22nd Jan 2022

Lithuania embraces membership of 'eurozone family'

  • Lithuania became the 19 member of the eurozone on 1 January (Photo:

Lithuania became the 19th eurozone member on 1 January with politicians keen to emphasize the geopolitical benefits of joining the currency amid a few grumbles about price rises and the size of local salaries.

“The worst thing about the euro is that it makes our pensions and salaries look ridiculously low”, Darjuš Bogdiun, a student in mid-twenties tells EUobserver.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

In Lithuania, the average gross monthly salary is €698.70 while the average pension is €240.

"Although the difference in salaries between Lithuania and Western Europe has always been widely known, the possibility of having a direct comparison will encourage employees to put pressure on employers and ask for better wages", chief economist at SEB bank Gitanas Nausėda says.

But a too-rapid hike in salaries would result in business losing competitiveness and a rise in unemplyoment. Fears about rising prices with salaries staying the same, are among the most popular anti-euro arguments.

Cash under the mattress

The new currency has also made some wonder if Lithuanians' preference for using cash rather than bank cards will change.

"I don‘t know whether I should cry or laugh about this money reform," said one person calling into local radio to share her impressions of the currency changeover.

"We spent the last decade complaining about how little money we have, how bad our lives are and how we don‘t have anything to eat - but just have a look at what‘s going on: people are taking money from under their pillows, mattresses, from glass jars dug under the ground, and keep bringing it to banks", she said.

SEB bank said on that on 29 December four times more cash was deposited in its branches, while the number of customers was twice the average.

The first days have also seen big lines in banks, post offices and some credit unions, as customers wanted to exchange the money as soon as possible. As a result, many post office branches run out of notes.

“Joining the eurozone has stirred up the cash flows and made customers put the cash onto their accounts,“ Gitanas Nausėda of SEB bank says.

However, if people keep saving and paying in cash, it is likely that the money will now be withdrawn in euros and cash flows will increase again, he adds.

Data shows that, unlike Latvians or Estonians, Lithuanians are very much attached to cash: more than half are changing their savings in cash into cash in euros.

According to Swedbank Estonia, 60 percent of card owners prefer to pay by card in the country, compared with 40 percent in Latvia and 21 percent in Lithuania.

Also, in Lithuania people take twice as much money out in cash as in Estonia.

Economists say this is down to “under the counter” money, as well as interest rates for time deposits in commercial banks being very low.

Forgery cases continue

It is not just bankers and post offices that have a lot of euro-related work now but also the police.

During the first week alone, thirty pre-trial investigations have been opened, mostly for cases related to counterfeit €20 or €50 notes.

Even though the number of forged euro cases equals to what would previously be taken out of circulation within a year, police says the number of forged notes is still comparatively low.

Vitas Vasiliauskas, governor of the bank of Lithuania, says the peak in support for the euro has been "striking", and notes it is the highest increase among eurozone numbers.

According to Eurobarometer, 63 percent of Lithuanians favour the euro, up from 50 percent a year ago.

“Usually the ‘breaking point’ in public opinion and a rise in positive attitudes happen after the euro adoption when people see the benefits. In Lithuania it happened even before 1 January”, Vasiliauskas tells this website.

He links it to the success of preventive measures such as a period of dual pricing and business signing memorandums to promise that the euro introduction will not be an excuse for raising prices.

However, some customers say they have already observed price differences after the euro conversion.

The euro amid geopolitical turmoil

But in Lithuania, many see geopolitics as more important than price increases or fake money.

With requests for more Nato presence in Lithuania and surprise military exercises being held by Moscow in neighbouring Kaliningrad, a Russian exclave, analysts say closer integration with the West is important, and the euro fits into the context well.

Vasiliauskas says that the euro is the next logical step in Lithiania‘s European orientation.

“The eurozone can be seen as a close family, and, as we believe, a family embraces and protects its members”, he says.

Lithuanians back euro amid Russia tensions

Lithuania on Thursday is adopting the euro with a majority now supporting the currency change amid heightened tensions with their former Russian masters.

Chemnitz neo-Nazis pose questions for Germany

UN human rights commissioner urged EU leaders to condemn violence that recalled the 1930s, but the local situation in former East Germany does not apply to the whole country.

Former Malta opposition leader fears for his life

Simon Busuttil spent 10 years as an MEP before returning to Malta to lead the opposition. He now fears for his life amid probes into high-level corruption in Malta's government.

Puigdemont reclaims Catalonia's leadership

Back in Belgium after Spain lifted a European Arrest Warrant against him, the separatist former leader wants to be the real power behind the region's government and a new push for independence.

News in Brief

  1. 'No embargo' on meetings with Putin, EU says
  2. Austria to fine unvaccinated people €3,600
  3. MEP: Airlines should start paying for CO2 sooner
  4. Twitter forced to disclose what it does to tackle hate speech
  5. EU watchdog calls for ban on political microtargeting
  6. MEPs adopt position on Digital Service Act
  7. Blinken delivers stark warning to Russia in Berlin
  8. Hungary's Orbán to discuss nuclear project with Putin

Latest News

  1. Lawyers threaten action over new EU gas and nuclear rules
  2. MEPs urge inclusion of abortion rights in EU charter
  3. EU orders Poland to pay €70m in fines
  4. Dutch mayors protest strict lockdown measures
  5. Macron promises strong EU borders
  6. MEPs to crackdown on digital 'Wild West'
  7. Macron calls for new security order and talks with Russia
  8. Macron's vision will hit EU Council veto buffers

Join EUobserver

Support quality EU news

Join us