11 August is an important date not only for the Bank of Lithuania, but also for the entire country. On this exact day in 1922, the Constituent Seimas adopted the Law on the Bank of Lithuania. This law could be dubbed “The Constitution of Litas”. It legally regulated the fundamentals of the bank’s organisation, management, activities as well as the issuance of banknotes. Just two days earlier, on 9 August, the Law on the Monetary Unit was passed that was composed of only 5 articles. It legalised releasing the litas and its gold content.
Interestingly, under this law (although the bank was founded by the Lithuanian government, while the Ministry of Finance provided credit for its establishment), the Bank of Lithuania was a joint-stock company with a capital of 12 million litas, and 120,000 registered shares worth 100 litas each were being distributed (the bank was supposed to start its operation when half of these shares were bought). Therefore, general meetings were also held. The Bank of Lithuania had exclusive rights to issue banknotes (under the law, this right was granted for 20 years), regulate the circulation of money and ensure a stable monetary system.
Another interesting fact is that the Bank of Lithuania was given quite a few functions that can only be performed by commercial banks nowadays: e.g. acceptance of deposits and granting of loans (for certain goods). The Bank of Lithuania also acted as the State Treasury and a savings bank.
The Chairman of the Board of the Bank of Lithuania was appointed by the President of the Republic of Lithuania upon the submission of the ministers. Therefore, even though the bank was not entirely a state institution, the government had a huge influence on its decisions. It is important to note that formally it was not the central bank of Lithuania, as it became such only after 1990.
The Statute of the Bank of Lithuania was approved on 22 September 1922 and the bank started its operation on 2 October of the same year. Vladas Jurgutis was appointed the first Chairman.
