The Bank of Latvia (,) is the

national central bank The Eurosystem is the monetary authority of the eurozone, the collective of European Union member states that have adopted the euro as their sole official currency. The European Central Bank (ECB) has, under Article 16 of its Statute,

for

Latvia Latvia, officially the Republic of Latvia, is a country in the Baltic region of Northern Europe. It is one of the three Baltic states, along with Estonia to the north and Lithuania to the south. It borders Russia to the east and Belarus to t ...

within the

Eurosystem The Eurosystem is the monetary authority of the eurozone, the collective of European Union member states that have adopted the euro as their sole official currency. The European Central Bank (ECB) has, under Article 16 of its Statute,

. It was the Latvian

central bank A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mo ...

from 1922 to 2013, albeit with a long suspension between 1940 and 1992. It issued the

Latvian lats The Latvian lats (plural: ''lati'', plural genitive: ''latu'', second Latvian lats ISO 4217 currency code: LVL) was the currency of Latvia from 1922 until 1940 and from 1993 until it was replaced by the euro on 1 January 2014. A two-week trans ...

(1922-1940), then a

Latvian ruble The Latvian ruble () was the name of two currency, currencies of Latvia: the Latvian ruble, in use from 1919 to 1922, and the second Latvian ruble, in use from 1992 to 1993. First Latvian ruble (no currency code) After the proclamation of the Re ...

(1992-1993) and second lats (1993-2013). Since 2014, it has also been Latvia's national competent authority within

European Banking Supervision European Banking Supervision, also known as the Single Supervisory Mechanism (SSM), is the policy framework for the prudential supervision of banks in the euro area. It is centered on the European Central Bank (ECB), whose supervisory arm is re ...

. The Bank of Latvia's administration is located in

Riga Riga ( ) is the capital, Primate city, primate, and List of cities and towns in Latvia, largest city of Latvia. Home to 591,882 inhabitants (as of 2025), the city accounts for a third of Latvia's total population. The population of Riga Planni ...

History

On , the Constitutional Assembly adopted the Law on the Establishment of the Bank of Latvia, which granted its issuance privilege. The Bank's interim statutes were approved on by the Cabinet of Ministers, with its initial capital set at 10 million lats. On , the

Saeima The Saeima () is the parliament of the Latvia, Republic of Latvia. It is a unicameral parliament consisting of 100 members who are elected by proportional representation, with seats allocated to political parties which gain at least 5% of the p ...

approved a permanent Statute of the Bank of Latvia, signed by President

Jānis Čakste Jānis Kristaps Čakste (; 14 September 1859 – 14 March 1927) was a Latvian politician and lawyer who served as the first head of an independent Latvian state as the Chairman of the Tautas Padome, People's Council (1918–1920), the Speaker o ...

on 2 July. The bank was headed by a council and board. The council consisted of a chairman, a deputy, and 11 members; the board included a director general, his deputy, and three directors. The bank's mandate extended beyond a pure monetary authority, as it also entailed a developmental role with the possibility of allocating short-term credit to industry and agriculture. On 17 June 1940,

was occupied and was incorporated into the

USSR The Union of Soviet Socialist Republics. (USSR), commonly known as the Soviet Union, was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 until Dissolution of the Soviet ...

on 5 August. On 25 July, the Law on the Nationalization of Banks and Large Industrial Enterprises was adopted. After the

Second World War World War II or the Second World War (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...

, both money emission and the Treasury's functions were performed by the USSR State Bank, but the money system of the

Latvian SSR The Latvian Soviet Socialist Republic (Also known as the Latvian SSR, or Latvia) was a Republics of the Soviet Union, constituent republic of the Soviet Union from 1940 to 1941, and then from 1944 until 1990. The Soviet occupation of the Bal ...

was under its full control. On 2 March 1990, the Latvian SSR Supreme Council passed the Law "On Banks" and the decision "On the Bank of Latvia". It determined that the Bank of Latvia, a local central bank, was reestablished as an independent state bank, a

money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are: m ...

issuing center, a

in relation to

commercial bank A commercial bank is a financial institution that accepts deposits from the public and gives loans for the purposes of consumption and investment to make a profit. It can also refer to a bank or a division of a larger bank that deals with whol ...

s, an organizer of the execution of the

state State most commonly refers to: * State (polity), a centralized political organization that regulates law and society within a territory **Sovereign state, a sovereign polity in international law, commonly referred to as a country **Nation state, a ...

budget, and a

monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...

regulator. However, only after the Declaration of 4 May 1990 on the restoration of independence of the Republic of Latvia and the collapse of the USSR with the decision of the Republic of Latvia Supreme Council of 3 September 1991 "On the Reorganization of Banking Institutions in the Territory of the Republic of Latvia", the Bank of Latvia became the only central and issuing bank. It took over the ownership and structure of the USSR banks, Latvijas Republikānisko banku, and other state credit institutions. On 4 March 1992, the Supreme Council of the Republic of Latvia passed the Law "On the Acquisition of the Bank of Latvia established in 1922". The Bank of Latvia's status as the central bank of the country and the issue bank was definitively consolidated by the laws of the Republic of Latvia "On Banks" and "On the Bank of Latvia" adopted on 19 May 1992. For the first time in Latvia, the independence of the national central bank from the government policy was ensured through legislation. The Law "On the Bank of Latvia" did not envisage its commercial activities, therefore, a decision was taken on the restructuring and privatization of 49 Bank of Latvia branches.

Monetary policy strategy and exchange rate policy

Like most central banks of the world, the main goal of the Bank of Latvia is to provide

inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...

at a certain level. After joining the European Union (EU), until its membership in the

Economic and Monetary Union An economic and monetary union (EMU) is a type of trade bloc that features a combination of a common market, customs union, and monetary union. Established via a trade pact, an EMU constitutes the sixth of seven stages in the process of economi ...

(EMU), the Bank of Latvia was able to pursue its monetary policy, provided that it is in line with the common EU interests, does not harm the development of other EU Member States, and contributes to economic stability. Membership in the EU also envisages joining EMU and the euro. After joining the EU, Latvia had to demonstrate its ability to meet the EMU accession criteria. One of these criteria was the two-year membership of the Exchange Rate Mechanism II (ERM II). Latvia joined it on 2 May 2005. ERM II means that at least two years before the

euro The euro (currency symbol, symbol: euro sign, €; ISO 4217, currency code: EUR) is the official currency of 20 of the Member state of the European Union, member states of the European Union. This group of states is officially known as the ...

changeover, the lats had been pegged to the euro and the exchange rate of the lats against the euro may fluctuate by no more than +/− 15% against the lats' pegging rate in euro. In order to achieve its main goal, as well as successfully entering the EMU, the Bank of Latvia implemented a fixed exchange rate strategy (EUR 1 = Ls 0.702804). Fluctuations around the fixed coupling rate are possible within +/− 1%. The Bank of Latvia had been implementing the lats attraction policy since February 1994, when the lats was pegged to the SDR basket of currencies. The lats was pegged to the euro on 1 January 2005. Also, at the beginning of 2006 and 2007, the Bank of Latvia operated a refinancing rate instrument, a rate for travel. In a situation where banks do not intend to actively use the instruments offered by the Bank of Latvia, the increase of the refinancing rate has a more signaling function.

Research

The Bank of Latvia also serves as a research center, producing economic and financial analysis and providing data on economic trends and developments in Latvia and the wider region.

Management

The Bank of Latvia is managed by the Bank's Board and Management Board. The

council A council is a group of people who come together to consult, deliberate, or make decisions. A council may function as a legislature, especially at a town, city or county/shire level, but most legislative bodies at the state/provincial or natio ...

consists of eight people: the

president President most commonly refers to: *President (corporate title) * President (education), a leader of a college or university *President (government title) President may also refer to: Arts and entertainment Film and television *'' Præsident ...

of the bank, his deputy, and six members of the council. The Bank's Supervisory Council is managed by the President of the Bank of Latvia. The Governing Council of the Bank of Latvia takes decisions on behalf of the Bank of Latvia. For the practical work and operational management of the Bank of Latvia, the Bank Council establishes a permanent

board Board or Boards may refer to: Flat surface * Lumber, or other rigid material, milled or sawn flat ** Plank (wood) ** Cutting board ** Sounding board, of a musical instrument * Cardboard (paper product) * Paperboard * Fiberboard ** Hardboard, a ...

of six people. The Bank's Governor approves the structure of the Bank of Latvia and recruits and dismisses the Bank of Latvia's employees.

Governors

* Kārlis Vanags (1 November 1922 – 14 October 1923) *

Edgars Švēde Edgars may refer to: * Edgars, New Jersey, United States * Edgars, Ontario, Canada * The Edgar Awards for mystery fiction * Edgars (department store), a former department store chain in South Africa owned by Edcon Limited * Edgar Department Sto ...

(15 October 1923 – 21 September 1926) * Kārlis Vanags (22 September 1926 – 13 July 1940) * Kārlis Zandersons (13 July 1940 – 21 July 1940) * Artūrs Graudiņš (26 March – 30 July 1990) * Pāvils Sakss (31 July 1990 – 3 September 1991) * Einars Repše (3 September 1991 – 20 December 2001) *

Ilmārs Rimšēvičs Ilmārs Rimšēvičs (born 30 April 1965) is a Latvian economist who served as the governor of the central Bank of Latvia from 2001 to 2019. In that position, he was also a member of the Governing Council of the European Central Bank. Educatio ...

(21 December 2001 – 20 December 2019) * Mārtiņš Kazāks (21 December 2019 – present)

References

External links

Official site of Latvijas Banka

Official site of Latvijas Banka
{{Authority control Economy of Latvia

Banks of Latvia

1922 establishments in Latvia Banks established in 1922