Shortly before withdrawing the first euro note from an ATM in central Vilnius in the first minutes of 2015, Lithuania’s Prime Minister Algirdas Butkevičius expressed certitude that Lithuania will make the euro family stronger.
“The euro will serve as a guarantee for our economic and political security, enabling further economic viability, job creation and rising public well-being,” he said at a solemn ceremony.
“Joining euro zone is not only victory for Lithuania, it is a victory for Estonia, for Latvia and the euro zone as a whole. Euro zone gained today not only a new member but a member that is committed to those all important criteria,” he said.
In a pre-recorded Lithuanian-language congratulatory message, Latvia’s Prime Minister Laimdota Straujuma said that “the Baltic states now share yet another symbol – the euro, which will further improve the well-being and cohesion of the nations.”
European Central Bank President Mario Draghi emphasized that Lithuania was permitted into the euro area after taking “exceptional measures,” probably referring to the austerity steps to cut the budget deficit after a 15-percent economic decline during the 2009 crisis.
“On behalf of the Governing Council of the European Central Bank, I welcome this further enlargement of the euro area. Lithuania has taken exceptional measures in difficult times to reach its goal of joining the single currency,” Draghi said in a press release.
Lithuania is joining the euro zone at a time of escalated concerns about Greece, which has announced plans to hold premature elections.
The Lithuanian government says that the euro will benefit the economy due to cheaper borrowing, eliminate currency exchange costs and devaluation risks, consequently promoting exports and investments. The Cabinet maintains solidarity mechanisms will allow Lithuania to expect assistance in case of crisis.
The Lithuanian currency, the litas, had been pegged to the euro since 2002, therefore, Lithuania was dependent on policies of the European Central Bank but did not have a vote.
Supporters say euro zone membership and deeper integration with the EU also boost the country’s security, which has been a major issue amid the Russian aggression in the neighborhood.
Meanwhile, critics fear that rounding will lead to higher prices, and hundreds of millions worth of contributions to the rescue fund will increase the state debt and take away the money that would otherwise be used for other needs. Some experts say cheaper loans will cause the government to overspend, and Lithuania will lose competitiveness in the long run due to salaries growing faster than productivity.
The litas was Lithuania’s national currency in 1922-1940 and in 1993-2014.
Until mid-January, both the litas and the euros will be accepted in Lithuania.