21 October is the Day of Photonics and the Global Dignity Day. The first one celebrates the day when the speed of light was accurately measured, while the second one encourages us to remain dignified and to believe in ourselves. These are clearly very important commemorations but let’s talk about the Bank of Lithuania. Interestingly, to the central bank this day is also a double celebration, related to two events of high importance to both the Bank and the country as a whole.
On 21 October 1992, the International Monetary Fund (IMF), joined by Lithuania on 29 April of the same year (making it the first one of all the former Soviet countries), granted the first loan to Lithuania. This loan was meant for maintaining the stability of the national currency and international reserves (part of it was intended for the implementation of the Systemic Transformation Facility). The loan was taken out in four parts. It was a huge help in adopting the national currency – the litas. The loan was repaid to the IMF ahead of time, before 2003.
Exactly one year later, on 21 October 1993, there was a rise in the foreign exchange market. On this day, the Bank of Lithuania held the first trade in the interbank currency exchange. In this market, banks with a licence for direct correspondence with foreign banks, could sell and purchase foreign currency. Actually, up until 1994, banks could only sell currency. The Bank of Lithuania performed regular interventions and bought currencies from other banks. This was how the reserves were increased and a stable foreign currency exchange rate was maintained.
