Update on ECB Discussion of Asset backed securities and Lithuania joining the Euro
February 14, 2015
By: Dominick Giammarino
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Hi everyone, so if you are thinking about getting into assets, read this article on what the ECB (European Central Bank) is discussing. As you all know, since about January of 2014, I write about the global currency reset in detail, and one of the things I mention is asset backed currencies. The Vietnamese Dong was expected to revalue at a higher rate, however, I’m not seeing a huge return, which is primilariy why I diversity and own multiple currencies including the Iraqi Dinar which just had new three zero dinar notes introduced. If you didn’t follow what happened to the GCR site in January, it’s worth reading. Someone obviously doesn’t like what I’m doing.
When you are considering asset backed currencies, doesn’t silver and gold come to mind? Why is China buying up so much Gold? Whether or not you believe in a reset, that’s not my concern, my concern is educating you on the loss of the purchasing power of the U.S. Dollar. See the below image.
The ECB homepage has a multitude of great information for you to look at.
Read what is currently happening overseas.
October 2014 – ECB announces operational details of asset-backed securities and covered bond purchase programmes
Programs will last at least two years
Will enhance transmission of monetary policy, support provision of credit to the euro area economy and, as a result, provide further monetary policy accommodation
Eurosystem collateral framework is guiding principle for eligibility of assets for purchase
Asset purchases to start in fourth quarter 2014, starting with covered bonds in second-half of October
The Governing Council of the European Central Bank (ECB) today agreed key details regarding the operation of its new programmes to buy simple and transparent asset-backed securities (ABSs) and a broad portfolio of euro-denominated covered bonds. Together with the targeted longer-term refinancing operations, the purchase programmes will further enhance the transmission of monetary policy. They will facilitate credit provision to the euro area economy, generate positive spill-overs to other markets and, as a result, ease the ECB’s monetary policy stance. These measures will have a sizeable impact on the Eurosystem’s balance sheet and will contribute to a return of inflation rates to levels closer to 2%.
The Eurosystem’s collateral framework – the rules that lay out which assets are acceptable as collateral for monetary policy credit operations – will be the guiding principle for deciding the eligibility of assets to be bought under the ABS purchase programme (ABSPP) and covered bond purchase programme (CBPP3). There will be some adjustments to take into account the difference between accepting assets as collateral and buying assets outright. To ensure that the programmes can include the whole euro area, ABSs and covered bonds from Greece and Cyprus that are currently not eligible as collateral for monetary policy operations will be subject to specific rules with risk-mitigating measures.
The two programmes will last for at least two years and are likely to have a stimulating effect on issuance. Asset purchases will commence in the fourth quarter of 2014, starting with covered bonds in the second half of October. The ABSPP will start after external service providers have been selected, following an ongoing procurement process.
Lithuania (as of 1 January 2015)
On 23 July 2014 the Council of the European Union approved Lithuania’s request to join the euro area on 1 January 2015. The irrevocably fixed exchange rate is €1= LTL 3.45280.
There will be a two-week period when both currencies are in circulation, with change normally provided in euro. The litas will cease to be legal tender on 16 January 2015.
Exchanging Lithuanian litas
At post offices, credit unions and banks
Litas banknotes and coins can be exchanged at 330 post offices and some credit unions in Lithuania at the fixed exchange rate, free of charge, until 1 March 2015. They can be exchanged at all banks until 30 June 2015. Certain banks will continue to exchange litas banknotes until 31 December 2015.
At Lietuvos bankas
The central bank will exchange litas banknotes and coins at the fixed exchange rate in unlimited amounts for an indefinite period. This service is also free of charge.
At other euro area national central banks
Other euro area national central banks will exchange litas banknotes, free of charge, at the fixed exchange rate from 1 January to 28 February 2015. The amount that can be exchanged is limited to €1,000 for any given party/transaction on any one day.
Key changeover dates at a glance
- EU Council approves Lithuania’s admission to euro area.
- Minting of Lithuanian euro coins starts.
- Prices in Lithuania are shown in both litas and euro until 30 June 2015. “Fair euro introducer” campaign.
- Transfer of euro coins from Lietuvos bankas to commercial banks starts.
- Transfer of euro banknotes from Lietuvos bankas to commercial banks starts.
- Transfer of euro banknotes and coins from commercial banks to businesses, retailers and cash machine operators starts.
- Coin starter kits, each containing the eight denominations, go on sale at Lietuvos bankas and commercial banks. They will also be available at post offices as of 4 December 2014.
- Euro introductionEuro banknotes and coins start circulating and bank accounts are converted into euro.
- For two weeks, to smooth the transition, both currencies – litas and euro – are in circulation and can be used for payments.
- Euro banknotes and coins become sole legal tender.
- Exchanging litas for euro free of charge
- Deadline for exchanging litas banknotes and coins at post offices and some credit unions.
- Deadline for exchanging litas coins at commercial banks and litas banknotes at most commercial banks.
- Deadline for exchanging litas banknotes at the remaining commercial banks.
- No deadline
- Litas banknotes and coins can be exchanged at Lietuvos bankas indefinitely.
Euro information campaign
The European Central Bank (ECB) and Lietuvos bankas have prepared a joint Euro information campaign. It included:
- the production and distribution of publications on euro banknotes and coins and the cash changeover;
- two short videos in English and Lithuanian on the cash changeover and how to check euro banknotes and coins;
- a high-level Euro Conference on 25 September 2014 that was streamed live;
- the Euro Exhibition at the Palace of the Grand Dukes of Lithuania in Vilnius (Katedros a.4) from 23 October 2014 until 5 January 2015.
Let’s join forces: the Partnership Programme
The Partnership Programme provided communication materials to businesses and organisations liked to pass on information about the euro cash changeover.
Lietuvos bankas and the European Central Bank invited these businesses and organisations to join forces with them to spread information about the euro in Lithuania. As a “partner”, they had access to information on the euro that they could pass on to their customers, clients, members and employees. This was a good way to ensure that all the stakeholders had accurate and timely information from reliable sources.
Details on the conditions of participation could be requested at email@example.com.
Press releases and publications
- Video: Euro Conference – Highlights video
- Speech: Keynote speech by Mario Draghi, President of the ECB, at the Euro Conference Lithuania en · lt
- Press release: Press releases from Lietuvos bankas on the Euro Conference Lithuania en · lt
- Images: Euro star handover – Lithuania: browse images
- Images: Press conference: browse images
- Images: Opening address and keynote speeches: browse images
- Images: Panel discussion “Single market, single currency, common future”: browse images
- Video: Euro star handover – Highlights video
- Publication: “€ OUR money” leaflet LT PL RU [5.15 MB]
- Publication: Are you ready? € day Lithuania = 1 January 2015. Discover the euro banknotes and coins en [3.1 MB] . lt [3.12 MB] . pl [3.12 MB] . ru
- Publication: Poster showing euro banknotes and coins Multilingual [7.18 MB]
- Video: Lithuanian euro coins (3D video) © Lietuvos bankas video
- Video: Minting of Lithuanian coins © Lietuvos bankas video