VILNIUS - Lithuania's parliament has revoked its two-week old resolution which had effectively urged the government to un-peg the litas from the euro by dissolving the country's currency board. The Parliamentary Commission on Ethics and Procedures finally decided that the passing of the resolution, on July 1, involved a procedural violation.
The resolution, initiated by MP Algimantas Matulevicius, provoked heated debate among financial experts and policymakers alike. The spark behind the idea centers on frustration at the government's apparent inability to control rising inflation.
The July 1 vote stipulated that the Bank of Lithuania should regain its powers to run an active monetary policy, specifically to return its ability to change interest rates, which would effectively require doing away with the litas' peg.
Shortly after the adoption of the resolution Lithuania's President Valdas Adamkus warned that any move to abandon the currency board could lead to panic on the financial markets.
