdom
  non-European Union member states using the euro with a monetary agreement - 4
  non-European Union member states using the euro unilaterally - 2

Lithuania is an EU member state and will join the eurozone by adopting the euro on 1 January 2015.[1] This will make it the last of the three Baltic States to adopt the euro, after Estonia (2011) and Latvia (2014). Until then, its currency, the litas, is pegged to the euro at 3.4528 litas to 1 euro.

History[edit]

All members of the European Union, except Denmark and the UK, are required by treaty to join the euro once certain economic criteria have been met. In March 2006, Lithuania requested that the European Commission and the European Central Bank conduct an assessment on their readiness to adopt the euro. The Commission's report found that while Lithuania met 4 of the 5 criteria, their average annual inflation was 2.7%, exceeding the limit of 2.6%. As a result, the Commission concluded that "there should be no change at present to Lithuania's status as a Member State with a derogation."[2][3] Lithuania is the only country to be rejected in the attempt to adopt the euro.[4] Generally high inflation, which reached a peak of 12.7% in June 2008[5] (well above the 4.2% limit of the time),[6] delayed Lithuania's adoption of the euro.

According to figures from the Bank of Lithuania, Lithuania had met 4 out of the 5 criteria by October 2013, the exception being the government deficit of 3.2% of GDP, exceeding the limit of 3.0%.[7] The Lithuanian government expected this to decline to 2.9% by the first quarter of 2014.[4][7] In February 2013, the government of Lithuania approved a plan for euro adoption in 2015.[8] In April 2014, the European Parliament's Committee on Economic and Monetary Affairs gave their preliminary consent for Lithuania to join the eurozone on 1 January 2015, having concluded that the country was complying with all the criteria according to economic data from the first months of 2014.[9] Lithuania's parliament approved a euro changeover law in April 2014,[10] and in their biennial reports released on 4 June the European Commission and European Central Bank found that the country satisfied the convergence criteria.[11][12][13][14][15] On 16 July the European Parliament voted in favour of Lithuania adopting the euro.[16][17] On 23 July the EU Council of Ministers approved the decision, clearing the way for Lithuania to adopt the euro on 1 January 2015.[1][1][18]


Convergence criteria
Assessment month Country HICP inflation rate[19][nb 1] Excessive deficit procedure[20] Budget deficit to GDP[21] Debt-to-GDP ratio Exchange rate Long-term interest rate[22][nb 2]
ERM II member[23] Change in rate[24][25][nb 3]
2012 ECB Report[nb 4] Reference values max. 3.1%[nb 5]
(as of 31 Mar 2012)
None open
(as of 31 March 2012)
max. 3.0%
(Fiscal year 2011)[27]
max. 60%
(Fiscal year 2011)[27]
min. 2 years
(as of 31 Mar 2012)
max. ±15%
(for 2011)
max. 5.80%[nb 6]
(as of 31 Mar 2012)
 Lithuania 4.2% Open 5.5% 38.5% 7 years, 9 months 0.0% 5.19%
2013 ECB Report[nb 7] Reference values max. 2.7%[nb 8]
(as of 30 Apr 2013)
None open
(as of 30 Apr 2013)
max. 3.0%
(Fiscal year 2012)[29]
max. 60%
(Fiscal year 2012)[29]
min. 2 years
(as of 30 Apr 2013)
max. ±15%
(for 2012)
max. 5.5%[nb 8]
(as of 30 Apr 2013)
 Lithuania 2.7% Open
(Closed in June 2013)
3.2% 40.7% 9 years, 9 months 0.0% 4.42%
2014 ECB Report[nb 9] Reference values max. 1.7%[nb 10]
(as of 30 Apr 2014)
None open
(as of 30 Apr 2014)
max. 3.0%
(Fiscal year 2013)[31]
max. 60%
(Fiscal year 2013)[31]
min. 2 years
(as of 30 Apr 2014)
max. ±15%
(for 2013)
max. 6.2%[nb 10]
(as of 30 Apr 2014)
 Lithuania 0.6% None 2.1% 39.4% 9 years, 9 months 0.0% 3.60%


  Criterion fulfilled
  Criterion potentially fulfilled: If the budget deficit exceeds the 3% limit, but is "close" to this value (the European Commission has deemed 3.5% to be close by in the past),[32] then the criteria can still potentially be fulfilled if either the deficits in the previous two years are significantly declining towards the 3% limit, or if the excessive deficit is the result of exceptional circumstances which are temporary in nature (i.e. one-off expenditures triggered by a significant economic downturn, or by the implementation of economic reforms that are expected to deliver a significant positive impact on the government's future fiscal budgets). However, even if such "special circumstances" are found to exist, additional criteria must also be met to comply with the fiscal budget criterion.[33][34] Additionally, if the debt-to-GDP ratio exceeds 60% but is "sufficiently diminishing and approaching the reference value at a satisfactory pace" it can be deemed to be in compliance.[35]
  Criterion not fulfilled


Notes
  1. ^ The 12-months average for the annual HICP inflation rate must be no more than 1.5% larger than the unweighted arithmetic average of the similar HICP inflation rates in the 3 EU member states with the lowest HICP inflation. If any of these 3 states have a HICP rate significantly below the similarly averaged HICP rate for the eurozone (which according to ECB practice means more than 2% below), and if this low HICP rate has been primarily caused by exceptional circumstances (i.e. severe wage cuts or a strong recession), then such a state is not included in the calculation of the reference value and is replaced by the EU state with the fourth lowest HICP rate.
  2. ^ The annual average for the yield of 10-year government bonds must be no more than 2.0% larger than the unweighted arithmetic average of the bond yields in the 3 EU member states with the lowest HICP inflation. If any of these states have bond yields which are significantly larger than the similarly averaged yield for the eurozone (which according to previous ECB reports means more than 2% above) and at the same time does not have complete funding access to financial markets (which is the case for as long as a government receives bailout funds), then such a state is not be included in the calculation of the reference value.
  3. ^ The change in the annual average exchange rate against the euro.
  4. ^ Reference values from the ECB convergence report of May 2012.[26]
  5. ^ Sweden, Ireland and Slovenia were the reference states.[26]
  6. ^ Sweden and Slovenia were the reference states, with Ireland excluded as an outlier.[26]
  7. ^ Reference values from the ECB convergence report of June 2013.[28]
  8. ^ a b Sweden, Latvia and Ireland were the reference states.[28]
  9. ^ Reference values from the ECB convergence report of June 2014.[30]
  10. ^ a b Latvia, Portugal and Ireland were the reference states.[30]

Lithuanian design and introduction of euro[edit]

The proposed design of the Lithuanian euro coins share a similar national side for all denominations, featuring the Vytis symbol and the name of the country, "Lietuva".[36] The design was announced on 11 November 2004 following a public opinion poll conducted by the Bank of Lithuania.[36] It was created by the sculptor Antanas Žukauskas.[37] The only difference between the coins is that the one and two euro coins have vertical lines on the outer circle, the fifty, twenty and ten cent coins have horizontal lines on the outer circle, and the five, two and one cent coins have no lines on the outer circle.[36] In January 2014 it was announced that all coins will have "2015" printed on them to display the year of Lithuania's euro adoption. The Lithuanian Mint has been chosen to mint the coins.[36][37]

Euro adoption day Change­over plan Intro­duction[38] Frontloading Dual circulation
period
Exchange of LTL coins period Dual price display Mint company Currency circulated
(in units)
1 January 2015 A changeover law was passed in April 2014[39] Big-Bang Commercial banks starts receiving euro banknotes and coins respectively 2 and 3 months before €-day.
Retailers receive coins and banknotes during the last month before €-day.
15 days Banks:
6 months
Central bank:
indefinitely
Start 30 days after Council approval of euro adoption, equal to 22 Aug.2015, and lasts until 12 months after adoption Lithuanian Mint[36] 132 million banknotes, 370 million coins[40]

Public opinion[edit]

A poll by Eurobarometer in April 2013 found that 41% of Lithuanians supported switching to the euro, while 55% were opposed. This was a decrease in support of 3% from a year earlier.[4][41] A July 2014 Eurobarometer poll showed that 50% of Lithuanians supported the euro and 41% were opposed.[42]

The rotation of voting rights in the ECB Governing Council[edit]

On 17 June 2014 the Deutsche Bundesbank released a statement claiming that "Lithuania could cause the ECB Governing Council's voting rights to rotate. The virtually certain introduction of the euro in this small Baltic nation at the beginning of next year would cause the number of national central bank (NCB) governors on the ECB Governing Council to exceed 18 for the first time. It would trigger a changed voting procedure designed to ensure that decisions can still be taken effectively in a growing Eurosystem. This would pave the way for the introduction of a modified voting system similar to that of the US Federal Reserve System."[43]

References[edit]

  1. ^ a b c "Lithuania to adopt the euro on 1 January 2015". Council of the European Union. 2014-07-23. Retrieved 2014-07-23. 
  2. ^ "Commission assesses the state of convergence in Lithuania". European Commission. 2006-05-16. Retrieved 2014-01-12. 
  3. ^ "Euro zone: Slovenia in, Lithuania on hold". 2006-05-16. Retrieved 2014-01-12. 
  4. ^ a b c Milne, Richard; Spiegel, Peter (2013-12-30). "Lithuania shows rare enthusiasm for eurozone membership". Financial Times. Retrieved 2014-01-12. 
  5. ^ ECB: Inflation and the euro
  6. ^ "SEB: no euro for Lithuania before 2013". The Baltic Course. Retrieved 22 December 2008. 
  7. ^ a b "Euro adoption criteria and their implementation". Bank of Lithuania. Retrieved 2014-01-12. 
  8. ^ "Lithuanian government endorses euro introduction plan". 15 min. 2013-02-25. Retrieved 2013-03-03. 
  9. ^ Lietuvos Bankas (8 April 2014). "The European Parliament's Committee on Economic and Monetary Affairs preliminary approved of the euro adoption in Lithuania". Retrieved 20 April 2014. 
  10. ^ "Lithuania readies for euro adoption". BalticTimes.com. 1 May 2014. Retrieved 2014-05-01. 
  11. ^ "Commission assesses eight EU countries’ readiness to join the euro area; proposes that Lithuania join in 2015". European Commission. 2014-06-04. Retrieved 2014-06-04. 
  12. ^ "ECB publishes its Convergence Report 2014". European Central Bank. 2014-06-04. Retrieved 2014-06-04. 
  13. ^ "Convergence Report". European Commission. 2014. Retrieved 2014-06-04. 
  14. ^ "Convergence Report". European Central Bank. Hune 2014. Retrieved 2014-06-04. 
  15. ^ http://www.bbc.com/news/world-europe-27697611 BBC:Lithuania 'ready to join euro' in 2015 - EU Commission, 4.June 2014.
  16. ^ "European Parliament gives go-ahead for Lithuania to join the euro". European Parliament. 2014-07-16. Retrieved 2014-07-16. 
  17. ^ European Parliament greenlights Lithuania's euro adoption
  18. ^ Lietuvoje keičiama valiuta
  19. ^ "HICP (2005=100): Monthly data (12-month average rate of annual change)". Eurostat. 16 August 2012. Retrieved 6 September 2012. 
  20. ^ "The corrective arm". European Commission. Retrieved 2014-07-05. 
  21. ^ "Government deficit/surplus data". Eurostat. 22 April 2013. Retrieved 22 April 2013. 
  22. ^ "Long-term interest rate statistics for EU Member States (monthly data for the average of the past year)". Eurostat. Retrieved 18 December 2012. 
  23. ^ "What is ERM II?". European Commission. 31 July 2012. Retrieved 8 September 2012. 
  24. ^ "Euro/ECU exchange rates - annual data (average)". Eurostat. Retrieved 5 July 2014. 
  25. ^ "Former euro area national currencies vs. euro/ECU - annual data (average)". Eurostat. Retrieved 5 July 2014. 
  26. ^ a b c "Convergence Report May 2012". European Central Bank. May 2012. Retrieved 2013-01-20. 
  27. ^ a b "European economic forecast - spring 2012" (PDF). European Commission. 1 May 2012. Retrieved 1 September 2012. 
  28. ^ a b "Convergence Report". European Central Bank. June 2013. Retrieved 2013-06-17. 
  29. ^ a b "European economic forecast - spring 2013" (PDF). European Commission. February 2013. Retrieved 4 July 2014. 
  30. ^ a b "Convergence Report". European Central Bank. June 2014. Retrieved 2014-07-05. 
  31. ^ a b "European economic forecast - spring 2014" (PDF). European Commission. March 2014. Retrieved 5 July 2014. 
  32. ^ "Luxembourg Report prepared in accordance with Article 126(3) of the Treaty" (PDF). European Commission. 12 May 2010. Retrieved 18 November 2012. 
  33. ^ "EMI Annual Report 1994" (PDF). European Monetary Institute (EMI). April 1995. Retrieved 22 November 2012. 
  34. ^ "Progress towards convergence - Nov. 1995 (report prepared in accordance with article 7 of the EMI statute)" (PDF). European Monetary Institute (EMI). November 1995. Retrieved 22 November 2012. 
  35. ^ "Progress towards convergence - November 1995 (report prepared in accordance with article 7 of the EMI statute)" (PDF). European Monetary Institute (EMI). November 1995. Retrieved 17 March 2013. 
  36. ^ a b c d e "Projects for Lithuanian euro coins already bear the year 2015". Bank of Lithuania. 31 January 2014. Retrieved 9 March 2014. 
  37. ^ a b "Euro Banknotes and Coins". Retrieved 2014-01-12. 
  38. ^ "Scenarios for adopting the euro". http://ec.europa.eu/. Retrieved 7 September 2013. 
  39. ^ "Lithuania readies for euro adoption". BalticTimes.com. 1 May 2014. Retrieved 2014-05-01. 
  40. ^ "The first Lithuanian euro coins are being minted by order of the Bank of Lithuania". Lietuvos Bankas. 16 June 2014. 
  41. ^ "Introduction of the euro in the more recently acceded member states". Eurobarometer. 2013-04. p. 66. Retrieved 2014-03-27. 
  42. ^ Eurobarometer Standard July 2014
  43. ^ http://www.bundesbank.de/Redaktion/EN/Topics/2014/2014_06_17_rotation_system.html

External links[edit]