Lithuania and the euro

Last updated
Eurozone participation
European Union (EU) member states
19 in the eurozone.
7 not in ERM II, but obliged to join the eurozone on meeting convergence criteria (Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, and Sweden).
1 in ERM II, with an opt-out (Denmark).
1 not in ERM II with an opt-out (United Kingdom).
Non-EU member states
4 using the euro with a monetary agreement (Andorra, Monaco, San Marino, and Vatican City).
2 using the euro unilaterally (Kosovo and Montenegro).
v
t
e Eurozone participation.svg
Eurozone participation
European Union (EU) member states
  19 in the eurozone.
  7 not in ERM II, but obliged to join the eurozone on meeting convergence criteria (Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, and Sweden).
  1 in ERM II, with an opt-out (Denmark).
  1 not in ERM II with an opt-out (United Kingdom).
Non-EU member states
  4 using the euro with a monetary agreement (Andorra, Monaco, San Marino, and Vatican City).
  2 using the euro unilaterally (Kosovo and Montenegro).

Lithuanian euro starter kit Lithuanian euro starter kit 2.jpg
Lithuanian euro starter kit

Lithuania is an EU member state which joined the Eurozone by adopting the euro on 1 January 2015. [1]

Lithuania republic in Northeastern Europe

Lithuania, officially the Republic of Lithuania, is a country in the Baltic region of Europe. Lithuania is considered to be one of the Baltic states. It is situated along the southeastern shore of the Baltic Sea, to the east of Sweden and Denmark. It is bordered by Latvia to the north, Belarus to the east and south, Poland to the south, and Kaliningrad Oblast to the southwest. Lithuania has an estimated population of 2.8 million people as of 2019, and its capital and largest city is Vilnius. Other major cities are Kaunas and Klaipėda. Lithuanians are Baltic people. The official language, Lithuanian, along with Latvian, is one of only two living languages in the Baltic branch of the Indo-European language family.

Member state of the European Union state that is party to treaties of the European Union (EU)

The European Union (EU) consists of 28 member states. Each member state is party to the founding treaties of the union and thereby subject to the privileges and obligations of membership. Unlike members of most international organisations, the member states of the EU are subjected to binding laws in exchange for representation within the common legislative and judicial institutions. Member states must agree unanimously for the EU to adopt policies concerning defence and foreign policy. Subsidiarity is a founding principle of the EU.

Eurozone Area in which the euro is the official currency

The eurozone, officially called the euro area, is a monetary union of 19 of the 28 European Union (EU) member states which have adopted the euro (€) as their common currency and sole legal tender. The monetary authority of the eurozone is the Eurosystem. The other nine members of the European Union continue to use their own national currencies, although most of them are obliged to adopt the euro in the future.

Contents

This made it the last of the three Baltic states to adopt the euro, after Estonia (2011) and Latvia (2014). Before then, its currency, the litas, was pegged to the euro at 3.4528 litas to 1 euro.

Baltic states Countries east of the Baltic Sea

The Baltic states, also known as the Baltic countries, Baltic republics, Baltic nations or simply the Baltics, is a geopolitical term used for grouping the three sovereign states in Northern Europe on the eastern coast of the Baltic Sea: Estonia, Latvia, and Lithuania. The term is not used in the context of cultural areas, national identity, or language. The three countries do not form an official union, but engage in intergovernmental and parliamentary cooperation.

Lithuanian litas former currency of Lithuania

The Lithuanian litas (ISO currency code LTL, symbolized as Lt; plural litai or litų was the currency of Lithuania, until 1 January 2015, when it was replaced by the euro. It was divided into 100 centų. The litas was first introduced on 2 October 1922 after World War I, when Lithuania declared independence and was reintroduced on 25 June 1993, following a period of currency exchange from the ruble to the litas with the temporary talonas then in place. The name was modeled after the name of the country. From 1994 to 2002, the litas was pegged to the U.S. dollar at the rate of 4 to 1. The litas was pegged to the euro at the rate of 3.4528 to 1 since 2002. The euro was expected to replace the litas by 1 January 2007, but persistent high inflation and the economic crisis delayed the switch. On 1 January 2015 the litas was switched to the euro at the rate of 3.4528 to 1.

History

All members of the European Union, except Denmark and the UK, are required by treaty to join the euro once certain economic criteria have been met. The Lithuanian litas participated in ERM II since 28 June 2004, and was pegged to the euro at a rate of 3.45280 litai = €1. Lithuania originally set 1 January 2007 as their target date for joining the euro, and in March 2006 requested that the European Commission and the European Central Bank conduct an assessment on their readiness to adopt the currency. The Commission's report found that while Lithuania met four of the five criteria, their average annual inflation was 2.7%, exceeding the limit of 2.6%. As a result, the Commission concluded that "there should be no change at present to Lithuania's status as a Member State with a derogation." [2] [3] Lithuania is the only country initially to have been denied approval to adopt the euro after requesting a convergence check. [4]

European Union Economic and political union of European states

The European Union (EU) is a political and economic union of 28 member states that are located primarily in Europe. It has an area of 4,475,757 km2 (1,728,099 sq mi) and an estimated population of about 513 million. The EU has developed an internal single market through a standardised system of laws that apply in all member states in those matters, and only those matters, where members have agreed to act as one. EU policies aim to ensure the free movement of people, goods, services and capital within the internal market, enact legislation in justice and home affairs and maintain common policies on trade, agriculture, fisheries and regional development. For travel within the Schengen Area, passport controls have been abolished. A monetary union was established in 1999 and came into full force in 2002 and is composed of 19 EU member states which use the euro currency.

Denmark and the euro

Denmark uses the krone as its currency and does not use the euro, having negotiated the right to opt-out from participation under the Maastricht Treaty of 1992. In 2000, the government held a referendum on introducing the euro, which was defeated with 46.8% voting yes and 53.2% voting no. The Danish krone is part of the ERM II mechanism, so its exchange rate is tied to within 2.25% of the euro.

United Kingdom and the euro

The United Kingdom has never sought to adopt the euro as its official currency for the duration of its membership of the European Union (EU), and secured an opt-out at the euro's creation via the Maastricht Treaty in 1992. Polls have shown that the majority of British people have been against adopting the euro, and in a June 2016 referendum the UK voted to withdraw from the EU which would virtually eliminate the chance of any future adoption. Despite never being a member of the eurozone, the currency is used in the UK's Cypriot territories and as a secondary currency in Gibraltar; furthermore, London is home to the majority of the euro's clearing houses.

In December 2006 the government approved a new convergence plan, which pushed the expected adoption date to post-2010 due to inflation. [5] In 2007, Prime Minister Gediminas Kirkilas stated that he hoped for adoption around 2010–11. [6] [7] Generally high inflation, which reached a peak of 12.7% in June 2008 [8] (well above the 4.2% limit of the time), [9] delayed Lithuania's adoption of the euro. By the time of the 2010 European debt crisis, the expected switch over date had been put further back to 2014. [10] Lithuania expressed interest in a suggestion from the IMF that countries which are not able to meet the Maastricht criteria be able to "partially adopt" the euro, using the currency but not getting a seat at the European Central Bank. [11] Interviews with the Foreign Minister and Prime Minister in May and August 2012 respectively highlighted that Lithuania still aimed to join the euro, but would not set a target date until the state of the eurozone post-crisis was clear. [12] [13]

Gediminas Kirkilas Lithuanian politician

Gediminas Kirkilas is a Lithuanian politician who was Prime Minister of Lithuania from 2006 to 2008. He was confirmed by the Seimas on 4 July 2006 after Zigmantas Balčytis, the provisional Prime Minister, failed to gather the required support from the parliament. He stepped down on 27 November 2008 after the 2008 parliamentary elections, and gave way to Andrius Kubilius to start his term as the prime minister.

European debt crisis Multi-year debt crisis in multiple EU countries, since late 2009

The European debt crisis is a multi-year debt crisis that has been taking place in the European Union since the end of 2009. Several eurozone member states were unable to repay or refinance their government debt or to bail out over-indebted banks under their national supervision without the assistance of third parties like other eurozone countries, the European Central Bank (ECB), or the International Monetary Fund (IMF).

International Monetary Fund International organisation

The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C., consisting of "189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world." Formed in 1944 at the Bretton Woods Conference primarily by the ideas of Harry Dexter White and John Maynard Keynes, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system. It now plays a central role in the management of balance of payments difficulties and international financial crises. Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money. As of 2016, the fund had SDR477 billion.

During the 2012 Lithuanian parliamentary election campaign, the Social Democrats were reported to prefer delaying the euro adoption, from the previous 2014 target until 1 January 2015. [14] When the second round of the elections were concluded in October, the Social Democrats and two coalition parties won a majority and formed the new government, and the coalition parties were expected to accept the proposed delay in adoption of the euro. [15] When Prime Minister Algirdas Butkevičius presented his new government in December, eurozone accession as soon as possible was mentioned as one of the key priorities for the government. The Prime Minister said: "January 2015 is a feasible date. But things can also turn out, that we may try to adopt the euro together with Latvia in January 2014. Let the first quarter (of 2013) pass, and we'll give it a thought." [16] However, in January 2013 the Prime Minister announced that the government and the Bank of Lithuania had agreed on a target date of 2015. [17] In February 2013, the government of Lithuania approved a plan for euro adoption in 2015. [18]

Social Democratic Party of Lithuania social democratic political party in Lithuania

The Social Democratic Party of Lithuania is a social-democratic political party in Lithuania. Founded as an underground Marxist organization in 1896, it is the oldest extant party in Lithuania. During the period of Soviet occupation, the party was forced into exile, emerging once again in Lithuania in 1989.

Algirdas Butkevičius Lithuanian politician

Algirdas Butkevičius is a former Prime Minister of Lithuania, serving between 2012 and 2016. He also served as the Minister of Finance from 2004 to 2005 and the Minister of Transport and Communications from 2006 to 2008. He has led the Social Democratic Party of Lithuania since 2009.

Bank of Lithuania central bank

The Bank of Lithuania is the central bank of the Republic of Lithuania. The Bank of Lithuania is a member of the European System of Central Banks. The chairman of the bank is Vitas Vasiliauskas. Until 2015, the Bank of Lithuania was responsible for issuing the former Lithuanian currency, the litas.

According to figures from the Bank of Lithuania, Lithuania had met 4 out of the 5 criteria by October 2013, the exception being the government deficit of 3.2% of GDP, exceeding the limit of 3.0%. [19] The Lithuanian government expected this to decline to 2.9% by the first quarter of 2014. [4] [19] In April 2014, the European Parliament's Committee on Economic and Monetary Affairs gave their preliminary consent for Lithuania to join the eurozone on 1 January 2015, having concluded that the country was complying with all the criteria according to economic data from the first months of 2014. [20] Lithuania's parliament approved a euro changeover law in April 2014, [21] and in their biennial reports released on 4 June the European Commission found that the country satisfied the convergence criteria. The European Central Bank does not conclude on whether the country is ready to join the euro area. [22] [23] [24] [25] [26] On 16 July the European Parliament voted in favour of Lithuania adopting the euro. [27] [28] On 23 July the EU Council of Ministers approved the decision, clearing the way for Lithuania to adopt the euro on 1 January 2015. [1] [29]

European Parliament directly elected parliamentary institution of the European Union

The European Parliament (EP) is the only parliamentary institution of the European Union (EU) that is directly elected by EU citizens aged 18 or older. Together with the Council of the European Union, which should not be confused with the European Council and the Council of Europe, it exercises the legislative function of the EU. The Parliament is composed of 751 members (MEPs), that will become 705 starting from the 2019–2024 legislature, who represent the second-largest democratic electorate in the world and the largest trans-national democratic electorate in the world.

European Commission executive institution of the European Union

The European Commission (EC) is an institution of the European Union, responsible for proposing legislation, implementing decisions, upholding the EU treaties and managing the day-to-day business of the EU. Commissioners swear an oath at the European Court of Justice in Luxembourg City, pledging to respect the treaties and to be completely independent in carrying out their duties during their mandate. Unlike in the Council of the European Union, where members are directly and indirectly elected, and the European Parliament, where members are directly elected, the Commissioners are proposed by the Council of the European Union, on the basis of suggestions made by the national governments, and then appointed by the European Council after the approval of the European Parliament.

Convergence criteria
Assessment monthCountry HICP inflation rate [30] [nb 1] Excessive deficit procedure [31] Exchange rateLong-term interest rate [32] [nb 2] Compatibility of legislation
Budget deficit to GDP [33] Debt-to-GDP ratio [34] ERM II member [35] Change in rate [36] [37] [nb 3]
2012 ECB Report [nb 4] Reference valuesMax. 3.1% [nb 5]
(as of 31 Mar 2012)
None open(as of 31 March 2012)Min. 2 years
(as of 31 Mar 2012)
Max. ±15% [nb 6]
(for 2011)
Max. 5.80% [nb 7]
(as of 31 Mar 2012)
Yes [38] [39]
(as of 31 Mar 2012)
Max. 3.0%
(Fiscal year 2011) [40]
Max. 60%
(Fiscal year 2011) [40]
Flag of Lithuania.svg  Lithuania 4.2%Open7 years, 9 months0.0%5.19%No
5.5%38.5%
2013 ECB Report [nb 8] Reference valuesMax. 2.7% [nb 9]
(as of 30 Apr 2013)
None open(as of 30 Apr 2013)Min. 2 years
(as of 30 Apr 2013)
Max. ±15% [nb 6]
(for 2012)
Max. 5.5% [nb 9]
(as of 30 Apr 2013)
Yes [41] [42]
(as of 30 Apr 2013)
Max. 3.0%
(Fiscal year 2012) [43]
Max. 60%
(Fiscal year 2012) [43]
Flag of Lithuania.svg  Lithuania 2.7%Open(Closed in June 2013)8 years, 10 months0.0%4.42%Unknown
3.2%40.7%
2014 ECB Report [nb 10] Reference valuesMax. 1.7% [nb 11]
(as of 30 Apr 2014)
None open(as of 30 Apr 2014)Min. 2 years
(as of 30 Apr 2014)
Max. ±15% [nb 6]
(for 2013)
Max. 6.2% [nb 12]
(as of 30 Apr 2014)
Yes [44] [45]
(as of 30 Apr 2014)
Max. 3.0%
(Fiscal year 2013) [46]
Max. 60%
(Fiscal year 2013) [46]
Flag of Lithuania.svg  Lithuania 0.6%None9 years, 10 months0.0%3.60%Yes
2.1%39.4%


  Criterion fulfilled
  Criterion potentially fulfilled: If the budget deficit exceeds the 3% limit, but is "close" to this value (the European Commission has deemed 3.5% to be close by in the past), [47] then the criteria can still potentially be fulfilled if either the deficits in the previous two years are significantly declining towards the 3% limit, or if the excessive deficit is the result of exceptional circumstances which are temporary in nature (i.e. one-off expenditures triggered by a significant economic downturn, or by the implementation of economic reforms that are expected to deliver a significant positive impact on the government's future fiscal budgets). However, even if such "special circumstances" are found to exist, additional criteria must also be met to comply with the fiscal budget criterion. [48] [49] Additionally, if the debt-to-GDP ratio exceeds 60% but is "sufficiently diminishing and approaching the reference value at a satisfactory pace" it can be deemed to be in compliance. [49]
  Criterion not fulfilled


Notes
  1. The rate of increase of the 12-month average HICP over the prior 12-month average must be no more than 1.5% larger than the unweighted arithmetic average of the similar HICP inflation rates in the 3 EU member states with the lowest HICP inflation. If any of these 3 states have a HICP rate significantly below the similarly averaged HICP rate for the eurozone (which according to ECB practice means more than 2% below), and if this low HICP rate has been primarily caused by exceptional circumstances (i.e. severe wage cuts or a strong recession), then such a state is not included in the calculation of the reference value and is replaced by the EU state with the fourth lowest HICP rate.
  2. The arithmetic average of the annual yield of 10-year government bonds as of the end of the past 12 months must be no more than 2.0% larger than the unweighted arithmetic average of the bond yields in the 3 EU member states with the lowest HICP inflation. If any of these states have bond yields which are significantly larger than the similarly averaged yield for the eurozone (which according to previous ECB reports means more than 2% above) and at the same time does not have complete funding access to financial markets (which is the case for as long as a government receives bailout funds), then such a state is not be included in the calculation of the reference value.
  3. The change in the annual average exchange rate against the euro.
  4. Reference values from the ECB convergence report of May 2012. [38]
  5. Sweden, Ireland and Slovenia were the reference states. [38]
  6. 1 2 3 The maximum allowed change in rate is ± 2.25% for Denmark.
  7. Sweden and Slovenia were the reference states, with Ireland excluded as an outlier. [38]
  8. Reference values from the ECB convergence report of June 2013. [41]
  9. 1 2 Sweden, Latvia and Ireland were the reference states. [41]
  10. Reference values from the ECB convergence report of June 2014. [44]
  11. Latvia, Portugal and Ireland were the reference states, with Greece, Bulgaria and Cyprus excluded as outliers. [44]
  12. Latvia, Ireland and Portugal were the reference states. [44]

Public opinion

A poll by Eurobarometer in April 2013 found that 41% of Lithuanians supported switching to the euro, while 55% were opposed. This was a decrease in support of 3% from a year earlier. [4] [50] A September 2014 Eurobarometer poll found that 49% of Lithuanians were opposed to the introduction of the euro and 47% supported it. [51]

Opinion polling in the run-up to the adoption of the euro produced a mixed set of results. [52] A Baltic Surveys (Baltijos Tyrimai) face-to-face interview survey for the eurosceptic Europeans United for Democracy party conducted on 14–24 November found that 49% of Lithuanians disagree with their Government’s decision to introduce the euro, while 26% of Lithuanians approved (5% fully, 21% rather in favour). 57% of respondents said the Government acted wrongly by introducing the euro without a referendum on the issue. [53] However, a poll conducted by Berent Research Baltic for the Bank of Lithuania between 3 and 26 November showed that 53% of the population were in favour of the new currency while 39% were sceptical. [52]

Coin design

The designs of the Lithuanian coins share a similar national side for all denominations, featuring the Vytis symbol and the name of the country, "Lietuva". [54] The design was announced on 11 November 2004 following a public opinion poll conducted by the Bank of Lithuania. [54] It was created by the sculptor Antanas Žukauskas. [55] The only difference between the coins is that the one and two euro coins have vertical lines on the outer circle, the fifty, twenty and ten cent coins have horizontal lines on the outer circle, and the five, two and one cent coins have no lines on the outer circle. [54] In January 2014 it was announced that all coins will have "2015" printed on them to display the year of Lithuania's euro adoption. The Lithuanian Mint was chosen to mint the coins. [54] [55]

Depiction of Lithuanian euro coinage | Obverse side
€0.01€0.02€0.05
N22978 5+2+1 cnt Lietuva 2015.jpg N22978 5+2+1 cnt Lietuva 2015.jpg N22978 5+2+1 cnt Lietuva 2015.jpg
"Vytis" from the Coat of arms of Lithuania
€0.10€0.20€0.50
N22978 10 cnt Lietuva 2015 (1).jpg N22978 20 cnt Lietuva 2015.jpg N22978 50 cnt Lietuva 2015.jpg
"Vytis" from the Coat of arms of Lithuania
€1.00€2.00€2 Coin Edge
N22978 1 eur Lietuva 2015.jpg N22978 2 eur aversas.jpg 2 euro edge inscription Lithuania.svg "LAISVĖ, VIENYBĖ, GEROVĖ"
"Freedom, Unity, Prosperity" in Lithuanian
"Vytis" from the Coat of arms of Lithuania

For the design of images on the common side and a detailed description of the coins, see euro coins.

Accession to the eurozone

Lithuania officially joined the Eurozone at midnight on the morning of 1 January 2015, with the Lithuanian Central Bank offering an exchange rate of 3.4528 LTL to one euro. [56] Immediately after the start of the New Year, Prime Minister Algirdas Butkevicius made the country's first cash withdrawal in euros. [57] It was reported that nearly all of the nation's cash machines would be dispensing euros within 30 minutes of the New Year. In Brussels, the European Commission building was draped with a banner welcoming Lithuania to the Eurozone. [58]

Euro adoption day [59] Changeover plan [59] Introduction [59] [60] Frontloading [59] Dual circulation
period [59]
Exchange of LTL cash period [59] Dual price display [59] Mint company [59] Currency circulated
(in units) [59]
1 January 2015A changeover law was passed in April 2014 [21] Big-BangCommercial banks starts receiving euro banknotes and coins respectively 2 and 3 months before €-day.
Retailers receive coins and banknotes during the last month before €-day.
15 daysBanks:
12 months (notes)
6 months (coins)
Central bank:
indefinitely
Start 30 days after Council approval of euro adoption, equal to 22 Aug.2014, and lasts until 6 or 12 months after adoption Lithuanian Mint [54] 132 million banknotes, 370 million coins [61]

The European Commission recommended in November 2014 that Lithuania extend the legally required dual price display period by six additional months, so that it would last until 31 December 2015. [59] Lithuania did not adopt the recommendation and the required dual price display ended on 1 July 2015. [62]

Rotation of voting rights in the ECB Governing Council

On 17 June 2014 the Deutsche Bundesbank released a statement stating that "Lithuania could cause the ECB Governing Council's voting rights to rotate. The virtually certain introduction of the euro in this small Baltic nation at the beginning of next year would cause the number of national central bank (NCB) governors on the ECB Governing Council to exceed 18 for the first time. It would trigger a changed voting procedure designed to ensure that decisions can still be taken effectively in a growing Eurosystem. This would pave the way for the introduction of a modified voting system similar to that of the US Federal Reserve System." [63]

See also

Notes

  1. Kosovo is the subject of a territorial dispute between the Republic of Kosovo and the Republic of Serbia. The Republic of Kosovo unilaterally declared independence on 17 February 2008, but Serbia continues to claim it as part of its own sovereign territory. The two governments began to normalise relations in 2013, as part of the Brussels Agreement. Kosovo has been recognized as an independent state by 113 out of 193 United Nations member states, 10 of which have subsequently withdrawn recognition.

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European Exchange Rate Mechanism European system to reduce exchange rate variability prior to the Euro

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Czech Republic and the euro

The Czech Republic is bound to adopt the euro in the future and to join the eurozone once it has satisfied the euro convergence criteria by the Treaty of Accession since it joined the European Union (EU) in 2004. The Czech Republic is therefore a candidate for the enlargement of the eurozone and it uses the Czech koruna as its currency, regulated by the Czech National Bank, a member of the European System of Central Banks, and does not participate in European Exchange Rate Mechanism II.

Hungary and the euro

While the Hungarian government has been planning since 2003 to replace the Hungarian forint with the euro, as of 2014, there is no target date and the forint is not part of the European Exchange Rate Mechanism. An economic study in 2008 has found that the adoption of the euro would increase foreign investment in Hungary by 30%, although current governor of the Hungarian National Bank (MNB) and former Minister of the National Economy György Matolcsy said they did not want to give up the country's independence regarding corporate tax matters.

Latvian euro coins

Latvia replaced its previous currency, the lats, with the euro on 1 January 2014, after a European Union (EU) assessment in June 2013 asserted that the country had met all convergence criteria necessary for euro adoption. The adoption process began 1 May 2004, when Latvia joined the European Union, entering the EU's Economic and Monetary Union. At the start of 2005, the lats was pegged to the euro at Ls 0.702804 = €1, and Latvia joined the European Exchange Rate Mechanism, four months later on 2 May 2005.

Poland and the euro

Poland does not use the euro as its currency. However, under the terms of their Treaty of Accession with the European Union, all new Member States "shall participate in the Economic and Monetary Union from the date of accession as a Member State with a derogation", which means that Poland is obliged to eventually replace its currency, the złoty, with the euro.

Bulgaria and the euro

Bulgaria committed to switching its currency, the lev, to the euro upon its joining the European Union in 2007, as stated in its EU accession treaty.

Romania and the euro

Romania is required by its EU accession agreement to replace the current national currency, the Romanian leu, with the euro, as soon as Romania fulfills all of the six nominal euro convergence criteria. The leu is not yet part of the European Exchange Rate Mechanism, of which minimum two years of stable membership is one of the six nominal convergence criteria to comply with to qualify for euro adoption. The current Romanian government in addition established a self-imposed criteria to reach a certain level of "real convergence", as a steering anchor to decide the appropriate target year for ERM II-membership and euro adoption. As of March 2018, the scheduled date for euro adoption in Romania is 2024, according to Liviu Dragnea, head of the ruling Party of Social Democrats.

Sweden and the euro

Sweden does not currently use the euro as its currency and has no plans to replace the krona in the near future. Sweden's Treaty of Accession of 1994 made it subject to the Treaty of Maastricht, which obliges states to join the eurozone once they meet the necessary conditions. Sweden maintains that joining the ERM II is voluntary, and has chosen to remain outside pending public approval by a referendum, thereby intentionally avoiding the fulfilment of the adoption requirements.

History of the euro

The euro came into existence on 1 January 1999, although it had been a goal of the European Union (EU) and its predecessors since the 1960s. After tough negotiations, particularly due to opposition from the United Kingdom, the Maastricht Treaty entered into force in 1993 with the goal of creating an economic and monetary union by 1999 for all EU states except the UK and Denmark.

Enlargement of the eurozone

The enlargement of the eurozone is an ongoing process within the European Union (EU). All member states of the European Union, except Denmark and the United Kingdom which negotiated opt-outs from the provisions, are obliged to adopt the euro as their sole currency once they meet the criteria, which include: complying with the debt and deficit criteria outlined by the Stability and Growth Pact, keeping inflation and long-term governmental interest rates below certain reference values, stabilising their currency's exchange rate versus the euro by participating in the European Exchange Rate Mechanism, and ensuring that their national laws comply with the ECB statute, ESCB statute and articles 130+131 of the Treaty on the Functioning of the European Union. The obligation for EU member states to adopt the euro was first outlined by article 109.1j of the Maastricht Treaty of 1992, which became binding on all new member states by the terms of their treaties of accession.

Croatia and the euro

Croatia's currency, the kuna, has used the euro as its main reference since its creation in 1994, and a long-held policy of the Croatian National Bank has been to keep the kuna's exchange rate with the euro within a relatively stable range.

References

  1. 1 2 "Lithuania to adopt the euro on 1 January 2015". Council of the European Union. 2014-07-23. Retrieved 2014-07-23.
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