Lithuanian litas

The Lithuanian litas (ISO currency code LTL, symbolized as Lt; plural litai (nominative) or litų (genitive) was the currency of Lithuania, until 1 January 2015, when it was replaced by the euro. It was divided into 100 centų (genitive case; singular centas, nominative plural centai). The litas was first introduced on 2 October 1922 after World War I, when Lithuania declared independence and was reintroduced on 25 June 1993, following a period of currency exchange from the ruble to the litas with the temporary talonas then in place.[1] The name was modeled after the name of the country (similar to Latvia and its lats). From 1994 to 2002, the litas was pegged to the U.S. dollar at the rate of 4 to 1. The litas was pegged to the euro at the rate of 3.4528 to 1 since 2002. The euro was expected to replace the litas by 1 January 2007, but persistent high inflation and the economic crisis delayed the switch. On 1 January 2015 the litas was switched to the euro at the rate of 3.4528 to 1.[2]

Lithuanian litas
Lietuvos litas (Lithuanian)
200 LTL banknote
ISO 4217
CodeLTL
Number440
Exponent2
Denominations
Subunit
1/100centas
Plurallitai (nom. pl.) or litų (gen. pl.) or litu (nom. dl. in pre-war period)
centascentai (nom. pl.) or centų (gen. pl.) or centu (nom. dl. in pre-war period)
SymbolLt (litas), ct (centas)
Banknotes
Freq. used10, 20, 50, 100, 200 litų
Rarely used500 litų
Coins
Freq. used1 centas, 10, 20, 50-centų, 1 litas, 2, 5 litai
Rarely used2, 5 centai
Demographics
User(s)None, previously:
Lithuania
Issuance
Central bankBank of Lithuania
Websitelb.lt
Valuation
Inflation1.4%
SourceEuropean Central Bank, April 2013
MethodHICP
ERM
Since28 June 2004
Fixed rate since2 February 2002
Replaced by €, cash1 January 2015
=3.45280 Lt
Bandpegged in practice, 15% de jure
This infobox shows the latest status before this currency was rendered obsolete.

First litas, 1922–1941

History

The first litas was introduced on 2 October 1922, replacing the ostmark and ostruble, both of which had been issued by the occupying German forces during World War I. The ostmark was known as the auksinas in Lithuania.

The litas was established at a value of 10 litų = 1 US dollar and was subdivided into 100-centų. In the face of worldwide economic depression, the litas appeared to be quite a strong and stable currency, reflecting the negligible influence of the depression on the Lithuanian economy. One litas was covered by 0.150462 grams of gold stored by the Bank of Lithuania in foreign countries. In March 1923, the circulation amounted to 39,412,984 litas, backed by 15,738,964 in actual gold and by 24,000,000 in high exchange securities.[3] It was required that at least one third of the total circulation would be covered by gold and the rest by other assets. By 1938, 1 U.S. dollar was worth about 5.9 litai,[4] falling to about 20 U.S. cents before its disappearance in 1941.[5]

Memelgebiet

In March 1939 Nazi Germany demanded that Lithuania give up the Klaipėda Region (also known as the Memel Territory), which had been detached from Germany after World War I. The Lithuanian government complied, and on 23 March 1939 the area was annexed by Germany. On the same day the reichsmark replaced the litas as the official currency of the region, with 1 litas being exchanged for 40 pfennig. Until 20 May 1939 inhabitants of the Memelgebiet could exchange litas for reichsmarks.[6]

Soviet occupation

The litas was replaced by the Soviet ruble in April 1941 after Lithuania was annexed by the Soviet Union, with 1 litas equal to 0.9 ruble, although the actual value of the litas was about 3–5 rubles. Such an exchange rate provided great profits for the military and party officials. Trying to protect the value of the currency, people started to massively buy which, together with a downfall in production (following nationalization), caused material shortages. Withdrawals were then limited to 250 litų[7] before the litas was completely abolished.

Coins

Interwar 10 litų coin, depicting Vytautas the Great

Coins were introduced in 1925 in denominations of 1 centas, 2 centai, 5 centai, 10, 20, 50-centų, and 1 litas, 2 litu, 5 litai, with the litas coins in silver. 10 litų coins were introduced in 1936. All these coins were designed by the sculptor Juozas Zikaras (1881–1944). The litas coins displayed Jonas Basanavičius and Vytautas the Great, which was replaced by a portrait of President Antanas Smetona.

Banknotes

10 litų banknote (1922)

In 1922, the Bank of Lithuania issued notes in denominations of 1 centas, 2 centu, 5 centai, 10, 20, 50-centų, and 1 litas, 2 litu, 5 litai, 10, 50, 100 litų. In 1924, 500 and 1000 litų notes were added. Denominations below 5 litai were replaced by coins in 1925.

10 September 1922 Issue
ImageDenominationObverseReverse
1 centasCoat of arms of Lithuania
5 centaiCoat of arms of Lithuania
20-centųCoat of arms of Lithuania
50-centųCoat of arms of Lithuania
1 litasCoat of arms of Lithuania
5 litaiCoat of arms of Lithuania
16 November 1922 Issue
ImageDenominationObverseReverse
1 centas
2 centu
5 centai
10-centų
20-centųCoat of arms of Lithuania
50-centųCoat of arms of Lithuania
1 litasCoat of arms of Lithuania
2 lituCoat of arms of Lithuania
5 litaiPortrait of a woman at the spinning wheelSower
10 litųCoat of arms of Lithuania, Timber raftingTwo women
50 litųArms of Kaunas, Vilnius and Klaipėda, Grand Duke GediminasVilnius Cathedral and its belfry
100 litųCoat of arms of Lithuania, Vytautas the GreatTwo women
1924–1928 Issue
ImageDenominationObverseReverse
10 litųCoat of arms of LithuaniaFieldwork
50 litųDr. Jonas BasanavičiusVilnius Cathedral
100 litųLithuanian woman in traditional dressBank of Lithuania
500 litųCoat of arms of Lithuania
1000 litųCoat of arms of Lithuania
1929–1930 "500 Years Vytautas the Great" Commemorative Issues
ImageDenominationObverseReverse
5 litaiCoat of arms of Lithuania, Vytautas the GreatBattle of Grunwald
20 litųCoat of arms of Lithuania, Vytautas the Great, Vytautas' the Great ChurchStatue of Liberty, Klaipėda
1938 "20 Years of Independence" Commemorative Issue
ImageDenominationObverseReverse
10 litųAntanas Smetona 1st President of LithuaniaThe original 20 members of the Council of Lithuania after signing the Act of Independence of Lithuania or Act of 16 February 1918

Second litas, 1993–2015

The litas became Lithuania's currency once more on 25 June 1993, when it replaced the temporary talonas currency at a rate of 1 litas to 100 talonas.

Banknotes

In 1993, banknotes (dated 1991) were issued in denominations of 1 litas, 2, 5 litai, 10, 20, 50, 100 litų. Due to poor designs, these were found to be easily copied and a second series of notes was swiftly introduced in denominations of 1 litas, 2, 5 litai, 10, 20, 50 litų, with only the 100 litų notes of the first series remaining in circulation. 200 litų notes were introduced in 1997, followed by 500 litų in 2000.

Denomination Market introduction year Image Banknote designer Banknote features Printing house Defunct
1 Litas 1994 Giedrius Jonaitis Averse: Žemaitė
Reverse: Church of Saint Juozapas in Palūšė
De La Rue Ltd., United Kingdom 2007 March 1
2 Litai 1993 Giedrius Jonaitis Averse: Motiejus Valančius
Reverse: Trakai Island Castle
De La Rue Ltd., United Kingdom 2007 March 1
5 Litai 1993 Giedrius Jonaitis Averse: Jonas Jablonskis
Reverse: Sculpture „School of hardship“ by P. Rimšas
De La Rue Ltd., United Kingdom 2007 March 1
10 Litų 1991 Giedrius Jonaitis Averse: Steponas Darius & Stasys Girėnas
Reverse: Lėktuvas Lituanica
American Banknote Corporation, USA 1996 January 1
10 Litų 1993 Giedrius Jonaitis Averse: Steponas Darius & Stasys Girėnas
Reverse: Lėktuvas Lituanica
American Banknote Corporation, USA 2007 March 1
10 Litų 1997 Giedrius Jonaitis Averse: Steponas Darius & Stasys Girėnas
Reverse: Lėktuvas Lituanica
De La Rue Ltd., United Kingdom 2012 June 1
10 Litų 2001 Giedrius Jonaitis Averse: Steponas Darius & Stasys Girėnas
Reverse: Lėktuvas Lituanica
Orell Fussli Security Printing Ltd., Switzerland 2015 January 16
20 Litų 1991 Justas Tolvaišis Averse: Maironis
Reverse: Sculpture „Freedom“ by J. Zikaris
American Banknote Corporation, USA 1994 June 1
20 Litų 1993 Justas Tolvaišis Averse: Maironis
Reverse: Sculpture „Freedom“ by J. Zikaris
American Banknote Corporation, USA 2007 March 1
20 Litų 1997 Justas Tolvaišis & Giedrius Jonaitis Averse: Maironis
Reverse: Sculpture „Freedom“ by J. Zikaris
De La Rue Ltd., United Kingdom 2012 June 1
20 Litų 2001 Giedrius Jonaitis Averse: Maironis
Reverse: Sculpture „Freedom“ by J. Zikaris
Giesecke & Devrient GmbH, Germany 2015 January 16
50 Litų 1991 Rimvydas Bartkus Averse: Jonas Basanavičius
Reverse: Vilnius Cathedral
American Banknote Corporation, USA 1996 January 1
50 Litų 1993 Rimvydas Bartkus Averse: Jonas Basanavičius
Reverse: Vilnius Cathedral
American Banknote Corporation, USA 2007 March 1
50 Litų 1998 Giedrius Jonaitis & Rimvydas Bartkus Averse: Jonas Basanavičius
Reverse: Vilnius Cathedral
Giesecke & Devrient GmbH, Germany 2015 January 16
50 Litų 2003 Giedrius Jonaitis Averse: Jonas Basanavičius
Reverse: Vilnius Cathedral
Giesecke & Devrient GmbH, Germany 2015 January 16
100 Litų 1991 Rytis Valantinas Averse: Simonas Daukantas
Reverse: Vilnius University
Orell Fussli Security Printing Ltd., Switzerland 2001 July 1
100 Litų 2000 Giedrius Jonaitis Averse: Simonas Daukantas
Reverse: Vilnius University
Orell Fussli Security Printing Ltd., Switzerland 2015 January 16
100 Litų 2007 Rytis Valantinas Averse: Simonas Daukantas
Reverse: Vilnius University
Francois – Charles Oberthur Fiduciaire, France 2015 January 16
200 Litų 1997 Rytis Valantinas Averse: Vydūnas
Reverse: Klaipėda Lighthouse
Giesecke & Devrient GmbH, Germany 2015 January 16
500 Litų 2000 Rimvydas Bartkus Averse: Vincas Kudirka
Reverse: Lithuanian landscape
Giesecke & Devrient GmbH, Germany 2015 January 16

Coins

Lithuanian litas coins

In 1993, coins were introduced (dated 1991) in denominations of 1 centas, 2, 5 centai, 10, 20, 50-centų, and 1 litas, 2, 5 litai. The 1 centas, 2, 5 centai pieces were minted in aluminium, the 10, 20, 50-centų in bronze and the litas coins were of cupro-nickel. In 1997, nickel-brass 10, 20, 50-centų coins were introduced, followed by cupro-nickel 1 litas, bimetallic 2 and 5 litai in 1998. All had the obverse designs showing the coat of arms in the center and the name of the state "Lietuva" in capital letters.

The first coins were minted in the United Kingdom and arrived in Lithuania on 31 October 1990. Later, all coins were minted in the state run "Lithuanian Mint", which started its operations in September 1992 and helped to cut the costs of introducing the litas.

Preparatory work

Officials started to prepare for the introduction of the litas even before independence was declared, it was thought to introduce the litas alongside the ruble even if Lithuania remained a part of the Soviet Union.[8] In December 1989, artists were asked to submit sketches of possible coin and banknote designs. Also, a list of famous people was compiled in order to determine who should be featured for its currency.

The Bank of Lithuania was established on 1 March 1990. Ten days later Lithuania declared its independence from the Soviet Union. At first the Lithuanian government negotiated in vain with François Charles Oberthur, a printing company located in France to print the banknotes. In November 1990, the Bank of Lithuania decided to work with the United States Banknote Corporation (now American Banknote Corporation). In late autumn 1991, the first shipments of litas banknotes and coins arrived in Lithuania.

In November 1991, the Currency Issue Law was passed and the Litas Committee was created. It had the power to fix the date for the litas to come into circulation, the terms for the withdrawal from circulation of the ruble, the exchange rate of the litas and other conditions. Officials waited for a while for the economy to stabilise so as not to expose the young litas to inflation. About 80% of Lithuania's trade was with Russia and the government needed to find a way to smooth the transition away from the ruble zone. Also Lithuania needed to gather funds to form a stabilisation fund.

Gathering funds

At first, Lithuania did not have gold or any other securities to back up the litas. Lithuania needed to find about 200 million U.S. dollars to form the stabilisation fund. First, it sought to recover its pre-war gold reserves (about 10 tonnes) from France, the United Kingdom, Switzerland, etc. In the interwar period Lithuania stored its gold reserves in foreign banks. After the occupation in 1940 those reserves were deemed "nobody's": there was no Lithuania and most Western countries condemned the occupation as illegal and did not recognise the Soviet Union as a successor. The Bank of England, for example, sold the reserves to the Soviets in 1967. However, in January 1992 it announced that this action was a "betrayal of the people of the Baltic states" and that it would return the originally deposited amount of gold, now worth about 90 million pounds sterling, to the three Baltic states. Lithuania received 18.5 million pounds or 95,000 ounces of gold and remained a customer of the bank. Similarly, in March 1992 Lithuania reclaimed gold from the Bank of France and later from the Bank of Sweden.

In October 1992, the International Monetary Fund (Lithuania joined this organisation on 29 April 1992) granted the first loan of 23.05 million U.S. dollars[9] to create the stabilisation fund. However, it is estimated that at the time of the introduction of the new currency, Lithuania gathered only $120 million for the stabilisation fund. For a brief while it was kept a secret so as not to further damage the reputation and trust in the litas.

Delayed introduction of the litas

Lietuvos Rytas journalists investigated the production of the litas and found that for a while it was purposely held back. For example, 6 million litas designated to pay for printing the banknotes stayed in a zero interest bearing account for a year in a bank in Sweden. By 1992, the litas was ready for introduction, but the banknotes were of extremely low quality, they could easily be counterfeited with a simple colour printer; especially the 10, 20, and 50 litų banknotes).

Newly elected President Algirdas Brazauskas dismissed the Chair of the Bank of Lithuania, Vilius Baldišis, for incompetence just two months before the introduction of the litas. Baldišis was later charged for negligence that cost Lithuania $3,000,000. Some claim that the Russian secret services were behind the affair. Baldišis' explanation was that he was trying to cut the costs of printing the banknotes and thus did not order better security features. Also, "U.S. Banknote Corporation" was accused of violation of the contract terms.

But when the new issue of litas banknotes was redesigned, reprinted, and introduced in June 1993, it was found that the quality of the money was still too low and the banknotes would have to be redesigned further in the future. All these scandals and the small backup of gold reserve (about $120 million instead of $200 million) damaged the reputation of the litas. The newly appointed chair, Romualdas Visokavičius, moved things quickly and won the trust of the public. However, in October he was asked to resign mostly because of his involvement with a private bank "Litimpex."

Introduction of the litas

Official litas and U.S. dollar exchange rate June 1993 – March 1994 according to statistics published by the Bank of Lithuania

On 25 June 1993, the litas was finally introduced at the rate of 1 litas to 100 talonas. 1 U.S. dollar was worth 4.5 litai and decreased to about 4.2 a couple of weeks later. Even the introduction of the litas was followed by a scandal. The government allowed the changing of unlimited amounts of talonas to the litas without having to show the source of the talonas. This allowed criminal groups to legalize their funds.

In July, circulation of the talonas was stopped and on 1 August 1993, the litas became the only legal tender. Following the reintroduction of the litas, there was an effort to weed out U.S. dollars from the market. The talonas was never really trusted by the people and the ruble was very unstable. Thus, people started using U.S. dollars as a stable currency. Another alternative was the German mark, but it was not available in larger quantities. A lot of shops printed prices in several different currencies, including dollars, and the economy was very "dollarised" as it was legal to make trades in foreign currencies.

Early litas lacked necessary protection

Due to poor banknote quality (both talonas and early litas) it was easy to counterfeit them. Most shops were forced to acquire ultra violet lamps to check for forgeries. One group, for example, printed 500 talonas banknotes in Turkey. It is estimated that their notes totaled 140,000 litas.[10]

From 1 April 1994 to 1 February 2002, the litas was pegged to the U.S. dollar at the rate of 4 to 1 (the litas was stable around 3.9 for half a year before the rate was fixed). The main reasons for this fixation was little trust in the emerging monetary system, fear of high fluctuations in currency exchange rates, desire to attract foreign investors, and International Monetary Fund recommendations. The peg was renewable every year. For a while a peg was considered to a basket of currencies: the European Currency Unit. At around this time Lithuania also established a currency board.

The litas and the euro

On 2 February 2002 the litas was pegged to the euro at a rate of 3.4528 to 1 (1 LTL = 0.28962 EUR); this rate was not expected to change – and indeed did not – until the litas was completely replaced by the euro on 1 January 2015.[11] After the peg, Lithuania became a member of the Eurozone de facto. The litas became part of the ERM II on 28 June 2004.[12] the EU's exchange rate mechanism. The design of Lithuanian euro coins had already been prepared.

Lithuania postponed its euro day several times, since the country did not meet the convergence criteria. High inflationwhich reached 11% in October 2008, well above the then acceptable limit of 4.2%[13]contributed to Lithuania's failure to meet the criteria. In 2011, polls showed narrow opposition to the currency.[14] On 23 July 2014, the Council of the European Union adopted a decision allowing Lithuania to adopt the euro as its currency on 1 January 2015.[11] Litas and euro were both legal tender in Lithuania until 16 January 2015.

See also

Citations

  1. Linzmayer, Owen (2013). "Lithuania". The Banknote Book. San Francisco, CA.
  2. "Lithuanian government endorses euro introduction plan". en.15min.lt. 25 February 2013.
  3. Germany Deaf to Currency Reform, New York Times, 5 March 1923, page 22
  4. Vidas Žigas (2002). "Nenukalto auksinio penkiasdešimtličio istorija". Mokslas Ir Gyvenimas (in Lithuanian) (9). Archived from the original on 27 September 2006. Retrieved 13 January 2007.
  5. Tom Walker & Anatol Lieven (7 September 1991). "Foreign ministers welcome Baltic states but offer little financial help". The Times.
  6. "ALEX – Historische Österreichische Rechts- und Gesetzestext online – Suche". onb.ac.at.
  7. Romuald J. Misiunas and Rein Taagepera (1993). The Baltic States. University of California Press. pp. 32. ISBN 0-520-08228-1.
  8. Peter Gumbel (21 July 1989). "Soviets Are at a Loss About Ethnic Unrest". The Wall Street Journal.
  9. Republic of Lithuania Government (3 February 1993). "LIETUVOS RESPUBLIKOS VYRIAUSYBĖ POTVARKIS". Retrieved 3 January 2007.
  10. "Forged Coupons Printed in Turkey". BBC Monitoring Service:Former USSR. 27 August 1993.
  11. "Lithuania to adopt euro on 1 January 2015" (PDF) (Press release). Council of the European Union. 23 July 2014. Retrieved 20 October 2014.
  12. "Lithuanian litas included in the Exchange Rate Mechanism II (ERM II)". ECB. Retrieved 22 December 2008.
  13. "SEB: no euro for Lithuania before 2013". The Baltic Course. Retrieved 22 December 2008.
  14. "Lithuania's anti-euro camp outstrips supporters: poll". eubusiness.com.

General references

Further reading

  • Documentaries directed by Rimtautas Šilinis "Iš lito istorijos: Banknotai" (From History of the Litas: Banknotes (2004)) and "Iš lito istorijos: Monetos" (From History of the Litas: Coins (2002))
  • Bronė Vainauskienė, "Skandalingoji lito istorija" (Scandalous History of Litas (2003)) – collection of articles by Lietuvos Rytas journalist who spend 6 years investigating the history of the litas in the early years of independence. ISBN 9986-448-12-3
First litas
Preceded by:
German Ostmark and German Ostruble
a.k.a. Lithuanian auksinas

Reason: independence (in 1918)
Currency of Lithuania
1922 1941
Succeeded by:
Soviet ruble
Reason: annexation
Second litas
Preceded by:
Lithuanian talonas
Reason: replacement of temporary currency
Currency of Lithuania
1993 2015
Succeeded by:
Euro
Reason: joining the eurozone
Ratio: 1 euro = 3.4528 litai
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