On January 1, 2015, Lithuania joined the euro area, becoming its 19th member. According to Indres Genyte-Pikciene, the chief economist of Bank Siauliu Bankas, Euro played an important role in the stabilization of the economy in difficult times and attracted foreign investors-writes the Lithuanian Information Agency Elta.
As Genyte-Pikciene notes, the euro has helped Lithuania survive the crises of recent years. “Currency and belonging to the euro area have brought very significant benefits to Lithuania. This is a form of serious recognition that the economy is developing in a balanced manner, and debts are under control,” she said in an interview with the Lithuanian press agency Elta.
The economist emphasizes that joining the euro area reduced the currency risk, which translated into lower loan costs and eliminating expenses related to currency exchange. In addition, the common currency enabled Lithuania more effective reacting to shocks in external markets, which is particularly important for a small, open economy.
Euro and price increase. Does the common currency cause inflation?
EURO critics often indicate a increase in prices as the main disadvantage of introducing a common currency. However, as Genyte-Pikciene notes, in the case of Lithuania, price increases were lower than the increase in salaries. “Wages have increased 2.5 times over the past decade, and pensions have grown at a similar pace. Meanwhile, inflation in Lithuania did not differ from levels recorded in other Central and Eastern European countries, which did not introduce the euro”-explains the economist.
According to data, prices in Lithuania increased by 50 % within a decade, which is comparable to Poland and Romania, and much lower than in Hungary, where the increase was 68 percent.
Linas Jurksas, the chief economist of the Lithuanian Bank, emphasizes that the euro played a key role in surviving Pandemia and reducing the costs of government loans. “The euro made Lithuanians feel faster as part of the democratic Western world,” says Jurksas.
Source: tvn24
