The Bank of Latvia » For Collectors » Currency in Circulation
Currency in Circulation
Money as an economic category is usually understood as currency in circulation (vault cash excluded). It is one of the components of broad money, which also includes bank deposits.
Latvia is among those countries where cash is quite widely used, i.e. the cash component accounts for approximately 11% of broad money. Currency in circulation amounts to over 700 million lats. In the euro area, the United Kingdom and Estonia, the cash component is somewhat smaller (8%, 2% and 6% respectively). In other Central and East European countries (Lithuania, Hungary, Romania etc.), cash is used on a wider scale (13% - 16% of broad money).
The development of non-cash settlement instruments - such as banking and retail cards, electronic, internet and other banking services - reduces the role of cash in the overall money circulation (cash accounted for approximately 40% of broad money in Latvia merely a decade ago). The trend is also expected to continue in the near future, as this indicator gradually approaches the level of the euro area
Structure of Currency in Circulation
The Bank of Latvia puts currency into circulation via credit institutions, which choose the nominal value of banknotes and coins taking into account customer demand. Consequently, the banknotes and coins required by depositors, companies, public institutions and other bank clients are circulated.
As of 1 July 2010, Bank of Latvia's banknotes and coins of all denominations, their value totalling 838.3 million lats, are in circulation.
Banknotes constitute 93.1% (780.8 million lats) of the total cash, while the rest are coins. The sum total of paper notes is made up of 5-lats (7.7%), 10-lats (8.5%), 20-lats (53.3%), 50-lats (9.0%), 100-lats (13.3%) and 500-lats (8.2%) banknotes. Of total coins, 2-lats coins account for 13.8% , 1-lats coins for 50.3%, 50-santims coins for 13.0%, 20-santims coins for 7.3%, and coins of other denominations for 0.9% - 4.5% each.
In the breakdown by denomination, for 20, 5 and 10 lats banknotes and low-value coins the number in circulation remains the highest. Within a year, the number of banknotes in circulation has increased for all denominations and most of all for 50 and 20 lats banknotes. The number of nearly all denomination coins (except 2 lats) also edged up.
Banknotes in Circulation
| 1 July 2009 | 1 July 2010 | Relative change in the amount (%) | |||
| Amount (in thousands of lats) |
Percentage | Amount (in thousands of lats) |
Percentage | ||
| Ls 5 | 56 927.1 | 8.1% | 59 970.3 | 7.7% | 5.3% |
| Ls 10 | 62 349.0 | 8.9% | 66 557.5 | 8.5% | 6.7% |
| Ls 20 | 366 780.0 | 52.1% | 416 513.1 | 53.3% | 13.6% |
| Ls 50 | 59 818.3 | 8.5% | 70 056.5 | 9.0% | 17.1% |
| Ls 100 | 93 898.8 | 13.3% | 103 841.6 | 13.3% | 10.6% |
| Ls 500 | 63 738.5 | 9.1% | 63 821.0 | 8.2% | 0.1% |
| Total banknotes | 703 511.7 | 100% | 780 760.0 | 100% | 11.0% |
Coins in Circulation
| 1 July 2009 | 1 July 2010 | Relative change in the amount (%) | |||
| Amount (in thousands of lats) |
Percentage | Amount (in thousands of lats) |
Percentage | ||
| Ls 2 | 8 032.5 | 14.6% | 7 930.8 | 13.8% | -1.3% |
| Ls 1 | 26 606.6 | 48.4% | 28 956.5 | 50.3% | 8.8% |
| 50 santîmi | 7 346.7 | 13.3% | 7 463.7 | 13.0% | 1.6% |
| 20 santîmi | 4 181.5 | 7.6% | 4 236.1 | 7.3% | 1.3% |
| 10 santîmi | 2 587.3 | 4.7% | 2 608.6 | 4.5% | 0.8% |
| 5 santîmi | 1 990.7 | 3.6% | 2 003.7 | 3.5% | 0.7% |
| 2 santîmi | 2 123.8 | 3.9% | 2 180.6 | 3.8% | 2.7% |
| 1 santîms | 1 596.4 | 2.9% | 1 646.6 | 2.9% | 3.1% |
| Jub. mon. | 549.7 | 1.0% | 549.8 | 0.9% | 0.0% |
| Kopâ monçtas | 55 015.2 | 100% | 57 576.4 | 100% | 4.7% |
The Bank of Latvia puts cash into circulation via Latvian
banks, and
the banks pick the denominations of banknotes and coins according to
the preferences of their clients - depositors, corporates, government
institutions (for wage payout) etc. During one year the number of
banknotes and coins received from banks and processed by the Bank of
Latvia's branches exceeds that in circulation more than 6 times, thus
ensuring the circulation fitness of money.
During one-year circulation, each coin, depending on its denomination, manages "to visit" the Bank of Latvia 2-5 times on average. When automated cash processing equipment determines banknotes and coins to be too worn-out or damaged and not fit for future circulation, they end their life in a cash destroyer.
In 2009, 20.4 million worn and damaged banknotes were withdrawn from circulation. The life of 5-lats banknotes, which get the greatest use, is the shortest, and in 2009, 7.3 million paper notes of this denomination were withdrawn from circulation.
As coins are much more durable than paper notes, they have longer useful lives. The number of coins withdrawn from circulation was 38 thousand in 1997, 144 thousand in 1998, 60 thousand in 1999, 132 thousand in 2000, 202 thousand in 2001, 119 thousand in 2002, 151 thousand in 2003, 159.7 thousand in 2004, 100 thousand in 2005, 106.7 thousand in 2006, 116.8 thousand in 2007 and 153.6 thousand in 2008, 121.9 thousand in 2009.
13.6 thousand 2-lats coins struck in 1992 and 1993 were withdrawn from circulation in 2001. The respective figures for 2004, 2005, 2006, 2007 and 2008 are 29.8 thousand, 12.2 thousand, 10.0 thousand, 5.0 thousand, 13 thousand, and only 3.1 thousand in 2009. The 2-lats bimetallic coin is gradually introduced.
