The Bank of Latvia

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Bank of Latvia

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 January 2010, Bank of Latvia's banknotes and coins of all denominations, their value totalling 788.2 million lats, are in circulation.

Banknotes constitute 92.8% (731.3 million lats) of the total cash, while the rest are coins. The sum total of paper notes is made up of 5-lats (8.4%), 10-lats (8.6%), 20-lats (53.1%), 50-lats (8.4%), 100-lats (12.9%) and 500-lats (8.6%) banknotes. Of total coins, 2-lats coins account for 14.0% (12.2% of which are bimetallic, 1.8% other), 1-lats coins for 49.1%, 50-santims coins for 13.5%, 20-santims coins for 7.5%, and coins of other denominations for 1.0% - 4.6% each.

Banknotes of 5-lats, 10-lats and 20-lats and coins of small denominations are predominant, and there are 19.4 million 20-lats, 12.3 million 5-lats, 6.3 million 10-lats, 0.9 million 100-lats, 1.2 million 50-lats, and 125.7 thousand 500-lats banknotes in circulation. Small denomination coins form the largest part of coins in circulation: there are 162.0 million and 108.2 million 1-santims and 2-santims coins respectively, and, by contrast, 15.4 million, 27.9 million and 4.0 million 50-santims, 1-lats and 2-lats coins respectively.


Banknotes in Circulation

 1 January 2009
 1 January 2010
 Relative change in the amount (%)
Amount
(in thousands of lats)
 Percentage
 Amount
(in thousands of lats)
 Percentage
Ls 5
 70 781.2 7.2% 61 312.7 8.4% -13.4%
Ls 10
 73 773.3 7.7% 63 321.5 8.6% -14.2%
Ls 20
 485 291.7 50.6% 388 305.4 53.1% -20.0%
Ls 50
 73 888,9 7.7% 61 163.4 8.4% -17.2%
Ls 100
 143 412,5 15.2% 94 336.9 12.9% -35.0%
Ls 500
 110 872.0 11.6% 62 841.5 8.6% -43.3%
Total banknotes
 959 819.1 100% 731 281.4 100% -23.8%


Coins in Circulation

 1 January 2009 1 January 2010 Relative change in the amount (%)
Amount
(in thousands of lats)		 Percentage Amount
(in thousands of lats)		 Percentage
Ls 2 (bimetal)
 7 619.3 13.1% 6 937.3 12.2% -9.0%
Ls 2
 1 054.1 1,8% 1 048,1 1,8% -0.6%
Ls 1
 28 344.6 48.6% 27 937.0 49.1% -1.4%
s 50
 7 744.3 13.3% 7 676.7 13.5% -0.9%
s 20
 4 376.1 7.5% 4 286.9 7,5% -2.0%
s10
 2 722.4 4,7% 2 637.5 4.6% -3.1%
s5
 2 081.9 3.6% 2 017.6 3,6% -3.1%
s2
 2 165.9 3,7% 2 163.2 3.8% -0.1%
s1
 1 614.2 2.8% 1 619.6 2.9% 0.3%
Collector coins
 549.8 0.9% 549,8 1.0% 0.0%
Total coins
 58 272.6 100% 56 873.7 100% -2.4%

Commentary on the latest data

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.