On Wednesday, July 23rd, the European Council of the EU gave Lithuania the official go ahead to adopt the euro currency beginning January 1, 2015.
Earlier Wednesday, ministers from the 28-nation European Union voted to allow Lithuania to become the 19th member of the currency zone encompassing more than 330 million people. The Baltic nation had been received preliminary approval of its application to join the currency zone in June.
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Lithuanian Prime Minister Algirdas Butkevicius said adopting the euro will strengthen the Baltic nation’s economy. In reference to the ongoing dispute between Russia and Ukraine, he continued to say that more integration with Western Europe “means greater security as well.”
Lithuania has population of around 3 million, and is the last of the three former Soviet Baltic states to join the EU currency zone. Estonia and Latvia became members of the euro zone in 2011 and 2014 , respectively.
Conversion exchange rate set
The European Council meeting also announced the exchange rate at which Lithuania’s currency will convert to the euro had been calculated. The official exchange rate has been established at 3.45280 Lithuanian litas to the euro.
New procedural change with Lithuania’s membership
Lithuania’s joining the euro zone will also begin a procedural change at the European Central Bank. Until now, each member of the policy-setting Governing Council has had a vote on policy. However, next year when Lithuania becomes the currency bloc’s 19th member, voting rights will begin to be divided based on the size of countries. The new arrangement means the biggest five countries will share four votes, and the smaller 14 countries will share 11 votes.
This new arrangement has not been greeted with joy in Germany, since it now means that once every five meetings, Deutsche Bundesbank President Jens Weidmann will not have a vote. Analysts note that on several occasion has been the only dissenter against ECB President Mario Draghi, in particular in objecting to Draghi’s program to buy bonds of eurozone countries in crisis (OMT program).