On 25 April 2006 the Seimas of the Republic of Lithuania
adopted the law amending Article 125 of the Constitution of the Republic of
Lithuania which repealed Paragraph 2 of Article 125 that provided for the
exclusive right of issue to the Bank of Lithuania. Paragraph 3 of Article 125
was also supplemented with a provision that the legal status of the Chairman of
the Board of the Bank of Lithuania and the grounds for dismissal are laid down
in the Law on the Bank of Lithuania.
These amendments were determined by the aim of the Republic
of Lithuania to adopt the single euro currency of the European Union (EU). This
step requires early preparation as, before taking the decision on the adoption
of the euro by an EU Member State, both the European Commission (EC) and the
European Central Bank (ECB) present the reports on the readiness of that Member
State to join the euro area. The assessment of compliance with convergence
criteria laid down in Article 121 of the Treaty establishing the European
Community (price stability (inflation), fiscal development, exchange rate
developments, and long-term interest rates) also includes an examination of
legal compliance. The Constitution is the main legal act so that even if all the
necessary amendments are introduced in the other legal acts, the lack of
compliance of the provisions of the main legal act of the country with the
provisions of the Treaty and the Statute of the European System of Central Banks
(ESCB) and of the ECB would result in a negative assessment and would
undoubtedly prevent Lithuania from joining the euro area until full compliance
is achieved.
The obligation of EU Member States to make national legal
acts compatible with the Treaty establishing the European Community and the
Statute of the ESCB and of the ECB is laid down in Article 109 of the Treaty. It
should be noted that neither the supremacy of EU law nor the adoption of
constitutional legal acts has an impact on this obligation, i.e. the obligation
of compatibility remains unchanged. This has repeatedly been stressed by the
European Court of Justice.
As mentioned above, Paragraph 2, Article 125 of the
Constitution of the Republic of Lithuania placed the exclusive right of issue
with the Bank of Lithuania, which was in contradiction with Article 106 of the
Treaty and Article 16 of the Statute of the ESCB and of the ECB (under EU law
the ECB has the exclusive right to authorise national central banks to issue
euro banknotes and approve the volume of euro coins issued by the Member States).
This provision was therefore repealed.
The amendments to Paragraph 3, Article 125 of the
Constitution of the Republic of Lithuania were necessary because the legal acts
of EU Member States have to ensure that governors of national central banks may
not be dismissed on the grounds other than listed in Article14.2 of the Statute
of the ESCB and of the ECB (when they no longer fulfil the conditions required
for the performance of their duties or if they are guilty of serious misconduct).
Article 75 and Paragraph 13 of Article 84 of the Constitution of the Republic of
Lithuania provides that the Seimas of the Republic of Lithuania may dismiss the
officials appointed by the parliament, including the Chairman of the Board of
the Bank of Lithuania, through a majority vote of no confidence. Irrespective of
the fact that Paragraph 1 of Article 12 of the Law on the Bank of Lithuania lays
down the grounds for dismissing the Chairman of the Board of the Bank of
Lithuania that are compatible with the Statute of the ESCB and of the ECB, the
constitutional provisions had to be supplemented to ensure the independence of
the Chairman of the Board of the Bank of Lithuania in line with the requirements
of EU law. Otherwise, the motion of no confidence may be put against the
Chairman of the Board of the Bank of Lithuania also on other grounds than
provided in the Law on the Bank of Lithuania, which would contradict Article
14.2 of the Statute of the ESCB and of the ECB. Consequently, the amendment of
Paragraph 3 of Article 125 of the Constitution refers only to the grounds laid
down in the Law on the Bank of Lithuania.
On 25 April 2006 the Seimas of the Republic of Lithuania
adopted the Republic of Lithuania Law on amending articles 1, 6, 7, 8, 11, 12,
14, 18, 19, 20, 25, 31, 33, 35, 36, 38, 47, 49, 50, 53, 54, 541 and
55, amending the title of chapters 4 and 5, repealing articles 26, 27, 28, 29,
30, 32 and 37 and supplementing the annex of the Law on the Bank of Lithuania.
The Law has been brought into compatibility with the Treaty establishing the
European Community, the Statute of the ESCB and of the ECB, as such
compatibility is necessary in order for Lithuania to become a full-fledged
member of the Economic and Monetary Union.
The ECB Convergence Report 2004 indicated the shortcomings of
the Law on the Bank of Lithuania (essentially the same shortcomings were also
indicated in the EC Convergence Report), which were removed by amending or
repealing the relevant articles of the Law on the Bank of Lithuania regulating
the issue of banknotes and coins, monetary policy measures, foreign reserve
management, etc.
It should be noted that the Law on amending articles 1, 6, 7,
8, 11, 12, 14, 18, 19, 20, 25, 31, 33, 35, 36, 38, 47, 49, 50, 53, 54, 541
and 55, amending the title of chapters 4 and 5, repealing articles 26, 27, 28,
29, 30, 32 and 37 and supplementing the annex of the Law on the Bank of
Lithuania (with the exception of two articles) will come into effect on the date
on which the Council of the European Union abrogates the derogation of the
Republic of Lithuania in line with the procedures laid down in Article 122.2 of
the Treaty establishing the European Community.
On 25 April 2006 the Seimas of the Republic of Lithuania
adopted the Republic of Lithuania Law on repealing certain laws in accordance
with which, as of the date of the adoption of the euro, the Republic of
Lithuania Law on the Issue of Currency, the Law on the Denominations of Currency
Units, Their Redenomination and Use in Laws and Other Regulations, the laws on
Money, on the Credibility of the Litas, as amended and supplemented, are
repealed.
