Central bank puts forward proposals amid unusual circumstances in sector

Lithuania’s banking sector is faced with exceptional circumstances: due to particularly high liquidity and predominance of floating-rate loan portfolio of banks, the increased interest rates have been passed on to borrowers very quickly, while the rise in interest rates on deposits has been much slower, the Bank of Lithuania said in a press release.

Similarly, as the key interest grows, excess liquidity generates unexpected returns. This leads to a significant increase in the banking system’s profits. In the view of the Bank of Lithuania, should the circumstances remain unchanged, it is appropriate to consider the necessity of fiscal measures and to implement measures promoting competition and enhancing consumer choice.