Vytautas Žukauskas. The euro is a new but second-hand currency

Despite Lithuania’s successful introduction of the new currency – the euro, the euro-zone economies are sending bad news. Of the three biggest euro-zone economies that account for 70% of the euro-zone’s GDP, Germany is the strongest, while Italy and France are showing negative prospects of growth. Two developments have affected this: the decrease in prices by 0.2 percent in the euro-zone and the decline of the euro in Germany. How does this relate to Lithuania? Lithuania is a country that already back in 1994 decided that the stability of its currency was going to be a top priority. Now, as a full member of the euro-zone, Lithuania will participate in the decision-making process on the new monetary policy. On the one hand, while the currency board model proved to be successful for the past 20 years, the adoption of the new currency will not solve Lithuania’s economic problems. On the other hand, Lithuania has to fundamentally change its position on monetary policy, even if some decisions are not favourable. One might claim that the euro-zone is not just a monetary policy. The introduction of the euro currency in Lithuania has been successful, but the participation in the decision-making on the future of its new currency will be a second test for Lithuania.

The article was published by the leading Veidas journal and its full version is posted at http://www.llri.lt/naujienos/ekonomine-politika/finansai-pinigu-politika/v-zukauskas-euras-nauja-bet-jau-padeveta-valiuta/vytautas-zukauskas