Lithuania to adopt euro as its currency from next year

Written By Unknown on Rabu, 23 Juli 2014 | 08.20

VILNIUS: It's now official - Lithuania will adopt the euro as its currency from January 1, 2015.

The European Council on Wednesday adopted a decision allowing Lithuania to adopt the euro as its currency.

The decision enlarges the euro area to 19 member states, including all three Baltic states.

Lithuania will now have five months to prepare for the changeover.

The council also adopted regulations setting a permanent conversion rate for the Lithuanian litas to the euro.

The conversion rate is set at 3.45280 Lithuanian litas to the euro, which corresponds to the current central rate of the litas in the EU's exchange rate mechanism.

The Commission has also struck down the chance of seven of its Member States - Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden to adopt the euro as its currency. The Commission has said that none of these currently fulfil all of the criteria to adopt the euro. Their situation will therefore be reassessed in two years' time.

"The entry of Lithuania into the euro family is not only a crucial event for this partner country, but it is of great importance for the whole Eurozone", said Sandro Gozi, state secretary for European Affairs of Italy and President of the Council of the EU.

"It's a demonstration of the continuing attractiveness of the single currency project and its relevance for the future of our community".

Algirdas Butkevicius, prime minister of Lithuania said "Lithuania's consistent efforts have paid off. Today the eurozone has opened the door for us. The adoption of the euro has been Lithuania's strategic step, well thought-out economically and politically, to foster national economic growth. Lithuania's accession to the single European currency will strengthen the EU's Economic and Monetary Union. Deeper euro integration means greater security as well".

Olli Rehn, commission vice-president responsible for economic and monetary affairs and the Euro, said "Lithuania's readiness to adopt the euro reflects its long-standing support for prudent fiscal policies and economic reforms. That reform momentum, driven in part by Lithuania's EU accession 10 years ago, has led to a striking increase in Lithuanians' prosperity: the country's per capita GDP has risen from just 35% in 1995 to a projected 78% in 2015".

According to the EU Treaty, the Commission every two years or upon request of an EU Member State which would like to join the euro area, examine whether the Member States satisfy the necessary conditions to adopt the single currency.

The conditions for euro adoption consist of four stability-oriented economic criteria regarding the government budgetary position, price stability, exchange rate stability and convergence of long-term interest rates which need to be fulfilled in a sustainable manner. National legislation on monetary affairs must also be in line with the EU Treaty.

According to the Treaty, additional factors also have to be taken into account in the assessment (balance of payments, market integration) as indicators that the integration of a Member State into the euro area will go ahead without problems and to broaden the view on the sustainability of convergence.

Eighteen of the 28 member states of the EU currently have the euro as their currency. Euro banknotes and coins were introduced on January 1, 2002 in Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Austria and Finland; on January 1, 2007 in Slovenia; on January 1, 2008 in Cyprus and Malta; on January 1, 2009 in Slovakia; on January 1, 2011 in Estonia and on January 1, 2014 in Latvia.

At the Council's meeting on June 20, the euro area member states adopted a recommendation in favour of Lithuania joining the currency union in the light of reports from the Commission and the European Central Bank.

The European Council on June 27, welcomed the fact that Lithuania had fulfilled all the convergence criteria set out in the EU treaties and endorsed the Commission's proposal for it to join the euro.

The ECB gave a favourable opinion on July 14, the European Parliament on July 16.

They confirmed the progress made by Lithuania in fulfilling the convergence criteria - namely price stability, the government's budgetary position, exchange rate stability and long-term interest rates - and several other factors.

http://timesofindia.indiatimes.com/followceleb.cms?alias=Lithuania euro currency,Lithuania


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