02.05.2005

The lats is included Exchange Rate Mechanism II

Latvia joined the ERM II on 2 May 2005 with the existing lats exchange rate vis-à-vis the euro and the fluctuation band of the lats exchange rate (±1%) which had already become the norm in the financial market. This was a pre-condition for the euro changeover in Latvia.

The ERM II is a system whereby the Member States seeking to adopt the euro peg their national currencies to the euro. Within the framework of the ERM II, each Member State preparing for the euro changeover must ensure a stable national exchange rate and meet a number of economic criteria or the Maastricht criteria: a low level of inflation, interest rates, government budget deficit and government debt. Latvia's monetary system had to operate within the ERM II for at least two years after entering it; however, the overall duration of this period depends on the fulfilment of the Maastricht criteria.