Lithuania and the euro

Lithuania is an EU member state which joined the Eurozone by adopting the euro on 1 January 2015.

This made it the last of the three Baltic states to adopt the euro, after Estonia (2011) and Latvia (2014). Before then, its currency, the litas, was pegged to the euro at 3.4528 litas to 1 euro.

All members of the European Union, except Denmark and the UK, are required by treaty to join the euro once certain economic criteria have been met. The Lithuanian litas participated in ERM II since 28 June 2004, and was pegged to the euro at a rate of 3.45280 litai = €1. Lithuania originally set 1 January 2007 as their target date for joining the euro, and in March 2006 requested that the European Commission and the European Central Bank conduct an assessment on their readiness to adopt the currency. The Commission's report found that while Lithuania met four of the five criteria, their average annual inflation was 2.7%, exceeding the limit of 2.6%. As a result, the Commission concluded that "there should be no change at present to Lithuania's status as a Member State with a derogation." Lithuania is the only country initially to have been denied approval to adopt the euro after requesting a convergence check.

In December 2006 the government approved a new convergence plan, which pushed the expected adoption date to post-2010 due to inflation. In 2007, Prime Minister Gediminas Kirkilas stated that he hoped for adoption around 2010–11. Generally high inflation, which reached a peak of 12.7% in June 2008 (well above the 4.2% limit of the time), delayed Lithuania's adoption of the euro. By the time of the 2010 European debt crisis, the expected switch over date had been put further back to 2014. Lithuania expressed interest in a suggestion from the IMF that countries which are not able to meet the Maastricht criteria be able to "partially adopt" the euro, using the currency but not getting a seat at the European Central Bank. Interviews with the Foreign Minister and Prime Minister in May and August 2012 respectively highlighted that Lithuania still aimed to join the euro, but would not set a target date until the state of the eurozone post-crisis was clear.

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Wikipedia