Banks, EU – Baltic States, Financial Services, Legislation, Lithuania

The euro coins will be distributed to commercial banks by the Bank of Lithuania from 1 October 2014, euro banknotes – from 1 November. The Board of the Bank of Lithuania approved the Description of the Procedure for the Frontloading of Euro Banknotes and Coins (hereinafter – Description of the Procedure).

For the euro frontloading to take place, the Bank of Lithuania and commercial banks have to sign a euro frontloading agreement. The key provisions of this agreement are defined in one of the annexes to the Description of the Procedure. In addition, commercial banks will have to provide to the Bank of Lithuania eligible collateral for the frontloaded euro banknotes and coins: funds in accounts with the Bank of Lithuania, debt securities or time deposits at the Bank of Lithuania.

It is foreseen that from 1 December 2014 until the euro adoption date commercial banks and their authorised cash-in-transit companies will begin the sub-frontloading of the euro. During this time commercial banks will provide the new currency to retail trade and service providing businesses, Lithuania Post, credit unions that exchange litas to euro as well as any other subjects that have the need to be provided with euro beforehand. For the sub-frontloading to take place, banks and the subjects to receive the euro will have to sign the Agreement on the Frontloading of Euro Banknotes and Coins, the minimum requirements of which are defined in one of the annexes to the Description of the Procedure.

Small trade and service providing businesses will be provided with euro banknotes and coins during the sub-frontloading. They have been provided with the opportunity to, no later than five days prior to the euro adoption, acquire an amount not exceeding EUR 10,000.

The Description of the Procedure provides the opportunity for the Bank of Lithuania to perform inspections of the banks, cash-in-transit companies and the premises of the subjects who will receive the euro during the sub-frontloading, seeking to establish the fulfilment of obligations on storage of the frontloaded euro banknotes and coins. Fines and late fees are planned for failure to fulfil the obligations provided in the Description of the Procedure.

Before this the Board of the Bank of Lithuania approved the Guidelines on Cash Changeover, which specify the members of the cash changeover process during euro adoption and their functions, the principles of acquisition of euro, euro and litas handling as well as other cash changeover related principles.

Based on the Guidelines on Cash Changeover and the Description of the Procedure for the Frontloading of Euro Banknotes and Coins, eight steps for businesses to prepare for and acquire cash euro were prepared and published on the Bank of Lithuania website.