No one will really know how Lithuania will impact European Central Bank monetary policy until the country gets a seat at the table. That is expected to happen in 2015, provided the last of the three Baltic nations meets the criteria to become the euro zone’s 19th member. We’ll all find out in early June.
The ECB’s monetary policy remains at its loosest (main refinancing rate is just 0.25 pct) since the bank assumed central banking responsibilities for the euro area 15 years ago. My Frankfurt-based colleague, Eva Taylor, explained earlier this month that the addition of Lithuania will change the voting patterns of the ECB, curbing smaller members’ perceived influence and giving more weight to the center.
Here in New York, Lithuania’s Economy Minister Evaldas Gustas, along with Mantas Nocius, who heads up the ministry’s enterprise department, presented investors with an overview of the economy. When asked if Bank of Lithuania Governor Vitas Vasiliauskas would be a hawk or a dove should Lithuania join the euro zone in 2015, the answer, at least from Nocius, was as sharp as a claw.
“Not that complicated. Yes, Lithuanians, they are a bit hawkish, as the other two Baltic neighbors, because of our tradition,” Nocius said.
He elaborated further: “We are close to Nordics and we think we have to be very prudent in financial issues. I would very much expect that the governor of the Bank of Lithuania, Vitas Vasiliauskas, he is likely to behave in a similar way as Estonia and Latvian counterparts. Definitely, they discuss a lot and meet quite often. I think this is a case where we can talk about cooperation. Also, our current president, she is a former minister of finance and former budget commissioner. I think it would be consistent to think that the governor of the bank of Lithuania is going to take a rather hawkish position.”