Bulgaria Economic Forum Joining the euro: Lithuanian experience Gediminas Šimkus Director, Economics and Financial Stability Service Bank of Lithuania Sofia, Bulgaria 8 December

Consistent policy direction for Lithuania ~70% exports to the EU, ~50% — to the euro area. May 2004 Currency Board Arrangement $ 1994 € 2002 ERM II (June 2004) January 2015 ~80% of FDI from the EU, ~45% — from the euro area Integration into the European structures Ensured exchange rate stability seeking price convergence and stability in the longer run Strengthened policy discipline and economic flexibility Natural step forward

ERM II – testing phase ERM II Lithuania in ERM II June 2004 – December 2014 ERM II Commitments 1 € = 3.4528 LTL Balanced budget over the medium term Credit growth Effective financial supervision

Compliance with criteria: in a durable way 2006 2014 % 12 month moving average

European decision making April Assessment dates Law compatibility & Economic data June Convergence Reports (European Commission and ECB) European Commission proposals July Opinions: ECB & European Parliament EU Council’s meeting: final decision

Euro adoption: strategy & timing National Changeover Plan Public information and communication strategy Action plan Law on the Introduction of the Euro in Lithuania June 2013 June 2013 December 2013 Post- Council decision

Euro adoption is HUGE project Commission (Chaired by PM) Coordinating WG (Chaired by MoF) Working Groups Business Environment (MoE) Consumer Rights Protection and Social Affairs (MoSSL) Legal Issues (MoJ) Public Information (BoL) Cash Changeover Compliance with Economic Convergence Criteria President Parliament

Lessons learnt Work hard and win public support at home Make sure there is a strong support among politicians Read carefully the reports of European authorities Have an “experienced country” to assist you Invest in networking

Public opinion – key support “A European Monetary Union with one single currency, the euro ... “ Source: Eurobarometer

GDP larger by 1.9% Impact through various channels Interest rates Foreign exchange and settlement costs Investment and foreign trade GDP in the medium and long terms Consumption Investment Impact through various channels Net export Impact on the price level One-off costs of the euro adoption Financial contributions

Thank you!