Lithuania finalizes legislation to join banking union

According to Finance Minister Rimantas Šadžius, Lithuania has fulfilled all the requirements and can now benefit from the opportunities offered by the banking union. The finance minister says that membership in the banking union will augment Lithuania’s financial stability and depositors’ financial security.

The agreement over key elements of the banking union was reached during the Lithuanian Presidency of the Council of the European Union in the second half of 2013.

Legislation prepared by the Ministry of Finance and the Bank of Lithuania transposed into national law key provisions of the banking union – the Single Resolution Mechanism (SRM), the Bank Recovery and Resolution Directive (BRRD) and the Directive on Deposit Guarantee Schemes (DGS). This will enhance the stability of the financial system and the protection of depositors’ rights. The foreseen measures will enable to effectively deal with insolvency of banks and other major financial institutions using funds of financial institutions themselves instead of taxpayers’ money. At the same time, depositors will have a guarantee that insurance payments will be paid out promptly.

The legislative package of Lithuania’s participation in the banking union consists of 2 primary and 14 accompanying laws and the agreement on the transfer and mutualisation of contributions to the single resolution fund.