OREANDA-NEWS. The Bank of Lithuania (BoL) is for the first time publishing its balance sheet compiled according to the harmonised composition of the balance sheet of euro area central banks. The BoL’s balance sheet has been supplemented with data related to the conducting of euro area monetary policy as well as other information increasing transparency and reporting to the public. From now on the BoL’s balance sheet will not only be published in the Annual Report but on a quarterly basis as well.

As Lithuania adopted the euro on 1 January 2015 and the Bank of Lithuania became a member of the Eurosystem, the BoL’s balance sheet was restructured to meet the composition used by euro area central banks. The new balance sheet of the BoL is characterised by its items broken down by areas of residence (euro area residents and non-euro area residents), currency (the euro and foreign currencies) and, also, distinguishing monetary policy operations-related items.  

The BoL’s balance sheet increased by EUR 1.4 billion (or 17%) over the second quarter. This increase was driven mainly by foreign exchange swaps conducted for investment purposes. 

As the BoL, jointly with other central banks within the Eurosystem, undertook the public sector securities purchase programme in March 2015, the value of euro area resident securities purchased by the BoL for monetary policy purposes reached EUR 1 billion as at 30 June 2015.

Having used Eurosystem monetary policy instruments, commercial banks in Lithuania, at the end of the half-year, had borrowed EUR 0.35 billion. 

In the new balance sheet, the disclosure of the BoL’s liabilities related to banknotes and coins issued into circulation has changed. In view of the fact that euro cash is issued into circulation by all euro area central banks, the balance sheets of these banks shall reflect the share of the total value of euro banknotes issued into circulation by the Eurosystem in proportion to their share in the ECB’s capital. The value of euro banknotes allocated to the Bank of Lithuania has practically remained unchanged since the euro adoption date; as at 30 June, it amounted to EUR 5.6 billion and by 68 per cent exceeded the actual amount of euro banknotes issued into circulation by the BoL, which, on that date, had decreased to EUR 1.77 billion. The value of litas banknotes remaining in circulation dropped from EUR 0.17 billion to EUR 0.13billion over the second quarter.

As sizeable amounts of cash were accumulated in the commercial banks before the euro adoption, the balances of commercial banks in current accounts with the BoL, at the end of 2014, had increased to EUR 2.9 billion. As a result of  the decline of the minimum reserve coefficient to the euro area level as well as changes in the banks’ liquidity management policy, towards the end of the first quarter of 2015 these balances decreased by EUR 2.7 billion, rising, however, to EUR 1.2 billion over the second quarter. Balances of general government accounts with the Bank of Lithuania decreased by EUR 0.8 billion over the first quarter, while remaining basically unchanged over the second quarter. 

The above-named decrease in the balances of commercial banks and general government accounts largely determined a decrease in the Bank of Lithuania’s financial investment portfolio and foreign holdings by EUR 4.6 billion over the first quarter of 2015. Less favourable opportunities for investing, including the growth of the market share of euro area and some other government securities with negative yields, as well as zero or negative interest rates on the balances in current accounts, etc., also contributed to that decrease. In the second quarter, the overall value of financial investment and foreign holdings increased by EUR 0.7 billion.

With the euro having become Lithuania’s currency and restructuring of the composition of the Bank of Lithuania’s balance sheet, the balance sheet data for 2015 are incomparable with the data for previous periods.