EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 20 July 2009 
on the procedure to change the official litas exchange rate 
(CON/2009/61) 
 
Introduction and legal basis  
On 23 June 2009 the European Central Bank (ECB) r eceived a request from the Speaker of the Seimas 
(Parliament) of the Republic of Lithuania for an opi nion on a draft law amending Article 3 of the Law on 
the credibility of the litas (her einafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the first and third indents of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the draft relates to currency matters  and Lietuvos bankas. In accordance with 
the first sentence of Article 17.5 of the Rules of Pr ocedure of the European Central Bank, the Governing 
Council has adopted this opinion. 
 1. Purpose of the draft law 
1.1 The main purpose of the draft law is to ame nd the Law on the credibility of the litas in order to 
include the Parliament in the procedure for ch anging the anchor currency and/or official litas 
exchange rate. 
1.2 According to Article 3(3) of the Law on the credibility of the litas, Lietuvos bankas, upon 
coordination with the Government, has been delega ted the power to change the anchor currency, 
currently the euro
2, and/or the official litas exchange rate . This power may only be exercised under 
extraordinary circumstances, wh ere maintaining the established exchange rate of the litas would 
have a destructive effect on the stability of the national economy. 
1.3 According to the draft law, Parliament becom es responsible for deciding if such extraordinary 
circumstances exist. Parliament, which previously  played no role in this process, takes on an 
                                                 
1 OJ L 189, 3.7.1998, p. 42.  
2 Lietuvos bankas decided to set the euro as the anchor currency and to set the official  litas exchange rate as 3.4528 litas to 
1 euro from 2 February 2002 (Resolution No 15 of the Bo ard of Lietuvos bankas of 1 February 2002 ‘On the anchor 
currency and the official litas exchange rate’ ( Valstybės žinios , 2002, No 12-453)). This decision was taken upon 
coordination with the Government (Resolution No 157 of th e Government of 1 February 2002 ‘On the endorsement of 
the proposal of Lietuvos bankas concerning the anchor currency  and the official litas exchange rate and the repeal of 
resolutions of the Government’ ( Valstybės žinios , 2002, No 12-417)).  
 2important role in the procedure to be followed wh en the anchor currency and/or the official litas 
exchange rate is to be changed. 
 2. General observations 2.1 According to Article 124(2) of the Treaty, each Member State with a derogation as referred to in 
Article 122(1) of the Treaty will treat its exch ange-rate policy as a matter of common interest. 
2.2 On 27 June 2004, at the request of the Lithuani an authorities, the ministers of the euro area 
Member States, the President of the ECB and the ministers and the central bank governors of 
Denmark and Lithuania decided, by mutual agreement, following a common procedure involving the European Commission and after consulting th e Economic and Financial Committee, to include 
Lithuanian litas in the Exchange Rate Mechanism II (ERM II). The central rate of the Lithuanian 
litas was set at 1 euro = 3.45280 litas with a standard fluctuation band of ± 15 %.  
2.3 The draft law will amend the procedure for chan ging: (i) the anchor currency; and/or (ii) the 
official litas exchange rate. As regards the possibilit y to change the anchor currency (the euro), the 
ECB notes that  although Member States with a derogation do not yet participate in economic and 
monetary union, they have a legal duty to start prep aratory work for the adoption of the euro and to 
ensure the compatibility of their legislation with the Treaty and the Statute of the European System 
of Central Banks and of the European Central Ba nk (hereinafter the ‘Statute of the ESCB’) with 
respect to Eurosystem-related tasks. In this contex t, the ECB is of the opinion that the provisions on 
a possible change from the anchor currency (the  euro) to any other anchor currency are not 
compatible with Lithuania’s membership in ERM II, its obligations under the Treaty and 
Lithuania’s goal of introducing the euro  and becoming part of the euro area
3.  
 3. Establishing and changing the exchange rate 3.1 According to Article 1.1 of the Agreement of 16 March 2006 between the European Central Bank 
and the national central banks of the Member States outside the euro area laying down the 
operating procedures for an exchange rate mechan ism in stage three of Economic and Monetary 
Union
4 (hereinafter the ‘ERM II Agreement’), the par ties participate in a joint notification to the 
market of the bilateral central rates, and any ch anges to them, between the participating non-euro 
area currencies and the euro as agreed following th e common procedure specified in paragraph 2.3 
of the Resolution of the European Council of 16 June 1997 on the establishment of an exchange-
                                                 
3  See, for example, the Ecofin conclusi ons of 7 November 2000, which provide th at ‘The ERM II could accommodate the 
main features of a number of exchange rates regimes, provided their commitments and objectives are credible and in line 
with those of the ERM II. The only clear incompatibilities vis- à-vis the ERM II that can be identified already at this stage 
are … pegs against anchors other than the euro’. 
4 OJ C 73, 25.3.2006, p. 21. 
 3rate mechanism in the third stage of economic and monetary union5 (hereinafter the ‘Resolution’). 
Lietuvos bankas, as party to the ERM II Agreement, is bound by these conditions. 
3.2 Paragraph 2.3 of the Resolution provides that deci sions on central rates and the standard fluctuation 
band are taken by mutual agreement of the minist ers of the euro area Member States, the ECB and 
the ministers and central bank governors of the non-eu ro area Member States participating in the 
mechanism, following a common procedure i nvolving the European Commission, and after 
consulting the Economic and Financial Committee. It also provides that all parties to the mutual 
agreement, including the ECB, will have the right  to initiate a confidential procedure aimed at 
reconsidering central rates. 
3.3 The Law on the credibility of the litas was adopted on 17 March 19946. Article 3 of this Law, on 
the procedure for establishing and changing the offi cial litas exchange rate, was last amended on 
20 July 19947, well before Lithuania’s entry into the Europ ean Union. It has no direct references to 
Community legal acts and/or instruments in the field of exchange rate mechanisms. 
3.4 Despite this shortcoming in the Law on the credibility of the litas, the ECB understands that 
Lietuvos bankas would follow the procedures de scribed in the ERM II Agreement and the 
Resolution when reconsidering the central rate , under which confidentiality is of utmost 
importance. 
 4. Final observations  
In the ECB’s view, there is an inconsistency between  the provisions of the draft law on the amendment to 
the procedure to change the official litas exchange  rate, which provide for the involvement of the 
Parliament in this procedure, and the provisions of the Law on Lietuvos bankas, in particular Article 3(2) 
and Article 8(1)(3), which delegate  to Lietuvos bankas the function of determining the litas exchange rate 
regulation system in an independent manner; such inconsistency would create uncertainty for Lietuvos 
bankas in fulfilling the tasks conferred upon it.  
The ECB notes that the national legislation must ensure  that Lietuvos bankas’s primary goal of preserving 
price stability is maintained.  
                                                 
5 OJ C 236, 2.8.1997, p. 5. 
6 Valstybės žinios , 1994, No 24-378. 
7 Law No I-566 on the amendment of Article 3 of the Law on the credib ility of the litas ( Valstybės žinios , 1994, No 59-
1157). 
 4 
This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 20 July 2009. 
 
[signed] 
 
The Vice-President of the ECB 
Lucas D. PAPADEMOS