Bank of Lithuania

1. The Board resolved to give permission to Vilniaus Bank to recognise the seven-year 22 million euro loan from the International Financial Corporation as a subordinated loan and include it into its eligible capital.

Permissions on including subordinated loans into eligible capital are granted in cases when the loan is a long-term loan in cash and is not expected to have a negative impact on the financial standing.

2. The Board discussed the participation of the Bank of Lithuania in the processes of Lithuania’s preparation for EU membership.

Most preparation measures of Lithuania are based on the Community Law (acquis communautaire) that consists of 29 chapters. The functions of the Bank of Lithuania are directly related to the adoption and implementation of legal acts pertaining to three chapters of the acquis: Economic and Monetary Union, Free Movement of Capital and Freedom to Provide Services.

The main fields in the work of the Bank of Lithuania include harmonisation of the legislation regulating the operations of credit institutions, improvement of monetary policy instruments (by bringing them in line with the requirements of the European Central Bank), improvement of the balance of payments, banking and monetary statistics and modernisation of the payments system.

Negotiations on the chapters Freedom to Provide Services and Free Movement of Capital were started in the second half of 2000, while the negotiations on the chapter Economic and Monetary Union are expected to start in the first half of 2001.

Lithuania’s progress within the chapter Economic and Monetary Union has for three years been viewed by the European Commission as related to the adoption of the Law on Amendments to the Law on the Bank of Lithuania. With the adoption of this law compliance with the acquis requirements under this chapter, such as institutional, financial and personal independence of the central bank and prohibition of direct financing of the public sector by the central bank will be implemented. While the Bank of Lithuania does not lend to the public sector directly, in the opinion of the Commission, Lithuania should adopt legislation expressly prohibiting such lending by the central bank.

Lithuanian legislation related to the subchapter Monetary and Exchange Rate Policy, with the exception of requirements for the introduction of the euro, will be fully harmonised with the acquis of this subchapter upon the adoption of the draft Law on the Amendments of the Law on the Bank of Lithuania.

As Lithuania prepares for EU membership, it is intended to retain the fixed exchange rate of the litas. A key task in the medium term is to ensure a smooth transition from its present peg to the US dollar to the euro peg. The peg of the litas to the euro at a fixed rate of exchange will allow meeting Treaty requirements on the common exchange rate policy and create conditions for the participation of Lithuania in the Exchange Rate Mechanism after EU accession.

3. The Board resolved to announce the 50 litas denomination silver commemorative coin issued to mark the New Millennium as legal tender for payments and settlements and issue it into circulation as of 27 December 2000.

The weight of the silver (925) coin is 28.28 g, diameter 38.61 mm, and mint 3000 pieces. The coin has a mirror surface with a matt relief and an inscription on the edge in Latin SALVE NOVUM MILLENNIUM.

The author of the coin is Rytis Balcev