On 17 March 1994, Seimas passed the Law on the Credibility of the Litas. In accordance with this law, the Government and the Bank of Lithuania set the litas/US dollar exchange rate at 1 litas to 0.25 dollars from 1 April 1994.
When implementing this law, the Bank of Lithuania’s monetary policy was changed. The former autonomous monetary policy strategy was replaced by the implementation of the Law on the Credibility of the Litas. In accordance with the law, the Bank of Lithuania guaranteed that the total amount of litas that is entered into circulation does not exceed the gold and foreign exchange reserves of the Bank of Lithuania. The bank could change the amount of litas in circulation only by changing gold and foreign exchange reserves respectively.
