Official translation
REPUBLIC OF LITHUANIA
LAW
on
THE BANK OF LITHUANIA
1 December 1994 No.I-678
CHAPTER I. GENERAL PROVISIONS
The Bank of Lithuania is the central bank of the Republic of
Lithuania, belonging by the right of ownership to the State of
Lithuania.
The Bank of Lithuania shall be established and liquidated by
the Seimas of the Republic of Lithuania.
Article 2. Legal Status of the Bank of Lithuania
The Bank of Lithuania is a legal person.
The Bank of Lithuania shall have a seal bearing the state
emblem of Lithuania and words "Lietuvos bankas" ("Bank of
Lithuania").
The headquarters of the Bank of Lithuania shall be based in
Vilnius.
The State of Lithuania shall not be liable for the
obligations of the Bank of Lithuania, and the Bank of Lithuania
shall not be liable for the obligations of the State of
Lithuania, except in cases where the Bank of Lithuania assumes
such liability or when such liability of the Bank of Lithuania is
established by the laws of the Republic of Lithuania.
The Bank of Lithuania shall be held accountable to the
Seimas of the Republic of Lithuania.
Article 3. Independence of the Bank of Lithuania
In implementing the objectives established to it by this Law
and carrying out its functions, the Bank of Lithuania shall be
governed by the Constitution and laws of the Republic of
Lithuania and shall be independent from the Government of the
Republic of Lithuania and other institutions of executive
authority.
. Article 4. The Institutions of the Bank of Lithuania
The Bank of Lithuania shall have the right to establish
branches, affiliates and other institutions and enterprises to
carry out its functions.
Article 5. Foreign Relations of the Bank of Lithuania
The Bank of Lithuania shall represent the State of Lithuania
in the central banks of foreign countries, in international
banks, and in other international financial institutions, as well
as at international conferences (councils) on the issues of
monetary, foreign exchange, and credit policy.
The Bank of Lithuania may be a shareholder in international
and foreign institutions provided that this is related to the
improvement of the policy of national currency, international
credit and settlements, and the implementation of the objectives
of the Bank of Lithuania.
Article 6. The Exclusive Right of the Bank of Lithuania to
Issue Currency
Only the Bank of Lithuania shall have the exclusive right to
issue currency. Implementing the right, the Bank of Lithuania
shall:
1) establish the denominations, the form, and the
distinctive security and solvency features of said currency,
organise the production of banknotes, buy litas and centas coins
from the Ministry of Finance at nominal value, organise the
transportation and storage of money, establish the procedure for
removing worn and damaged currency from circulation and replacing
said currency, make up currency reserve funds, and establish the
procedure for examining banknotes;.
2) in accordance with the procedure established by law put
into circulation and withdraw from circulation currency of the
Republic of Lithuania. The Bank of Lithuania may also withdraw
from circulation banknotes and coins replacing said currency. The
Bank of Lithuania shall establish the procedure for the
withdrawal of currency and shall announce said procedure to the
public.
Article 7. The Principal Objective of the Bank of Lithuania
The principal objective of the Bank of Lithuania shall be to
achieve stability of currency of the Republic of Lithuania
Implementing the principal objective, the Bank of Lithuania
must:
1) ensure the reliable functioning of the currency market
and the system of credit and settlements; and
2) support the economic policy carried out by the Government
of the Republic of Lithuania, provided that said policy is in
compliance with the principal objective of the Bank.
Article 8. The Functions of the Bank of Lithuania
Implementing its objectives, the Bank of Lithuania shall
perform the following basic functions:
1) shall put into circulation and withdraw from circulation
the currency of the Republic of Lithuania;
3) shall organise the sale and purchase of domestic bonds of
the Government of the Republic and the payment of interest
thereon, and act as the registrar of Government bonds;
4) shall implement, in accordance with the procedure
established by law, the monetary policy by managing the
circulation of currency and credit using open market operations
and other means;
9) shall establish the procedure for domestic and
international payments, including clearings, between banks and
other economic entities;
10) shall issue and revoke licenses of the banks of the
Republic of Lithuania and foreign banks, as well as other credit
institutions in the Republic of Lithuania and supervise their
activities;
11) shall act, in accordance with the procedure established
by law, as the last source of liquidation and credit in the bank
system;
13) shall establish the accounting, reporting and
accountability of banks and other credit institutions licensed in
the Republic of Lithuania; and
14) shall draw up the balance of payments of the Republic of
Lithuania.
Article 9. Legal Acts of the Bank of Lithuania
The Bank of Lithuania shall issue legal acts within the
limits of its jurisdiction.
CHAPTER II. ORGANISATION AND MANAGEMENT
OF THE ACTIVITIES OF THE BANK OF LITHUANIA
Article 10. The Board of the Bank of Lithuania
The Bank of Lithuania shall be governed by the Board
of the Bank, which shall be comprised of a chairperson, deputy
chairpersons (3), and members (10).
The Chairperson, deputy chairpersons, and members of the
Board of the Bank of Lithuania must be citizens of the Republic
of Lithuania only.
The President of the Republic, or members of the Seimas, the
Government and members of boards or councils of other credit
institutions, may not be the Chairperson, deputy chairpersons and
members of the Board of the Bank of Lithuania.
The Chairperson of the Bank of Lithuania shall be appointed
for a term of 5 years and his or her salary shall be fixed by
the Seimas of the Republic of Lithuania upon the recommendation
of the President of the Republic.
The deputy chairpersons and the members of the Board of the
Bank of Lithuania shall be appointed for a term of 9 years by
the President of the Republic of Lithuania on the recommendation
of the Chairperson of the Board of the Bank of Lithuania.
The Board of the Bank of Lithuania, except the Chairperson
and one deputy chairperson, shall be renewed by one third every
three years.
Article 11. The Main Functions of the Board of the Bank of
Lithuania
The Board of the Bank of Lithuania shall:
1) establish and approve the forms, methods and procedures
of the monetary policy of the Republic of Lithuania, including
the tasks of operations performed by the Bank of Lithuania in the
open market, discount rates and credit interest rates, the
size of reserve requirements, the procedure for holding credit
and deposit auctions, and for granting specific loans;
4) resolve issues concerning the participation of the Bank
of Lithuania in foreign and international organisations;
5) resolve questions of currency emission and other issues
related thereto and denoted in Article 6 of this Law;
6) establish and liquidate branches, affiliates and other
institutions and enterprises of the Bank of Lithuania to carry
out its functions;
11) approve the terms and conditions of domestic and foreign
loans received by the Bank of Lithuania from international
financial institutions;
14) determine the salaries of deputy chairmen and members of
the Board of the Bank of Lithuania.
The Board of the Bank of Lithuania may authorise the
chairperson of the Board to carry out a portion of its functions,
except the functions established by items 1,2,4,5,8,9,10,11,12,13
and 14 of Par. 1 hereof..
Article 12. Dismissal of Members of the Board of the Bank of
Lithuania.
A Board member of the Bank of Lithuania shall be dismissed
prior to the expiration of his or her term if he or she loses
citizenship of the Republic of Lithuania or becomes President of
the Republic or member of the Seimas or the Government.
A member of the Board of the Bank of Lithuania may only be
dismissed prior to the expiration of his or her term if:
1) it becomes clear that he or she is not able to perform
his or her duties properly due to health problems;
2) a court decision concerning the conviction of the member
of the Board for a deliberate crime becomes valid;
3) he or she becomes a member of councils or boards of
banks or other credit institutions, with the exception of
participation in the management of international credit agencies
or institutions the member whereof is the Republic of Lithuania.
Article 13. Resignation of the Members of the Board of the
Bank of Lithuania
The Chairperson of the Board of the Bank of Lithuania may
resign from his or her post upon submitting a resignation request
to the President of the Republic of Lithuania; deputy
chairpersons and members of the Board must submit resignation
requests to the Chairperson of the Board of the Bank of
Lithuania.
Resignation requests submitted by the Chairperson shall be
considered by the Seimas; requests of deputy chairpersons and
members of the Board shall be considered by the President of the
Republic.
Decisions concerning resignation shall be adopted within a
month of receipt of the corresponding request.
If a decision is not adopted, the person shall be considered
to have resigned after one month from the day of filing of the
request.
Article 14. Meetings of the Board of the Bank of Lithuania
Meetings of the Board of the Bank of Lithuania shall be held
as necessary, but at least twice a month. The procedure for
arranging meetings of the Board shall be established by the rules
of the Board of the Bank of Lithuania.
Board members shall be informed of meetings, in writing, at
least two business days in advance of said meeting.
Meetings of the Board of the Bank of Lithuania shall be
considered to be valid if at least 9 members of the Board are
present. Decisions of the Board shall be adopted by simple
majority vote.
Board meetings shall be chaired by the Chairperson of the
Board or by one of the deputy chairpersons in accordance with the
procedure established by the rules of the Board of the Bank of
Lithuania.
In the event of a tie vote, the chairperson of the meeting
of the Board shall have the deciding vote.
Decisions of the Board shall be implemented by resolutions
thereof, or by the instruction of the Chairperson of the Board.
Article 15. Information of Board Members
When an issue to be resolved during a meeting of the Board
is related to the commercial interest of a Board member or a
member of his or her family, the Board member concerned shall
give notice thereof prior to the discussion and shall not have
the right to participate therein. Board members shall be
considered to have commercial interests if they are shareholders,
members of the board or council of a credit institution or any
type of enterprise, as well as owners, co-owners, or part
owners of an enterprise.
Article 16. Work Restriction for Members of the Board of
the Bank of Lithuania
The Chairperson, deputy chairpersons, and members of the
Board of the Bank of Lithuania, as well as persons who formerly
held such posts, may not be members of boards or councils of
credit institutions until one year has passed since their
resignation from their respective positions at the Bank of
Lithuania.
The Chairperson, deputy chairpersons and members of the
Board of the Bank of Lithuania may only work in the Bank of
Lithuania; scientific, pedagogical and cultural activities may be
engaged in upon consent of the Board.
Article 17. The Chairperson of the Board of the Bank of
Lithuania
The Chairperson of the Board of the Bank shall:
2) represent the Bank of Lithuania in the Republic and
abroad without special authorisation and carry out all actions
related thereto;
3) conclude employment contracts with staff members and
heads of the branches, affiliates and offices of the Bank of
Lithuania; encourage distinguished employees, and impose
disciplinary punishment;
7) execute other functions authorised by the Board of the
Bank of Lithuania.
In the event of the absence of the Chairperson of the Board
of the Bank of Lithuania, his or her duties shall be vested in
one of the deputy chairpersons on the instruction of the
Chairperson of the Board.
The Chairperson of the Board of the Bank of Lithuania must
participate in the meetings of the Government of the Republic of
Lithuania with the right of advisory vote.
Article 18. The Staff of the Bank of Lithuania
The staff of the Bank of Lithuania shall perform the
functions of the Bank of Lithuania provided for in this law,
observing the regulations of their appropriate structural
division and their employment contract.
The staff of the Bank of Lithuania may work only in the
Bank of Lithuania, with the exception of cases when the Board of
the Bank of Lithuania gives its consent for outside employment.
The latter provision shall not be applicable in the cases
provided for in Par. 2 of Article 16 of this Law.
Staff members of the Bank of Lithuania may not take out
loans in any credit office or institution other than the Bank of
Lithuania.
The employees of the Bank of Lithuania may be rendered
financial services according to the procedures and conditions set
by the Board of the Bank of Lithuania.
Article 19. Protection of Secrets of the Bank of Lithuania
The Chairperson, deputy chairpersons and members of the
Board of the Bank of Lithuania and its staff must maintain the
secrecy of information which is related to the activities of the
Bank of Lithuania.
The Board of the Bank of Lithuania shall compile a list of
information considered to be a secret of the Bank of Lithuania.
Information which is considered a secret of the Bank of
Lithuania may only be disclosed to the institutions determined by
law and in accordance with the procedure established by law.
For the disclosure of information which is considered a
secret of the Bank of Lithuania and for concealment of unlawful
financial operations and transactions the Chairperson, deputy
chairpersons and members of the Board of the Bank of Lithuania
and its staff shall be liable in accordance with the established
legal procedure.
CHAPTER III. CAPITAL, INCOME AND EXPENSES
OF THE BANK OF LITHUANIA
Article 20. Capital of the Bank of Lithuania
The authorised capital of the Bank of Lithuania shall be 50
million litas.
The authorised capital shall be formed from the state funds
of the Republic of Lithuania and the allocations of the profit of
the Bank of Lithuania.
The reserve capital of the Bank of Lithuania shall be formed
from quarterly allocations from the profit of the Bank of
Lithuania. Allocations shall be continued until the reserve
capital reaches 200 million litas. Reserve capital may only be
used to cover bank losses. When a part of the reserve capital is
used to cover losses, allocations from the profit to the reserve
capital shall be carried out again until the reserve capital
reaches the sum of 200 million litas.
Article 21. Income of the Bank of Lithuania
The income of the Bank of Lithuania shall comprise:
4) income received from operations in foreign exchange,
precious metals, and for securities and guarantees issued in
accordance with the legal procedure; and
5) income received from other operations which are in
compliance with law.
Article 22. Expenses of the Bank of Lithuania
The expenses of the Bank of Lithuania shall constitute:
1) interest payable on the deposits of credit institutions
and deposits of the staff of the Bank of Lithuania kept with the
Bank of Lithuania;
4) expenses related to the operations in foreign exchange,
precious metals and securities and the issue of guarantees;
9) other specific expenses required for the performance of
functions of the Bank of Lithuania provided that they are in
compliance with the law.
Article 23. Profit of the Bank of Lithuania
The profit for each financial year shall be calculated after
deducting expenses from the bank income.
Article 24. Distribution of Profit of the Bank of Lithuania
The profit of the Bank of Lithuania shall be distributed in
the following order:
2) Twenty percent -- to form the authorised capital of the
Bank of Lithuania.
The remaining profit shall be paid to the budget of the
Republic of Lithuania by the 1st of May each year.
CHAPTER IV. MONETARY REGULATION AND
OPERATIONS OF THE BANK OF LITHUANIA
Article 25. The Program of Monetary Policy of the Bank of
Lithuania
The Bank of Lithuania shall prepare and conduct the program
of monetary policy.
Article 26. Open-Market Operations
In conducting monetary policy, the Bank of Lithuania shall:
2) perform rediscount operations.
The Bank of Lithuania, pursuant to the procedure set by the
Bank, shall have the right to rediscount bills of exchange and
other debt instruments, denominated in litas and payable in the
Republic of Lithuania, bearing the signature of at least three
solvent guarantors or warrantors of which at least one shall be a
bank, and maturing within three months from the date they were
presented for rediscounting.
In exceptional cases pursuant to the decision of the Board
of the Bank of Lithuania, bills of exchange and other obligations
of commercial operations may be accepted for rediscounting
provided that they have a maturity not exceeding six months and
bear the signatures of two guarantors and warrantors of which at
least one is a bank.
The Bank of Lithuania shall rediscount bills of exchange
without exceeding the maximum possible rediscount amount of each
bank; this limit shall be calculated as a correspondent ratio
from the registered bank capital.
The Bank of Lithuania shall determine, increase or diminish
the rediscount limits for each bank or shall entirely cancel
rediscount operations.
Article 27. Credit Operations
The Bank of Lithuania may, pursuant to item 11 of Article 8,
grant according to the conditions and procedure established by
the Bank, credit institutions of the Republic of Lithuania that
hold reserve requirement with the Bank of Lithuania credits for a
term of up to 3 months, secured by any of the following assets:
1) international reserve funds: gold, foreign exchange,
including exchange in their accounts with foreign banks, drafts
and bills in foreign exchange;
2) debt instruments in the national currency issued and
payable within the territory of the Republic of Lithuania
provided that they form part of state emission; and
3) other securities, debt instruments, and precious metals
which the Bank of Lithuania has the right to buy and sell
according to this Law.
Article 28. Interest Rates
The rates for rediscounts and credit operations of the Bank
of Lithuania shall be established by the Bank of Lithuania.
Under extraordinary economic conditions, a maximum interest
rate of credit and discount operations for all credit
institutions of the Republic may be established by the Bank of
Lithuania.
CHAPTER V. FOREIGN EXCHANGE REGIME
(ESTABLISHMENT AND REGULATION OF THE EXCHANGE RATE),
INTERNATIONAL RESERVES AND OPERATIONS WITH FOREIGN CREDIT
INSTITUTIONS
Article 29. Regulation of Foreign Exchange Operations
The Bank of Lithuania shall:
4) keep and manage foreign exchange reserves of the Republic
of Lithuania.
Article 30. Settlement Agreements
The Bank of Lithuania may, on its own behalf or on behalf of
the Republic of Lithuania, on the instruction thereof, enter into
clearing and settlement agreements or any other contracts for the
same purpose with foreign states or private central clearing
institutions domiciled abroad.
Article 31. Gold, Convertible Foreign Exchange and other
Universally Recognised International Reserve
Assets
The Bank of Lithuania shall establish, keep and manage the
reserves of the Republic of Lithuania which may consist of the
following assets:
2) convertible foreign exchange in the form of banknotes or
coins or bank balances held abroad in foreign currencies;
d) securities, including repurchase obligations,
payable in a convertible foreign exchange which are issued and
guaranteed by foreign states, the central banks of foreign
states, or international institutions.
Article 32. Operations with Foreign Credit Institutions
The Bank of Lithuania shall have the right to:
3) open accounts, accept funds into their accounts or
deposits from central banks of foreign states and international
banks, credit institutions and other organisations;
5) be the guarantor and issue letters of guarantee on the
basis of pecuniary obligations of international organisations and
foreign and Lithuanian legal persons; and
6) carry out other international foreign exchange operations
provided for by law.
CHAPTER VI. LICENSING AND SUPERVISION
OF BANKS AND OTHER CREDIT INSTITUTIONS
Article 33. Activities of Credit Institutions
Activities of credit institutions - activities based on
public acceptance of monetary resources in any form and the
lending thereof at the expense of the institutions.
Article 34. Licensing of Credit Institutions
It shall be prohibited to engage in the activities of credit
institution without a license of the Bank of Lithuania.
The terms and conditions for granting licenses shall be
established by the laws of the Republic of Lithuania which
regulate the establishment and activities of banks and other
credit institutions, other laws of the Republic of Lithuania and
legal acts issued by the Bank of Lithuania.
Article 35. Formation of Prudential and Reserve Requirements
of Banks and other Credit Institutions
The Bank of Lithuania shall establish prudential and reserve
requirements of banks and other credit institutions on the basis
of their deposits and other borrowed funds (liabilities). The
amount of prudential and reserve requirements as well as the
procedure for keeping the reserves shall be established by the
Bank of Lithuania by Board resolutions.
Article 36. Supervision of the Activities of Banks and other
Credit Institutions
The Bank of Lithuania shall supervise the activities of
banks and other credit institutions which possess a license of
the Bank of Lithuania.
The Bank of Lithuania shall have the right to :
2) inspect banks and other credit institutions and their
subunits, and examine the accounts, books, and other documents
thereof;
3) issue rules, instructions and other legal acts, and take
other measures necessary to ensure the efficient functioning of
the credit system; and
4) apply sanctions provided for by this and other laws of
the Republic of Lithuania to banks and other credit institutions
which violate the laws and legal acts passed by the Bank of
Lithuania, or when their chosen risky manner of activities may
cause instability in the financial system or affect the interests
of clients and depositors, or when by their activities they are
seeking to monopolise certain spheres of the financial system of
the Republic of Lithuania.
Information which the Bank of Lithuania obtains from banks
and other credit institutions for the purpose of supervision may
not be announced publicly or released to other institutions of
state management, control, or law and order, except as in the
cases specified by laws.
The Bank of Lithuania shall have the right to examine
accounts, books and other documents of any economic entity which,
on the basis of information in the possession of the Bank of
Lithuania, is engaged in the activities of credit institutions
without a license of the Bank of Lithuania.
Article 37. Sanctions of the Bank of Lithuania against
Banks and other Credit Institutions
The Bank of Lithuania shall have the right to apply against
banks and other credit institutions sanctions prescribed by the
laws of the Republic of Lithuania.
The validity of the resolution concerning the application of
sanctions may be appealed against in court in accordance with the
procedure established by law.
Article 38. Cooperation with the Authorities of Supervision
of Credit Institutions of other States
In carrying out the functions of licensing and supervision
of banks and other credit institutions, the Bank of Lithuania
shall have the right to:
1) participate in the international organisations of
supervision of banks and other credit institutions;
2) conclude cooperation agreements with the supervisors of
banks and other credit institutions of other states; and
3) exchange information with supervisors of other states on
the activities of any bank or other credit institution, ensuring
the confidentiality of such information.
CHAPTER VII. ACCOUNTS, BALANCE-SHEET AND
REPORTING OF THE BANK OF LITHUANIA
Article 39. The Financial Year of the Bank of Lithuania
The financial year of the Bank of Lithuania shall begin on
the first day of January and end on the thirty-first day of
December.
Article 40. Accounting
The Bank of Lithuania shall carry out accounting of assets,
liabilities, and operations in accordance with the accounting
procedure.
The annual financial statements shall include a balance-
sheet, a profit and loss account, and notes to the financial
statements.
Article 41. Control of the Activities and Audit of the
Accounts of the Bank of Lithuania
State control institutions shall monitor lawful management
and use of state property.
The Seimas of the Republic of Lithuania shall appoint
auditors to audit the financial statements and accounts of the
Bank of Lithuania.
Article 42. The Annual Statement of the of the Bank of
Lithuania
The Bank of Lithuania shall, within four months after the
close of each financial year, submit the annual financial
statement to the Seimas.
Article 43. Reporting on the Implementation of Basic
Objectives by the Bank of Lithuania
The Bank of Lithuania shall semi-annually present to the
Seimas of the Republic of Lithuania a report on its activities.
CHAPTER VIII. FINAL PROVISIONS
Article 44. Preferential Right of the Bank of Lithuania
The Bank of Lithuania shall have the preferential right to
satisfy its claims by using all of the borrower's funds in the
accounts with the Bank of Lithuania, as well as the securities,
precious metals and other assets deposited for safekeeping with
the Bank of Lithuania or pledged by the borrower to the Bank of
Lithuania, with the exception of required reserves.
The Bank of Lithuania shall have the right to debit, without
suit, funds to the accounts of the borrowers who fail to repay
the loan and fail to pay the interest thereon by the time
specified in the loan agreement.
Article 45. Tax Exemption of the Bank of Lithuania
The Bank of Lithuania shall be exempt from all national and
local taxes, with the exception of payments provided for by Par.2
of Article 24 of this Law.
Article 46. Receiving Information
The Bank of Lithuania shall have the right to receive from
the Government of the Republic of Lithuania financial and
economic information necessary for the performance of banking
functions.
Article 47. Publication of the Data of the Bank of
Lithuania
The Bank of Lithuania shall issue information bulletins on
its activities at least once a month.
Article 48. Validity of the Law
The Law shall be valid to the extent it is in compliance
with the Law on the Credibility of Litas of the Republic of
Lithuania.
Article 49. Procedure for Coming into Effect of Article 10
of this Law
The procedure established in Pars. 5 and 6 of Article 10 of
this Law shall not apply to deputy chairpersons and members of
the Board who are appointed prior to the coming into effect of
this Law.
When the first appointments are made in accordance with the
procedure established by this Law, one deputy chairperson and
three members shall be appointed for a three years, one deputy
chairperson and three members - for six years, and one deputy
chairperson and four members - for nine years.
Article 50. Declaring Certain Legal Acts Invalid
Upon the coming into effect of this Law, the following legal
documents shall be repealed:
1) Law of the Republic of Lithuania on the Bank of Lithuania
of February 13, 1990 (Þin., 1990, No.7-172; 1992 No. 29 (1)-855,
1993 No. 16-402, No. 58-1115).
2) September 4, 1990 Resolution No. 1-522 of the Supreme
Council of the Republic of Lithuania "On the Statute and Fixed
Capital of the Bank of Lithuania" (Þin., 1990 No. 27-636, 1993
No. 31-711);
3) The Statute of the Bank of Lithuania (Þin., 1990 No. 27-
636, 1992 No. 24-709, 1993 No. 16-405, No.58-1118).
I promulgate this Law passed by the Seimas of the Republic