The analysis of possible economic changes in lithuania after the integration into the european monetary union

When Lithuania became an EU member, a legal obligation set in the memorandum of association of European Commission in the future to adopt common currency euro entered into power. This paper presents the analysis of pros and cons of Lithuanian membership in European Monetary Union, taking into account the ongoing discussions during the transitional period to euro zone and the current situation of Lithuania. The object of research is the economic benefit of European Monetary Union. The hypothesis of research is that the membership of Lithuania in euro zone will have more positive than negative consequences. The purpose of the paper is to make the analysis of the influence of membership of Lithuania in euro zone to economy, to review possible pros and cons and to evaluate consequences to the development of economy of Lithuania. If Lithuania entered the euro zone our gain would be smaller in comparison to other Central and Eastern European states because Lithuania has already linked its currency to Euro contrary to, for instance, Poland, the Check Republic and Hungary. The latter states would gain more adopting euro because the majority of them have got the so called ,,regulated floating“ currency rate regime and for that pay the price of not only higher interests but also of indefinite currency rate. Although the future change of currency has met a lot of discussions in the country, the specialists have got no doubts as to the benefit of membership in EMU to the economy of Lithuania. However, that benefit will not be great – trade increase with euro zone countries, decrease of interests levels, disappearance of definite currency costs and currency rate – all of that will nurture foreign investments in Lithuania, increase country’s GDP and decrease the unemployment. The adoption of euro is especially a piece of good news for competitive, to the international markets oriented enterprises. However, the integration of Lithuania into the euro area is also related to new sources of risk, such as the rise of inflation, one-time costs of euro adoption, small correlation of business cycles. The economy of Lithuania is increasing quite fast; therefore there is a risk that business people may be abusive in stating rounded prices. There would not be any significant changes if Lithuania did not enter the euro zone in time, however, the risk of currency and country may increase. That is the reason why foreign investments are decreasing, the margin between interests is increasing, so loans may get more expensive faster that in euro zone. The structure of the paper: the paper consists of three parts. There are 13 tables, 12 pictures and 3 appendices in the paper. There are 38 positions of literature sources in the list of used literature