“The current situation, when litas is pegged to euro, is favorable and useful for Lithuania. It enables to import euro’s properties but leaves the room to shift the peg to another currency or precious metal if the euro no longer meets the requirements for a base currency”, the think tank said.
According to the institute, the goal of euro adoption is a politically disciplinary factor, which enhances fiscal discipline and reduces political risks related to changes in the currency rate or the money issue model.
“As a country that has pegged the litas to the euro and seeks to adopt the single currency, Lithuania is interested in euro’s stability. Hence Lithuania shall urge the European Union (EU) to take decisions that would ensure sustainable and long-term economic growth in the Union – deregulate the market, create more flexible labor relations, reduce the public sector, implement structural social and healthcare reforms,” the experts said.
In their opinion, Lithuania, irrespective of the EU’s actions, should implement the proposed reforms thus reducing internal political risks for litas’ stability.
Prime Minister Andrius Kubilius has recently said that Lithuania could adopt the euro in 2014.
