Analytics, Economics, EU – Baltic States, Financial Services, Lithuania

Photo: lb.lt

"Beyond showing commitment to making its own economy fit for the euro area, Lithuania has also contributed to making the currency union as a whole more stable: the priorities set last year under its EU presidency included more steps towards banking union and a further deepening of Economic and Monetary Union. We can draw an important lesson from the Baltic experience: governments not only acted boldly but also immediately," said Mario Draghi of the European Central Bank.

"The euro adoption crowns what was begun almost a quarter of a century ago, when Lithuania firmly and irrevocably chose the direction of euro integration. Having made a decade ago the free decision to become a member of the EU, with the single currency we will soon draw even closer to Europe – being together we will have more opportunities to be stronger, more secure and richer," said Vitas Vasiliauskas, governor of the Bank of Lithuania.

According to the estimates of the Bank of Lithuania's economists, due to the euro adoption the scope of Lithuania's foreign investment will increase by 5-10%, while the benefits in the medium term, until 2021, will amount to at least EUR 10 billion, or almost a third of the GDP of Lithuania.

In addition, the euro adoption will lead to 0.3-0.5 p.p. less interest rates for businesses and residents, while interest expenditure by 2022 will decrease by more than EUR 1 billion, or almost 3% of GDP.

Increased export and decreased interest will drive a growth in economic activity and employment. Because of this, in the medium term Lithuania's GDP level will be almost 2% higher, while the unemployment rate was smaller by 0.4-0.5 p.p.

On 1 January 2015, Lithuania will become the 19th member of the euro area, which unites almost 340 million people.