Seimas passes euro currency transition law

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Pranešk apie klaidą
Lithuanian Euro Coint, Photo the Bank of Lithuania

Lithuanian Euro Coint, Photo the Bank of Lithuania

At the plenary sitting, the Seimas adopted the Law on the Euro Adoption in the Republic of Lithuania (draft No XIIP-1450(2)) that establishes the procedure for the preparation for the euro adoption, changeover from the litas to the euro, conversion of values in litas to values in euro after the euro adoption in the Republic of Lithuania, and withdrawal of the litas from circulation. The Law was passed by 87 votes for, 7 against and 13 abstentions, states a press release from the Seimas.

The Law sets out that the Bank of Lithuania would exchange the litas banknotes as well as the litas and cent coins to the euro free of charge for an unlimited period and without any limitation on the amount. On the euro adoption date, the money held in all client accounts would be converted to the euro free of charge. Commercial banks would exchange the litas to the euro for six months following the euro adoption date in the Republic of Lithuania free of charge and without any limitation on the amount in all bank units. After the expiry of this term, commercial banks would exchange the litas to the euro free of charge for another six months in bank units, the list of which would be drawn up in advance by the Bank of Lithuania. The Law gives banks the right to set a requirement that a client willing to exchange an amount of LTL 15,000 to EUR must inform a bank in advance.

Since the services provided by the public company Lithuanian Post Office are widely used by residents of Lithuania, particularly those living outside major cities, the Law imposes an obligation on the Lithuanian Post Office to exchange the litas to the euro for two months following the euro adoption date free of charge. The Lithuanian Post Office may, however, set a maximum amount of the litas to be changed to the euro. The same obligation is also imposed on credit unions.

The Law sets out a general mathematical rule for rounding: if the decimal is under 5 it is rounded down, and if the decimal is 5 or above it is rounded up. In a move to maximally safeguard the interests of employees when converting wages set in litas to euro, one euro cent will be added to the wage in euro if after conversion the third decimal is above 0. The same principle of rounding to the benefit of a person will be applied when converting pensions and other social benefits into euro.

The Law regulates the display of prices and other amounts in euro and in litas. The display of prices in litas and euro would start after 30 days following the date when the Council of the European Union sets the irrevocably fixed conversion rate and six months following the euro adoption date. “Based on the practice in other countries, the display of prices in two currencies is expected to reduce the risk of unjustified price increases. Moreover, buyers will get used to payments in euros more quickly, when they have an opportunity to see the prices of products and services in euro before the adoption of this currency. Meanwhile, the display of prices in litas after the euro adoption will show buyers whether there is a difference between the price of the same product or service before and after the adoption of the euro,” the explanatory note reads.

For any violation of this Law, natural persons may be issued a warning, and heads of legal persons or their authorised persons may be issued a warning or imposed a fine of up to LTL 1,000. For any repeated violation of this Law, natural persons may be imposed a fine of up to LTL 5,000, and heads of legal persons or their authorised persons may be imposed a fine from LTL 1,000 to 10,000.

The Law will enter into force on the date when the Council of the European Union makes a decision to abrogate the derogation of the Republic of Lithuania following Article 140(2) of the Treaty on the Functioning of the European Union. As enshrined in the Treaty, after consulting the European Parliament and after discussion in the European Council, the EU Economic and Financial Affairs Council, on a proposal from the Commission, decides whether a Member State fulfils the necessary conditions for adopting the euro.

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