Bank of Lithuania

The Bank of Lithuania, or Lietuvos bankas, is the central bank of the Republic of Lithuania. It is wholly owned by the Lithuanian state and headquartered in Vilnius. The institution has two principal historical phases: the interwar central bank founded in Kaunas in 1922, and the modern Bank of Lithuania re-established in March 1990 as Lithuania restored its independence. The bank’s original monetary role included issuing the Lithuanian litas and extending short-term credit to industry and agriculture. During the interwar period it helped replace German occupation currencies with the litas, developed a national banking infrastructure, and joined the Bank for International Settlements in 1931. The institution was dismantled during the occupations of Lithuania in the Second World War. Soviet authorities nationalized it in 1940 and absorbed it into the State Bank of the USSR. Under German occupation its status was reduced to that of a commercial bank, and its operations were terminated in 1943. The fate of the bank’s gold reserves became connected with the international legal position of the Baltic states: some reserves were immobilized or returned after independence, while other holdings were subject to later settlements. Following restoration in 1990, the bank recovered significant gold holdings and resumed its institutional relationship with the BIS. The modern bank initially supported the reintroduction and stabilization of Lithuania’s national currency. The litas entered circulation in 1993 and was pegged to the United States dollar in 1994. In 2002 the peg was changed to the euro as Lithuania aligned its monetary system with the European Union. Lithuania adopted the euro on 1 January 2015, after which the Bank of Lithuania became part of the Eurosystem. It participates in the formulation and implementation of euro-area monetary policy but does not independently set national interest rates in the manner of a non-euro central bank. Beyond monetary policy, the Bank of Lithuania is responsible for maintaining price stability, supporting financial stability, operating and overseeing payment infrastructure, acting as an agent of the state treasury, and producing economic and financial statistics. Since 2012 it has also served as Lithuania’s single integrated financial-sector supervisor for banking, insurance, securities and related markets, apart from certain accounting and auditing functions assigned elsewhere. Within European structures it acts as Lithuania’s national competent authority in European Banking Supervision, the national resolution authority under the Single Resolution Mechanism, and Lithuania’s representative in relevant European supervisory and systemic-risk bodies, including the EBA, EIOPA, ESMA, the SRB, the ESRB and AMLA supervisory structures. The institution has also promoted financial technology and innovation. It identified fintech as a strategic area in 2017 and has participated in the licensing and supervision ecosystem for firms serving the European market. In 2020 it introduced LBCoin, an experimental digital collectible and central-bank digital-currency-related initiative. The bank’s public-facing activities include its Money Museum in Vilnius, financial education, consumer protection, payments oversight and publication of monetary, economic and supervisory information. Its governing board consists of the chairperson, two deputy chairpersons and two members. Gediminas Šimkus has served as governor since April 2021.

The first Bank of Lithuania was established in Kaunas in 1922, after the country’s independence but before the creation of a stable national currency. Lithuania had continued to use German occupation currency, including the ostmark and related notes, and the new institution was tasked with replacing those currencies with the Lithuanian litas. Its first board meeting took place on 27 September 1922, and it began operating on 2 October. Vladas Jurgutis was its first governor. The bank was predominantly state-owned, although municipalities, companies and private individuals also held shares. Its responsibilities included central-banking functions and a developmental-credit role supporting industry and agriculture. A substantial headquarters was built in Kaunas during the 1920s. Designed by Mykolas Songaila in a neoclassical style, the building was inaugurated in 1928 and incorporated sculpture and interior artwork. The bank joined the Bank for International Settlements in 1931. Its monetary role was interrupted by the Soviet occupation in 1940. The institution was nationalized and merged into the State Bank of the USSR. During the subsequent German occupation, attempts by Lithuania’s provisional authorities to restore it as an issuing bank were unsuccessful. It operated only in a reduced commercial capacity before its activities were ended in 1943. The bank’s overseas gold reserves were affected by the competing legal positions surrounding the Soviet annexation of the Baltic states. Gold held in the United States was protected from Soviet transfer claims and was later used in support of Lithuania’s diplomatic representation abroad. Holdings in the United Kingdom, Sweden, France and at the BIS were handled through a mixture of immobilization, settlement and later restitution. After the modern Bank of Lithuania was re-established on 1 March 1990, it recovered gold held at the Bank of France in 1991, received the BIS holding in 1992 subject to a deduction, and obtained compensation or returned reserves connected with holdings in the United Kingdom and Sweden. It also restored its BIS membership and shareholding in 1992. The post-independence institution inherited a network of branches from the Soviet banking system. In 1992 that network was separated into the State Commercial Bank of Lithuania, which was eventually liquidated in 1998. The Bank of Lithuania concentrated on central banking, currency management and supervision. The litas was introduced on 25 June 1993 and pegged to the US dollar in 1994. Lithuania experienced a serious banking crisis in the mid-1990s, and the central bank’s supervisory response was later criticized as slow in identifying and addressing institutional weaknesses. The currency regime changed in 2002 when the litas was linked to the euro, reflecting Lithuania’s EU-oriented economic integration. The institution’s responsibilities broadened substantially in the twenty-first century. In 2012 it absorbed capital-market and insurance-supervision functions previously carried out by separate commissions, becoming the principal integrated supervisor of Lithuania’s financial sector. Lithuania joined the euro area on 1 January 2015. The Bank of Lithuania consequently became part of the Eurosystem and took on formal roles in European Banking Supervision and the Single Resolution Mechanism. It also participates in European supervisory, resolution, systemic-risk and anti-money-laundering structures. From 2017 the bank promoted fintech as a strategic area, including licensing and supervisory engagement with innovative payment and banking businesses. It acted as Lithuania’s local contact point in relation to Revolut’s European banking authorization in 2018. In 2020 it launched LBCoin, an experimental digital initiative. Today the bank combines national functions—price stability support, cash and payment operations, financial supervision, consumer protection, statistics and research—with responsibilities delegated or coordinated through the Eurosystem and wider European financial architecture. Its Vilnius headquarters on Gediminas Avenue also houses the Money Museum, while the historic Kaunas building remains part of its institutional heritage.

• 2020

  LBCoin launched

  [6]Bank of Lithuania: LBCoinlb.lt

  The bank introduced an experimental digital collectible and central-bank digital-currency-related project.

• 2018

  Expansion of fintech innovation support

  [9]Bank of Lithuania: Innovation Hublb.lt

  The bank expanded mechanisms such as its innovation hub and regulatory-sandbox work to support controlled experimentation by financial innovators.

• 2017

  Fintech designated a strategic priority

  [5]Bank of Lithuania: Fintechlb.lt

  The institution expanded its policy and supervisory focus on financial technology.

• 2015

  Lithuania joins the euro area

  [4]Bank of Lithuania: The eurolb.lt

  The bank became Lithuania’s national central bank within the Eurosystem and assumed European supervisory and resolution roles.

• 2015

  Lithuania adopted the euro

  [10]European Central Bank: Lithuania and the euroecb.europa.eu

  The euro replaced the litas, and the Bank of Lithuania joined the Eurosystem as Lithuania's national central bank.

• 2012

  Integrated financial supervision begins

  [1]Bank of Lithuaniaen.wikipedia.org

  Banking, insurance and securities-supervision responsibilities were consolidated under the Bank of Lithuania.

• 2004

  Entry into ERM II

  [10]European Central Bank: Lithuania and the euroecb.europa.eu

  Lithuania joined the European Exchange Rate Mechanism II as part of its route toward euro adoption.

• 2002

  Litas peg shifted to the euro

  [1]Bank of Lithuaniaen.wikipedia.org

  Lithuania moved its currency peg from the US dollar to the euro.

• 1993

  Lithuanian litas introduced

  [1]Bank of Lithuaniaen.wikipedia.org

  The bank introduced the litas as Lithuania’s national currency.

• 1993

  Reintroduction of the litas

  [11]Reintroduction of the litaslb.lt

  The litas became Lithuania's national currency during the restoration of the country's independent monetary system.

• 1990

  Modern Bank of Lithuania re-established

  [1]Bank of Lithuaniaen.wikipedia.org

  The present institution was established on 1 March during the restoration of Lithuanian independence.

• 1990

  Re-establishment after independence

  [8]Bank of Lithuania historylb.lt

  The Bank of Lithuania was re-established as the independent state's central bank through national legislation.

• 1940

  Nationalized under Soviet occupation

  [1]Bank of Lithuaniaen.wikipedia.org

  The institution was nationalized and incorporated into the State Bank of the USSR.

• 1931

  Joins the Bank for International Settlements

  [1]Bank of Lithuaniaen.wikipedia.org

  The Bank of Lithuania became a member of the BIS.

• 1928

  Kaunas headquarters inaugurated

  [1]Bank of Lithuaniaen.wikipedia.org

  The bank opened its purpose-built neoclassical headquarters designed by Mykolas Songaila.

• 1922

  Bank of Lithuania established

  [1]Bank of Lithuaniaen.wikipedia.org

  The interwar Bank of Lithuania was created in Kaunas and began operations in October, with responsibility for currency replacement and national banking functions.

• 1922

  Establishment of the first Bank of Lithuania

  [8]Bank of Lithuania historylb.lt

  Lithuania established its national central bank during the first period of modern independence.

Lithuania’s public monetary authority, integrated financial supervisor and national representative within European central-banking, supervision and resolution institutions.

• Central banking · 2015

  Monetary policy implementation

  As a Eurosystem member, the Bank of Lithuania implements euro-area monetary policy in Lithuania, contributes to Eurosystem analysis and operations, and supports the objective of price stability. It no longer independently issues a national monetary policy framework following Lithuania’s adoption of the euro.

• Currency · 1993

  Lithuanian litas

  The litas was the national currency issued by the interwar bank and later by the restored Bank of Lithuania. The modern litas was introduced in 1993, first pegged to the US dollar and later to the euro, and was replaced by the euro in 2015.

• Financial regulation · 2012

  Financial-sector supervision

  The bank supervises Lithuania’s banking, insurance, securities and related financial sectors, protects consumers, supports market integrity and works with European supervisory authorities. Since 2012 it has operated as the country’s principal integrated financial supervisor, subject to the division of responsibilities established by Lithuanian and European law. The institution licenses and supervises a broad range of Lithuanian financial-market participants, including banks, credit unions, insurance and payment-related institutions within its legal mandate. It also contributes to consumer protection, prudential oversight, governance standards, and the detection and mitigation of financial-sector risks.

• Digital currency experiment · 2020

  LBCoin

  LBCoin was an experimental digital initiative launched in 2020. It combined collectible digital tokens with a central-bank digital-currency research and engagement project, allowing the institution to explore digital assets and public interaction with central-bank innovation.

• Payments · 1990

  Payment and settlement infrastructure

  The Bank of Lithuania operates, oversees or supports payment and settlement arrangements used by financial institutions in Lithuania and within the Eurosystem. Its responsibilities include payment-system safety, access and resilience, alongside cash distribution and related central-bank services. The Bank of Lithuania supports the safe functioning of domestic and European payment and settlement arrangements. Its responsibilities include central-bank settlement services, participation in Eurosystem payment infrastructures, and oversight or operation of systems relevant to the Lithuanian financial market.

• Central banking · 2015

  Eurosystem monetary-policy operations

  The Bank of Lithuania participates in the formulation of euro-area monetary policy through the Eurosystem and implements relevant operations in Lithuania. Its work includes market operations, liquidity-related functions, monetary-policy analysis, and communication of Eurosystem decisions in the national market.

• Economic information · 1990

  Financial statistics and economic analysis

  The bank compiles and publishes monetary, financial, balance-of-payments, and other economic data, alongside research and analysis used by public institutions, financial-sector participants, researchers, and the public.

• Financial innovation · 2018

  Fintech innovation hub and regulatory sandbox

  These services provide information, supervisory dialogue, and controlled testing opportunities for eligible companies developing financial products or business models. They are intended to clarify regulatory expectations without replacing formal authorization or ongoing supervision.

• 2020LBCoin

  Lithuania · International digital-asset community

  The bank used LBCoin to explore digital tokens, digital collectibles and public-facing central-bank innovation. LBCoin became an internationally noted experiment in central-bank digital engagement, without replacing the euro as legal tender.

  Outcome. LBCoin became an internationally noted experiment in central-bank digital engagement, without replacing the euro as legal tender.

  Source
• 2017Fintech strategy

  Lithuania · European Union

  The Bank of Lithuania promoted fintech as a strategic area, seeking to support innovation while maintaining licensing, supervision and financial-stability standards. The initiative strengthened Lithuania’s profile as a fintech jurisdiction and increased the bank’s engagement with technology-based financial businesses.

  Outcome. The initiative strengthened Lithuania’s profile as a fintech jurisdiction and increased the bank’s engagement with technology-based financial businesses.

  Source

• 2020

  Launch LBCoinProduct launch

  Background

  Central banks and financial institutions were examining digital currencies, tokenization and new forms of digital payment.

  Action taken

  The bank launched an experimental digital-token and collectible project called LBCoin.

  Aftermath

  The project provided a public demonstration of central-bank experimentation with digital assets while leaving the euro as Lithuania’s currency.

  Source

• 2018

  Development of a fintech innovation and sandbox frameworkStrategy

  Background

  Rapid growth in financial technology created demand for clearer regulatory dialogue and controlled testing of new financial services.

  Action taken

  The Bank of Lithuania developed innovation-support channels, including an innovation hub and regulatory-sandbox mechanisms.

  Aftermath

  The initiatives strengthened Lithuania's profile as a fintech jurisdiction while placing continued emphasis on licensing, supervision, governance, and compliance.

  Source

• 2015

  Join the EurosystemStrategy

  Background

  Lithuania fulfilled the conditions for euro adoption and replaced the litas with the euro.

  Action taken

  The Bank of Lithuania became a Eurosystem national central bank and took on national roles in European Banking Supervision and the Single Resolution Mechanism.

  Aftermath

  Monetary policy became coordinated through the Eurosystem, while the bank retained national cash, supervisory, payment and financial-stability functions.

  Source

• 2015

  Transition from the litas to the euroStrategy

  Background

  Lithuania pursued euro adoption after meeting the relevant convergence requirements and participating in ERM II.

  Action taken

  The Bank of Lithuania supported the national changeover, replaced the litas with euro cash, and became part of the Eurosystem's operational framework.

  Aftermath

  Lithuania became a euro-area member on 1 January 2015, while the bank retained national responsibilities for supervision, payments, statistics, reserves, and financial stability.

  Source

• 2012

  Consolidate financial supervisionStrategy

  Background

  Lithuania sought a more unified institutional framework for oversight of financial markets.

  Action taken

  The Bank of Lithuania assumed capital-market and insurance-supervision duties previously assigned to separate commissions.

  Aftermath

  The bank became the principal integrated supervisor of Lithuania’s financial sector, apart from specified accounting and auditing responsibilities.

  Source

• 2002

  Shift the litas peg to the euroStrategy

  Background

  Lithuania’s economy and monetary arrangements were increasingly oriented toward European Union membership and eventual euro adoption.

  Action taken

  The bank changed the litas reference peg from the US dollar to the euro.

  Aftermath

  The change supported Lithuania’s path toward euro-area membership, completed in 2015.

  Source

• 1993

  Introduce the modern Lithuanian litasProduct launch

  Background

  The restored state needed a national currency after the monetary instability that followed independence.

  Action taken

  The Bank of Lithuania introduced the litas on 25 June 1993.

  Aftermath

  The currency was subsequently pegged to the US dollar and then to the euro before Lithuania adopted the euro in 2015.

  Source

1. 1Bank of Lithuaniaen.wikipedia.org
2. 2Bank of Lithuania official websitelb.lt
3. 3Bank of Lithuania: About uslb.lt
4. 4Bank of Lithuania: The eurolb.lt
5. 5Bank of Lithuania: Fintechlb.lt
6. 6Bank of Lithuania: LBCoinlb.lt
7. 7Bank of Lithuania official websitelb.lt
8. 8Bank of Lithuania historylb.lt
9. 9Bank of Lithuania: Innovation Hublb.lt
10. 10European Central Bank: Lithuania and the euroecb.europa.eu
11. 11Reintroduction of the litaslb.lt