Negotiation chapter "Free movement of capital"

The acquis in the chapter "Free movement of capital" covers the following areas: Capital movements and payments, Prevention of money laundering, Payment and settlement systems.

The Republic of Lithuania intends to implement all provisions and requirements of this chapter by the date of accession to the European Union. Therefore, the Republic of Lithuania has not requested for any transitional periods or derogation in this chapter. The remaining capital movement restrictions should be eliminated by the end of 2003.

The main provisions in the area of Capital movement and payments

The Republic of Lithuania, since 3 May 1994, has accepted the requirements of Article VIII of the Articles of Agreement of the International Monetary Fund, which require for the liberalisation of all current payments and for a non-discriminatory nature of currency agreements. The Republic of Lithuania ensures free current, including capital, payments and does not intend to impose any restriction in this respect.

The Republic of Lithuania has maintained a currency board arrangement since 1994, which ensures a fixed exchange rate of the national currency (litas) against the anchor currency, with full backing of the litas put into circulation by gold and foreign currency reserves, as well as the unrestricted exchange of the litas for the anchor currency and vice versa. On 2 February 2002 the anchor currency of the litas (US dollar) was replaced by another anchor currency – euro.

The Republic of Lithuania imposes no restrictions on credits related to commercial transactions or the provision of services, as well as on financial loans and credits.

Residents may open accounts in foreign banks, and there are no restrictions for non-residents on opening accounts in the commercial banks of the Republic of Lithuania.

In order to ensure that the authorization procedure with respect to legal persons excluding banks for opening accounts abroad complies with the acquis, the Law on the Amendment of the Law on the Foreign Currency in the Republic of Lithuania was adopted in the end of 2002 whereby the authorization procedure was replaced by the information procedure.

In the opinion of the European Commission, the authorisation procedure for the acquisition and (or) management of a block of shares of a bank could also be considered as a restriction on capital movement; therefore, it should be replaced with an information procedure. Full elimination of this restriction is related to the implementation of the requirements of the chapter "Freedom to Provide Services".

The main provisions in the area of Payment and settlement systems

In order to implement the acquis in the area of Payment and settlement systems, it is planned to adopt draft laws on the Amendment of the Law of Payments and on Settlement Finality in Payment and Securities Settlement Systems by the end of 2003.

With an objective of streamlining the domestic payment systems, the Bank of Lithuania is developing the new Interbank Funds Transfer System aimed at real time (for large value and urgent payments) and designated-time (for retail payments) settlement. The new system based on the state-of-the-art technology will be in line with the international standards required for systems of similar purpose and will ensure a high level of security and confidentiality with regard to the activities of the Bank of Lithuania.