What is the euro?

The euro is the single currency of sixteen European Union Member States (Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Slovakia and Spain) that have joined the euro area. The euro was introduced in 1999 for non-cash settlements, while on 1 January 2002 euro cash – banknotes and coins – was issued into circulation in the twelve countries of the euro area.

What is the euro area?

The euro area consists of the EU Member States that have introduced the common currency, the euro. The euro is made up of 16 countries: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia,Slovakia and Spain.

Which non-euro area countries use the euro for payments?

Euro area countries are not the only that use the euro. It is also used in other countries and territories. The euro circulates in such European countries as Monaco, Vatican, San Marino, Andorra, as well as in Montenegro and Kosovo.

Lithuania allows making the euro payments upon a mutual agreement between the buyer and the seller.

Is it possible for Lithuania not to adopt the euro?

When acceding to the European Union, Lithuania undertook the obligation to adopt a single European currency. At present, Lithuania and other new EU member states are subject to a derogation to use their national currencies until they meet criteria for the adoption of a single European currency.

What will be the benefits of the adoption of the euro?

The adoption of the euro will completely abolish exchange rate risk, and the Lithuanian financial market will become part of the common financial market of the euro area. This will remove the need for foreign exchange transactions in settlements with the main trading partners in Europe, cut borrowing and transfer costs, encourage investment and trade. The use of the euro by all main Lithuania’s trading partners will make price comparisons easier, which will promote sound competition and abolish price movements determined by exchange rate changes. These and many other factors should contribute to faster economic growth in Lithuania, creation of jobs and the rise of the standard of living to EU level.

What is the planned euro adoption date in Lithuania and who will set it?

Setting the date for the adoption of the euro by any Member State of the European Union (EU) is within the competence of the Economic and Financial Affairs Council (Ecofin Council).

Is the legislation of the Republic of Lithuania compatible with the European Union acquis with respect to the adoption of the euro?

The Convergence Report of the European Central Bank (May 2006) stated that after the recent amendments the Constitution of the Republic of Lithuania and the Law on the Bank of Lithuania are compatible with the Treaty and the Statute of the European System of Central Banks (ESCB) with respect to Stage Three of the Economic and Monetary Union.

What are the arrangements for the adoption of the euro in Lithuania?

The arrangements for the adoption of the euro are laid down in the National Changeover Plan. The Government of the Republic of Lithuania approved this Plan by its Resolution No. 1050 of 29 September 2005. The Plan singles out a period for preparation to adopt the euro, the dual (litas and euro) circulation period and the period after the dual circulation period. The second version of the National Changeover Plan was prepared in March 2006.

What will the exchange rate between the litas and the euro be?

The conversion rate between the litas and the euro will be established by the European Union’s Council of Economics and Finance (ECOFIN). It is planned that the conversion rate will be announced approximately half a year before the euro adoption.

According to the Bank of Lithuania and the Government of the Republic of Lithuania, there are no objective reasons to adopt the euro on the basis of a different exchange rate than a current official exchange rate between the litas and the euro, i.e. LTL 3.4528 for EUR 1.

For how long will it be possible to exchange the litas into the euro? Is the exchange free of charge?

The Bank of Lithuania will exchange the litas into the euro free of charge for unlimited period of time. It is planned that legal acts will impose an obligation on commercial banks to exchange the litas into the euro free of charge for 60 days following the adoption of the euro. After the expiry of this period, commercial banks will be allowed to charge a fee set by them for the exchange of the litas into the euro.

What are the denominations of euro coins and banknotes?

Euro coins of eight denominations and banknotes of seven denominations have been circulating since 1 January 2002.

The denominations of euro coins are the following: 1, 2, 5, 10, 20 and 50 cent and 1 and 2 euro (1 euro=100 cents).
- The obverse of all coins has the same design and symbolises the idea of a united Europe;
- The reverse of all coins differs in every country.
Coin denominations vary in size, weight, form and metal composition. The higher denomination coins – 1 and 2 euro – have two colours (silver and gold colours). The medium denomination coins – 10, 20 and 50 cents – are of gold colour, while the low denomination coins – 1, 2 and 5 cents – have the colour of copper.
The denominations of euro banknotes are the following: 5, 10, 20, 50, 100, 200 and 500.
- Each banknote denomination is of different colour and size;
- The banknotes depict windows, arches, gates and bridges, a map of Europe and the European flag.

How can I recognise a real euro banknote?

Euro banknotes are well protected with modern security features. To make sure whether the banknote is real, look for the main banknote security features.

Will the euro banknotes be printed in Lithuania?

It is economically inexpedient to print euro banknotes in our small country. The Bank of Lithuania will borrow the amount of euro banknotes needed for the euro adoption, and will repay the debt after having printed the required amount of euro banknotes in European printing works authorised to print such banknotes.

How will Lithuania procure euro coins?

Around 200 million units of euro coins of various denominations will have to be accumulated for the adoption of the euro. It is planned that, on making the final decision on the adoption of the euro, this amount will be minted in six months by the Lithuanian Mint operating in Vilnius.

How will the national side of euro coins issued in Lithuania look like?

In Lithuania the euro coins of eight denominations will be minted bearing the symbol of the Lithuanian national emblem Vytis, as was the wish of the majority of the Lithuanian population. This wish was discovered through a public opinion survey made by the Bank of Lithuania, which, having estimated the results of the survey, formulated the terms and conditions of the tender for the design of plaster models for the national side of euro coins. This tender was won by the sculptor from Vilnius Antanas Zukauskas. The Lithuanian euro coins will be legal tender and fit for settlement in all states that adopted the euro.

What are the requirements to EU Member States aiming to adopt the euro?

The Maastricht Treaty sets the following convergence criteria to EU Member States aiming to adopt the euro:

1. Inflation should not exceed average inflation in three EU Member States with the lowest inflation by more that 1.5 percentage points. This should be long-term price stability.

2. The general budget deficit may not exceed 3 per cent of GDP or should be approaching this level in a fast and consistent way.

3. Public debt may not exceed 60 per cent of GDP or should be going down in a fast and consistent way.

4. Long-term interest rates on Government securities should not exceed average long-term interest rates on Government securities in three EU Member States with the lowest level of inflation by more than 2 percentage points.

5. The country’s national currency must be stable and stay within the set band against the euro for at least two years of participation in ERM II.