The Bank of Latvia (Latvian: Latvijas Banka) is the central bank of Latvia. It is one of the key public institutions and carries out economic functions as prescribed by law.

The principal objective of the Bank of Latvia is to regulate currency in circulation by implementing monetary policy to maintain price stability in Latvia. It is responsible for issuing coins and banknotes in the Latvia's currency the Lats.

The Bank of Latvia administration is located in Riga. The fiscal year for the bank begins on 1 January and ends on 31 December.

History
Republic of Latvia was proclaimed on November 18, 1918. Next steps that the new state took were to create the financial system and introduce the national currency of Latvia.

In order to ensure the implementation of monetary policy, the Constitutional Assembly adopted the law founding the Bank of Latvia on September 7, 1922. The right to issue the national currency was vested with the Bank of Latvia. The provisional Charter of the Bank was passed on September 19, 1922 with a resolution of the Cabinet of Ministers. Initial capital of the Bank of Latvia totalled 10 million lats.

The Bank of Latvia was created out of the State Savings and Credit Bank, whose assets and liabilities were taken over by the Bank of Latvia on November 1, 1922. It was on the next day, November 2, that the Bank of Latvia issued provisional banknotes of 10-lats denomination - 500-ruble notes with an overprint. The Bank of Latvia comprised both the functions of a central bank (currency issuance, control of currency backing and currency circulation) and a commercial bank (lending to and financing of public and private enterprises, institutions, and individuals).

The Charter of the Bank of Latvia was adopted at the plenary meeting of the Saeima (the Parliament) on April 24, 1923, and was approved by President Janis Cakste on July 2, 1923. The Bank was administered and managed by the Board of Governors and the Executive Board. The Board of Governors consisted of the Chairman, the Deputy Chairman and eleven members of the Board of Governors, whereas the Executive Board was comprised of the Director in Chief, the Deputy Director in Chief, and three Directors.

Ringolds Kalnings, Minister of Finance, became the first Chairman of the Board of Governors. In 1926 Julijs Celms, an economist, Member of the Saeima, and Director of the Riga Discount Bank, became Chairman of the Board of Governors, but in 1931 this position was occupied by Adolfs Klive, who remained the Chairman of the Board of Governors until 1940, when Soviet troops advanced into Latvia.

The Bank's structure was elaborated as follows in 1924: a Head Office (K. Valdemara iela 2A, Riga), eight branches conducting all banking operations, and fourteen branches functioning as the State Treasury and accepting deposits. This was the structure of the Bank until 1940.

The central building of the Bank was designed by the well-known Latvian architect Augusts Reinbergs (1860-1908). The construction and building of the Bank premises began in 1902, executed by the enterprise of P. Radzins, and was completed by January 1905 when operations began. The building is outstanding for the period, remarkable both in design and construction. Operation halls are constructed in reinforced concrete. There is no flamboyance either in structure or embellishments on the building’s exterior. Its detailed accuracy and refined line give the building a simple and impressive dignity. The facade has a Renaissance, Florentine design. The metal eagles above the entrance symbolize wealth and have become a greeting card for the building. The Bank of Latvia building is listed among most salient masterworks of architecture in the Republic of Latvia. It is one of the last eclectic buildings in Riga.

On June 17, 1940 Latvia was occupied by the Red Army, and on August 5 annexed to the USSR. The law nationalizing banks and large industrial enterprises was adopted on July 25, 1940. The nationalized credit institutions were merged and reorganized into branches of the Bank of Latvia. The management of the Bank of Latvia was dismissed on July 13. Peteris Ozols was appointed Chairman of the Board of Governors of the Bank by the Cabinet of Ministers. The law on dismissal of the Boards of Governors of all banks, including the Bank of Latvia, was adopted on August 3. This law transferred the duties (functions) of Boards of Governors to Executive Boards. The Cabinet of Ministers appointed Karlis Zandersons to the position of Director of the Bank of Latvia (Chairman of the Executive Board), and it also appointed Members of the former Board of Governors and Executive Board Karlis Vanags, Ernests Ozolins and Janis Stalbovs to the positions of Director. This Bank's management functioned until October 10, 1940, when the Bank of Latvia was legally liquidated. With the date of liquidation, the functions of the Bank of Latvia were taken over by the Latvia Republican Office of the State Bank of the USSR, one of the constituent parts of the centralized Soviet banking system. The first Governor of the Bank was G. Teplovs, Authorized Representative of the State Bank of the USSR in Latvia, but his Deputy was K. Zandersons. The Soviet monetary system was gradually introduced in Latvia. Without prior notice, the lats was withdrawn from circulation on March 25, 1941.

At the beginning of the Second World War, the Bank of Latvia and its branches suffered severe losses in staff and material assets. Many Bank employees were victimized in the deportations that took place in 1941. The withdrawal of the Red Army also brought a time of tribulation. Precious metals and articles thereof, money and other valuables were removed from Latvia and sent to the USSR.

In June 1941, Latvia was occupied by German troops. Right after the invasion of the German army, the Bank of Latvia resumed its activity; however, the Bank did not regain its right to issue currency.

During German occupation, the functions of the central bank were performed by the Riga State Credit Union. A monetary policy tailored especially for occupied countries was implemented, the aim of which was to suppress and rob said countries.

After the Second World War, Latvia again was incorporated into the Soviet financial system. The State Bank of the USSR both issued money and functioned as the State Treasury. The monetary system of the Latvian Soviet Socialist Republic was entirely controlled by the Bank.

In the middle of 1980s, the political and economical restructuring taking place in the USSR also triggered changes in Latvia, where the reorganization of the banking system began in 1988. In 1987, the Latvia Republican Office of the State Bank of the USSR was renamed the Latvia Republican Bank of the State Bank of the USSR; however, it did not become a central bank with the right to issue the national currency.

On March 2, 1990, the Supreme Council of the Latvian SSR adopted the Law "On Banks" and the Resolution "On the Bank of Latvia". It stipulated that the Bank of Latvia, a local central bank, was established (actually restored) in the Latvian SSR. This was a full-fledged central bank - an independent state bank which had the exclusive right to issue the national currency, supervise commercial banks, organize fulfilment of the state budget treasury position, and control the economy by means of monetary policy instruments. However, it was only after the declaration of independence of the Republic of Latvia on May 4, 1990 and the collapse of the USSR that, in accordance with the Resolution of the Supreme Council of the Republic of Latvia "On Reorganization of Banks in the Territory of the Republic of Latvia," passed on September 3, 1991, the Bank of Latvia became a central bank with the right to issue the national currency. The Bank of Latvia took over and incorporated into its structure the Latvia Republican Bank of the State Bank of the USSR and other state credit institutions. Einars Repse, Chairman of the Banking and Finance Subcommittee of the Economic Committee at the Supreme Council of the Republic of Latvia, was appointed Governor of the Bank of Latvia. On March 4, 1992, the Supreme Council adopted the Law "On Taking over Rights of the Bank of Latvia Founded in 1922". The status of the Bank of Latvia as a central bank with the right to issue the national currency was reinforced by two Republic of Latvia Laws, "On Banks" and "On the Bank of Latvia" passed on May 19, 1992. For the first time, the independence of the central bank from the Government's policy was ensured by legislation. The Law "On the Bank of Latvia" did not stipulate that the Bank of Latvia had the right to conduct commercial operations. Therefore, the resolution to restructure and privatize forty-nine branches of the Bank of Latvia was adopted.

On July 31, 1990, the Supreme Council of the Republic of Latvia passed the Resolution "On the Program to Create the Republic of Latvia Monetary System". The restoration of the Latvian national currency was prepared by the Čouncil of the Bank of Latvia in collaboration with advisors from Latvia and abroad. The Monetary Reform Committee of the Republic of Latvia was established, and on May 4, 1992, it passed a resolution introducing a temporary currency - the Latvian ruble. The national currency - the lats - was introduced in 1993. This successful reform, ending in the introduction of the lats, helped to promote the transition to a market economy.

On December 20, 2001 Mr. Ilmars Rimsevics was appointed Governor of the Bank of Latvia.

According to the Law "On the Bank of Latvia", the Bank of Latvia is administered by a Council and a Board. The Council consists of eight persons: the Governor, the Deputy Governor and six members of the Council. The Council is chaired by the Governor. The Council of the Bank of Latvia makes decisions on behalf of the Bank of Latvia. The Board, which is established by the Council and consists of six persons, executes the practical work and ensures the efficient management of the Bank of Latvia. The Governor of the Bank of Latvia approves the Bank of Latvia's structure, and has the power to hire and dismiss Bank of Latvia employees.

Objectives
The Bank of Latvia is the central bank of the Republic of Latvia. It is one of the key public institutions and carries out economic functions as prescribed by law.

The principal objective of the Bank of Latvia shall be to maintain price stability in Latvia.

The Bank of Latvia's functions are set out in the Republic of Latvia Law "On the Bank of Latvia". Among the most important objectives of the national central bank are the following:

• to establish and implement monetary policy in order to ensure price stability in the country;
• to issue the national currency;
• to promote the smooth operation of the payment systems in Latvia;
• to issue permits (licences) to legal persons listed in the Register of Enterprises of the Republic of Latvia, except credit institutions, for the purchase and sale of cash foreign currency as a business activity;
• to collect, record and aggregate the financial information and the data of the national payment balance, as well as to publish the processed statistical information;
• to manage foreign assets;
• to act as financial agent for the government;
• to issue permits (licences) to legal persons listed in the Republic of Latvia Register of Enterprises, except credit institutions, for the purchase and sale of foreign currency as a business activity.

The Bank of Latvia represents the Republic of Latvia in foreign central banks and international financial institutions. The Bank of Latvia also consults the Parliament and the Cabinet of Ministers on monetary policy issues and other issues pertaining to the execution of its tasks.

In execution its functions the Bank of Latvia is guided by the Law "On the Bank of Latvia" and is not subject to decisions and instructions by the Government or other institutions. The Bank of Latvia is independent in setting and implementing policy under its legal mandate.

Supervision of the Bank of Latvia is vested with the Parliament.

The Law "On the Bank of Latvia" proscribes the national central bank from conducting any commercial activity. The Bank of Latvia finances its activities from revenue received through foreign exchange and credit operations that are carried out within the framework of its objectives.

The Law "On the Bank of Latvia" prescribes the authorized nominal capital of the Bank of Latvia at 25 million lats.

The Law "On the Bank of Latvia" establishes that part of the Bank of Latvia's annual profit, calculated by applying the tax rate set for residents by the Law "On Enterprise Income Tax", and a payment in the amount of 50 per cent of the profit earned during the reporting year for the usage of State capital shall be transferred to the State budget. The Bank of Latvia's profit remaining after making the above deductions shall be transferred to the reserve capital. The reserve capital shall be formed to cover possible losses.

The Audit Commission of members authorized by the State Audit Office of the Republic of Latvia performs the inspection and audit of documents and the economic activity of the Bank of Latvia.

Vision
The Bank of Latvia is an independent entity that carries out its tasks in the public interest and with a high sense of professional responsibility. It is a full-fledged participant in the European System of Central Banks and cooperates with other institutions of the European Union, developing stable and favorable environment for the economic growth of Latvia.

Mission
The objective of the operation of the Bank of Latvia as the central bank is price stability promoting Latvia's long-term economic growth.

The Bank of Latvia is an active and responsible participant of the European System of Central Banks, promoting integration and stability of the financial systems of Latvia and other EU countries.

The Bank of Latvia raises the level of Latvian general public's perception of economic issues, promoting understanding and credibility.

The Bank of Latvia operates effectively in a professional manner ensuring high quality, risk management and business continuity.

The Bank of Latvia is a reliable cooperation partner.

Values
Employee motivation, creative approach and responsibility are essential preconditions for successful operation of the Bank of Latvia. In its employees, the Bank of Latvia highly values the following:

1. Orientation towards service quality and result;
2. Use of high technologies and corporate government principles;
3. Teamwork and maintaining favorable working environment;
4. Professionalism:
   • quality performance of tasks, meeting the deadlines;
   • initiative;
   • ability to identify drawbacks, inform about them or correct them if the person himself/herself can do it;
   • ability and willingness to admit one's mistakes and correct them;
   • application of the principles of best practice;
   • ability to be prudent and risk-appraising when making decisions;
   • ability to safeguard information;
   • willingness to acquire knowledge and ability to be flexible regarding reasonable changes;
   • ability to be part of the team and share know-how and experience with colleagues.
5. Ethical attitude towards work and colleagues:
   • intelligence in mutual relationships;
   • honesty;
   • good fellowship;
   • respectful attitude and behavior and no discrimination on the basis of nationality, gender, religion and opinions;
   • awareness of the special responsibility and the importance of the duties of the employees of the central bank in order to promote the Bank of Latvia's credibility.
6. Civic qualities: patriotism and sense of duty towards the country and its people.

Monetary Policy
The key objective of the central bank's monetary policy is to facilitate favourable macroeconomic environment for growth of the national economy in the long term. The course of the global economic development suggests that the monetary policy can best contribute to the economic growth, employment and financial stability by ensuring low inflation rate. By maintaining price stability, the central bank creates a stable and predictable business environment. For this reason, the majority of sovereign central banks across the world have declared maintenance of a low and stable long-term inflation rate as their principal goal.

Pursuant to the Law "On the Bank of Latvia", the primary objective of the Bank of Latvia's monetary policy is likewise to maintain price stability in the country.

International Cooperation
With Latvia's accession to the European Union the Bank of Latvia (BoL) became a member of the European System of Central Banks (ESCB). The Governor of the Bank of Latvia participates in the ECB General Council meetings on a regular basis. The representatives of the Bank of Latvia participate in 12 ESCB's committees and the Human Resources Conference, as well as more than 30 working groups, dealing with issues related to monetary policy, banking supervision, euro banknotes, statistics, accounting, market operations, payment systems, international relations etc.

The Bank of Latvia's experts also participate in several committees and working groups of the Council of the EU and the EC. Working in the Economic and Financial Committee and its sub-committees, representatives of the Bank of Latvia regularly participate in decision-making concerning the economic and financial development of the EU, discuss the EU economic policy strategy and instruments, preparation of countries for the introduction of the euro, relations with third countries, and policies of international financial institutions. The Bank of Latvia's experts participate in the EC and Eurostat working groups addressing issues related to euro coins, payment systems, economic forecasting and statistics.

In cooperation with other governmental institutions and the representatives of the private sector, the Bank of Latvia prepares for participation in the Economic and Monetary Union and the introduction of the euro in Latvia, participating in the development of the National Changeover Plan of the Euro Implementation.

Cooperation with the International Monetary Fund
The Bank of Latvia represents Latvia at the meetings of the IMF Board of Governors as well as on a day to day basis.

Cooperation with other international institutions and foreign central banks
The Bank of Latvia cooperates with the Bank for International Settlements, the World Bank and other international financial institutions. The Bank of Latvia's experts actively exchange experience and information with foreign central banks, including technical assistance in the areas of the Bank of Latvia's functions.

Useful links

Currency of Latvia:

Latvian lats

List of Central Banks:

Central Banks

Official website of Bank of Latvia:

www.bank.lv

Ministry of Finance of the Republic of Latvia:

www.fm.gov.lv

Ministry of Economics of the Republic of Latvia:

www.em.gov.lv