1.5 Euro – Lithuania

In 2022, Lithuania’s currency situation was firmly anchored within the Eurozone, having adopted the euro as its sole legal tender on January 1, 2015. This meant the country no longer managed an independent monetary policy or a national currency like the former litas. Consequently, Lithuania’s interest rates and broader monetary stance were set by the European Central Bank (ECB) in Frankfurt, with a primary focus on controlling Eurozone-wide inflation, which began surging in late 2021 due to global energy shocks and supply chain disruptions.

The key domestic financial discussions in 2022 therefore revolved not around exchange rates, but around the impact of the ECB’s policy responses on the Lithuanian economy. As inflation in the Eurozone soared, the ECB initiated a series of interest rate hikes starting in July 2022. For Lithuanian businesses and households, this translated into higher borrowing costs for mortgages and loans, which aimed to cool demand and curb inflation but also risked slowing economic growth. The national debate centered on balancing this anti-inflationary pressure with the need to support economic resilience, especially given the economic uncertainty following Russia’s invasion of Ukraine.

Furthermore, Lithuania’s euro membership provided significant stability during a year of global geopolitical and economic turmoil. It eliminated currency risk in trade with its main Eurozone partners and provided a solid foundation for financial stability, shielding the country from potential speculative attacks or devaluation pressures that might have affected non-euro neighbors. The focus for Lithuanian authorities was thus on fiscal policy, energy security, and targeted support measures to mitigate inflation's impact, while the currency itself remained a stable, supranational tool managed externally for the collective good of the monetary union.