Money and central banks. Looking back into the future.

In 2022, we will be celebrating the centenary of the establishment of Latvijas Banka by looking back to the past and marking the challenges of the future. Over time, an institution has been built up that is independent, competent, with a long-term view on monetary policy issues, providing the basis for sustainable development of the state.

All through the year Latvijas Banka will be sharing its knowledge and historic testimonies with society, inviting it to discover cultural values and enjoy the celebration. At the same time, it is also envisaged to have a look into the future – our currency, the euro, is changing together with the world, acquiring new, digital forms. Besides, the role, tasks and contribution of a central bank to the common good of the society are also changing with the time.

Both, through the past 100 years and in the future, the main task of Latvijas Banka remains the same: to maintain the value of our money, so that it does not lose its trustworthiness in public eyes.



Proclamation of the Republic of Latvia

Establishment of Latvian Women's Gold Foundation

Address to women by writer Ivande Kaija to donate their valuables for national defence and the establishment of Latvian Women's Gold Foundation served as a basis for the establishment of the State Gold Fund.

Decree on the Establishment of the State Gold Fund

Decree on the Establishment of the State Gold Fund for preventing the depreciation of the Latvian ruble (with effect from 23 March 1920). Signed by Minister of the Interior Arveds Bergs on behalf of the Prime Minister and by Foreign Minister Zigfrīds Anna Meierovics on behalf of the Minister of Finance.

The lats becomes national currency

The lats, backed by 0.2903226 g of gold, became Latvia's currency pursuant to a Regulation approved by the government.

Suggestions for the names of the monetary units of the Latvian national currency.
The Statute of Latvijas Banka

On 22 September 1922, the Cabinet of Ministers promulgated the Statute of Latvijas Banka as a matter of urgency.

Appointment of the Council of Latvijas Banka

On 19 October 1922, the Cabinet of Ministers approved the composition of the Council of Latvijas Banka and appointed Ringolds Kalnings as Chairman of the Council.

Ringolds Kalnings - Chairman of the Council
The first meeting of the Council of Latvijas Banka

The first meeting of the Council of Latvijas Banka with the participation of Chairman of the Council Ringolds Kalnings, Deputy Chairman of the Council Ādolfs Klīve and Members of the Council Kārlis Benze, Jānis Bisenieks, Staņislavs Kambala, Aleksandrs Kārkliņš, Pēteris Siecenieks, Jānis Vesmanis and Jānis Zēbergs.


The Council of Latvijas Banka (1922)
Start of Latvijas Banka operation

The assets and liabilities of the liquidated State Savings and Credit Bank as well as its employees were transferred to Latvijas Banka.

Latvijas Banka operated on the former premises of the Russian State Bank Branch leased from the Ministry of Finance at K. Valdemāra iela 2A in Riga. In the first few years of Latvijas Banka's operation, the building still carried the inscription "Finanšu ministrija" ("The Ministry of Finance"). The inscription was changed to "Latvijas Banka" in the mid-1920s.

Main building of Lavijas Banka. About 1920
Latvijas Banka issues a 10 lats banknote

The 500 ruble Treasury notes already in circulation were printed over with an inscription "Provisional banknote of Latvijas Banka – 10 lats" and an inscription "Against this banknote, Latvijas Banka shall hand out 2.903226 g of gold".

Author of the design and overprint was Rihards Zariņš.

Provisional banknotes of 10-lats denomination - 500-ruble notes with an overprint
Lending to public enterprises and projects

The "Law on Maximum Lending Rates" adopted by the Saeima entered into force. The law stipulated that no more than 12% per annum could be charged on a loan.

Discontinuation of a free exchange of foreign currencies

The Government "Regulation on Foreign Exchange Operations" cancelled Latvijas Banka's obligation to exchange banknotes for gold and discontinued their free exchange for foreign currency.

Latvia's first clearing agreement

Clearing agreements or the so-called compensation agreements were initiated to facilitate exports and prevent unfavourable foreign trade balance resulting from the global economic crisis. According to these agreements, the outstanding balance was not adjusted with currency transfers but rather with purchases of goods.

Agreement with France was followed by another clearing agreement with Germany, which came into effect on 8 July 1932. Such agreements were also concluded with Sweden, Lithuania, Estonia and the Soviet Union in 1935, with Italy in 1937 and, by mid-1940, with Turkey, Bulgaria, Hungary, Greece and Finland.

Repegging of the lats and price stability

The Government adopted the decision to give up maintaining the previous gold-backed exchange rate of the Latvian currency whereby foreign trade had been significantly limited by quotas and clearing agreements.

The cartoon of the "over-credited speculators” by cartoonist K. Saliņš published in the magazine Svari (Scales)
Concept for the development of the Victory Square

The first day of the Victory Square money lottery held in the Column Hall of the Congress House. Riga. 18 February 1938.
First session of the National Economic Council

The National Economic Council monitored and coordinated the activities of four economic chambers: the Chamber of Crafts (1935), the Chamber of Labour (1936), the Chamber Of Agriculture (1935) and the Chamber of Commerce and Industry (1934).

Members of the Bureaus and Chairmen of the Sections of the above Chambers were also Members of the National Economic Council. During the introduction of the chamber system in Latvia, six chambers were established. Several Members of the Council of Latvijas Banka occupied managerial positions in at least three chambers.

Members and Committee Chairmen of the National Economic Council during their visit at the President's Castle. Riga. 11 January 1938.
Soviet occupation

The nationalisation of banks

Latvian People's Saeima declaration on the nationalisation of banks and large industrial enterprises.

In August 1940, within eight days Latvijas Banka took over the assets and liabilities of 32 private joint-stock banks and mutual credit partnerships. The nationalised credit institutions were incorporated into Latvijas Banka as its branches. 103 Latvian credit unions were also placed under the control of Latvijas Banka. At the same time, Latvijas Banka's functions were narrowed down and its transactions with foreign countries were restricted.

The announcement of nationalisation of banks and large industrial enterprises published in the official newspaper of the Communist Party of Latvia Cīņa (Struggle) on 23 July 1940.
Reorganisation of Latvijas Banka

Based on the Resolution adopted by the USSR Council of the People's Commissars and the Order No 71 of the State Bank of the USSR of 5 October 1940, Latvijas Banka was reorganised into the Latvia Republican Office of the State Bank of the USSR, becoming a branch of the State Bank of the USSR.

Order on the Reorganisation of the Bank.
Decree on the Cash Changeover

The USSR ruble was introduced in Latvia at the exchange rate 1 : 1, followed by a dual circulation period of the lats and the ruble.

On 25 March 1941, the use of the lats in payments was discontinued. Only household deposits of up to 1 000 lats were exchanged for rubles, while all other deposits were nationalised.

Decree on the Cash Changeover issued by the State Bank of the USSR.
Transferral of the valuables of the Latvia Republican Office to the USSR

Due to the outbreak of the war between the USSR and Germany, evacuation of the Latvia Republican Office and its branches was initiated.

The Latvia Republican Office was evacuated to Ivanovo. Valuables such as gold, banknotes, silver money and other objects of value worth 154 947 554.64 rubles were transported from Latvijas Banka to the USSR.

The operation of the Latvia Republican Office was suspended in September 1942.

Occupation by Nazi Germany

A column of the German Army in Latvia in 1941.
Attempt to restore Latvijas Banka

In the first days of the Nazi occupation, people hoped for the restoration of Latvia's independence and the restoration of Latvijas Banka. The Republican Office of the State Bank of the USSR was given back its original name – Latvijas Banka. There was an intention to restore the lats.

However, the Economic Commando (Wirtschaftskommando) of the German army did not let it happen. Although Latvijas Banka was allowed to keep its historic name, its further operation was strictly regulated by the new occupying power.

The circular of 7 August 1941 by Jānis Stalbovs, Commissioner Manager of Latvijas Banka, on his appointment.
Transition to the Reichsmark

On 1 July 1941, the banknotes of the Reichskreditkasse or the so-called occupation marks were introduced as legal tender in Nazi-occupied Latvia. With their exchange rate against the Soviet ruble set at 1 : 10, the savings of Latvian households were depleted.

Although the Nazi occupying power persistently called on the public to build savings, people were reluctant to use this money and rather exchanged goods and services by bartering.

The poster "Be frugal!", 1943, commissioned by the Propaganda Department of the Commissioner General in Riga and created by Osvalds Rožkalns (1910-1989).
Liquidation of Latvijas Banka

The Latvian Self-Administration approached the Riga Chief Commissioner several times with a request to suspend the liquidation of Latvijas Banka as well as prepared several projects for Latvijas Banka to be completely transferred under the management of the Latvian Self-Administration. None of these requests were satisfied.

For the purposes of collecting the revenue of the Latvian Self-Administration, financing its budget expenditure as well as managing and selling securities, Treasury Offices were established in the General District of Latvia by an order issued by the Riga Chief Commissioner. The Treasury Offices took over the functions of the liquidated Latvijas Banka.

Honouring Latvijas Banka's remaining employees at its 20th anniversary. 1 November 1942.
The restoration of the Latvian Republican Office of the State Bank of the USSR

The Latvian Republican Office of the State Bank of the USSR was restored in Moscow and, following the reoccupation of the territory of Latvia, the operation of its branches was renewed.

Until the restoration of Latvijas Banka in 1990, the Latvian Republican Office carried out the duties of a branch of the State Bank of the USSR.

The building of Latvijas Banka in the city of Riga in 1945
The second Soviet occupation

Declaration of Independence

Activities of Latvijas Banka restored

Based on Resolution "On the Reorganisation of Banks in the Territory of the Republic of Latvia" of the Supreme Council of the Republic of Latvia of 3 September 1991, Latvijas Banka resumed its operation as the national central bank with the right and capacity to issue national currency. One of the tasks of Latvijas Banka is to maintain price stability. The supply of money is controlled via the banking system, without providing direct services to businesses and individuals. The above principle is incorporated into the Law "On Latvijas Banka" adopted by the Supreme Council of the Republic of Latvia on 19 May 1992.

Einars Repše, Governor of Latvijas Banka (1991-2001)
Recovery of Latvia’s Gold

The recovery of Latvias Banka's gold deposited with foreign banks took place from November 1991 to May 1994. Latvijas Banka gradually recovered a total of 7.7 tons of gold deposited with Banque de France, the Bank for International Settlements, the US Federal Reserve System and the Bank of England.

Initially, the reserves comprised the recovered gold, some long-term securities recovered from the US Federal Reserve System, as well as the loan received from the International Monetary Fund which remained unused and was later paid back. Latvijas Banka's reserves increased from approximately 200 million lats in 1993 to 5.8 billion euro at the end of 2016.

Introduction of Latvian rouble

In order to exercise Latvia's economic independence, facilitate Latvia's transition to market economy and contain the growing inflation, the basis for the national currency system had to be established already before the re-introduction of the lats.

Launching of Latvijas Banka’s clearing system

Interbank clearing was created to ensure the execution of payments in Latvian rubles between banks and their customers using paper-based payment orders.

Latvia reintroduces the lats as the national currency

5 lats, the first restored lats banknote, was put into circulation and used in parallel with Latvian rubles at the exchange rate 1 lats = 200 Latvian rubles. Expressed in lats, prices for goods and services were 200 times lower.

1 lats coins, 2 lats coins and 50 santims coins were issued on 25 March, 15 April and 22 April respectively, whereas 1, 2, 5, 10 and 20 santims coins as well as 10 and 20 lats banknotes were issued on 28 June. 50 and 100 lats banknotes were issued on 2 May 1994, and, finally, 500 lats banknotes were issued on 20 July 1998.

The lats banknote was created by artists Imants Žodžiks and Valdis Ošiņš, and the coin was designed by artists Gunārs Lūsis and Jānis Strupulis.

Compilation of statistics in accordance with international standards

Each central bank requires statistical data to make monetary policy decisions and analyse the country's financial sector and its interaction with global developments. Latvijas Banka compiles the statistics on the banks' balance sheets, interbank transactions, non-bank interest rates, foreign exchange transactions, etc.

Latvijas Banka issues first collectors’ coins

The set of collector coins "75th Anniversary of the Republic of Latvia" (artists Aivars Krūklis and Edgars Grīnfelds) marks the beginning Latvijas Banka’s accomplishments in the field of lats collector coins.

Latvijas Banka’s Council approves the first guidelines for investing of foreign reserves

In compliance with the Guidelines for Reserve Management approved by the Council of Latvijas Banka on 16 November 1993, the management of part of Latvijas Banka's foreign reserves was transferred to external managers in October 1994.

Latvijas Banka pegs the lats to the SDR

On 12 February 1994, Latvijas Banka pegged the lats to the SDR (1 SDR = 0.7997 LVL), the so-called basket of currencies established by the International Monetary Fund and composed of the world's five major currencies. Back then, the SDR basket of currencies comprised the US dollar (39%), Deutschmark (21%), Japanese yen (18%), British pound sterling (11%) and French franc (11%).

In the run-up to the euro changeover on 1 January 2014, Latvijas Banka set a fixed exchange rate of the lats vis-à-vis the SDR. The stable exchange rate of the lats relative to the world's major currencies allowed Latvia, a small and open economy, to maintain the price stability and expand its exports.

SDR currency basket in 1994
Launching of Latvijas Banka’s electronic clearing system

With the introduction of the electronic exchange of documents in Latvia, the execution of customers' payments in lats was ensured within two days.

Payment system
Latvijas Banka starts construction of its Riga Branch Building

The Council of Latvijas Banka passed the resolution on the construction of the Riga Branch building on 12 May 1994. The foundation stone of the new building of Latvijas Banka's Riga Branch was laid on 23 July 1999. 

A capsule containing a message for future generations and specimens of Latvian banknotes and coins in circulation was built into the foundation of the building.
Launching of Interbank Automated Payment System

The first real time interbank settlement system for large market transactions in lats facilitated smooth implementation of the monetary policy and interbank market development, enabling banks to settle their transactions in a matter of minutes. The customers of banks also used this system for urgent payments.

Establishing of the National Supervisory Authority

On 1 July 2001, the Financial and Capital Market Commission (FCMC), the single financial and capital market supervisory authority, commenced its operation. The FCMC supervises banking participants of credit institutions and the insurance market, as well as those of the securities market.

Construction of the Riga Branch building completed

The new building of Latvijas Banka's Riga Branch was completed on 16 November 2001.

Latvia joins the European Union (EU)

Latvia, along with nine other European countries, joined the EU on 5 May 2014.

Consequently, Latvijas Banka became a member of the European System of Central Banks (ECBS). The Governor of Latvijas Banka was accepted as member of the General Council of the European Central Bank (ECB), and experts of Latvijas Banka joined more than 40 committees and working groups, participating in decision-making, cooperating with the ECB and other national central banks of the EU countries and sharing Latvia's experience on issues falling within the competence of central banks.

Latvijas Banka opens its Visitors’ Centre "Money World"

Latvijas Banka's Visitors Centre "Money World" was established in 2004. It is the basic element of Latvijas Banka's economic education programme and rises public awareness on economic and financial issues related to currency circulation and the role of money in the economy. The Visitors Centre welcomes 8 000–9 000 visitors per year.

Latvijas Banka pegs the lats to the euro

By pegging the lats to the euro with the peg rate EUR 1 = LVL 0.702804 and a ±1% fluctuation band, Latvijas Banka took the first step towards the euro as Latvia's future currency.

To become a euro area member state, the criteria specified in the Treaty on European Union or the Treaty of Maastricht (1992) had to be fulfilled.

Latvijas Banka organises the first public vote “Latvian Coin of the Year”

As of 2004, Latvijas Banka has invited everyone in Latvia to vote for the previous year's lats commemorative coins (euro collector coin since 2014) which the voter found special in terms of its emotional impact, originality or thematic aspect.

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.

Lata kurss attiecībā pret eiro starpbanku tirgū bija tuvu oficiāli noteiktajam tā kursam
Latvia joins TARGET2

Latvia joined the TARGET2 system as soon as its operation was launched, thus facilitating Latvia's integration into the European market. Banks and their customers could make payments in euro across Europe in a matter of minutes. The preparation of the payment system infrastructure for the introduction of the euro was initiated. The introduction of euro settlements in the EKS on 1 January 2008 satisfied the growing need of businesses to make payments in euro.

Launching of Latvijas Banka’s Credit Register

The Credit Register is used as a source of information for the purpose of assessing the creditworthiness of persons, monitoring the financial market participants and performing macroeconomic analysis.

"Coin of Latvia" receives the highest international award

The gold "Coin of Latvia" won the international "2010 Coin of the Year Award" in the nomination "Gold coin of the year" at the contest organised by US Krause Publications and its magazine World Coin News.

The coin was designed by Teodors Zaļkalns (until 1930 – Grīnbergs; 1876–1972); the plaster model, based on the author's sample, was made by Ligita Franckevica. Struck in 2008 by Münze Österreich (Austria).

First Latvian euro coins are minted

On 31 July 2013, Governor of Latvijas Banka Ilmārs Rimšēvičs started the minting equipment at the mint Staatliche Münzen Baden-Württemberg in Stuttgart, Germany, thereby launching the minting of Latvian euro coins. required for the euro changeover and the first year of circulation. The coins were minted in Stuttgart and Karlsruhe.

Governor of the Bank of Latvia Ilmārs Rimšēvičs started the minting equipment at the mint in Stuttgart
Latvia introduces the euro

The changeover from settlements in lats to settlements in euro was implemented.

The timely preparation of the payment infrastructure facilitated successful euro changeover in Latvia and ensured a smooth transition from settlements in lats to settlements in euro.

With Latvia joining the euro area, a small share of Latvijas Banka's gold and foreign currency reserves was transferred to the European Central Bank and is managed together with Oesterreichische Nationalbank.

Since its joining the euro area, Latvijas Banka has participated in the formulation and implementation of the euro area's monetary policy.

Latvijas Banka participates in supporting of the Latvian Presidency of the Council of the EU

Latvijas Banka provided active support to the government in advancing the EU legal initiatives in the areas of payment services, financial services, financial market regulation, statistics and other areas and ensured the representation of EU interests at the G20.

Latvijas Banka becomes a national centre for examination of counterfeit money

A single currency authentication centre was formed at Latvijas Banka. The centre comprises the National Analysis Centre, the Coin National Analysis Centre (both previously within the structure of the Latvian State Police) and the National Counterfeit Centre (previously within the structure of Latvijas Banka).

Latvia joins OECD

Introduction of instant payments service

The instant payment service supports and facilitates the development and introduction of innovative payment solutions in Latvia.

The service enables people to make payments in a matter of seconds in the 24/7/365 regime.

Latvia joins the securities platform of TARGET2

Migration to TARGET2-Securities platform facilitates the integration of Latvia's securities market into the European securities market. As payments are executed via the single platform, the securities issued in Latvia become much more accessible to European investors.

Diskusija par ieguvumiem un jaunām iespējām Baltijas kapitāla tirgum. 26.09.2017.
Modernisation of "Money World"

Following the euro changeover, Latvijas Banka gradually redesigned its Knowledge Centre "Money World" to offer comprehensive contents according to the current situation and to modernise the technological solution. Therefore, the premises and the display were reconstructed and the informational content as well as its presentation were renewed.

ECB Governing Council meeting in Riga

In June 2018, the spotlights of the global financial world focussed on Riga where Latvijas Banka hosted the external meeting of the Governing Council of the European Central Bank (ECB).

This was a historic meeting since the policy makers passed decisions on monetary accommodation and gradual quantitative easing.

Ms Zoja Razmusa, Acting Governor of Latvijas Banka, hosted the meeting and represented Latvia there.

"Honey Coin" was announced the Coin of the Year

In 2020, at the competition Coin of the Year Awards organised by Active Interest Media (AIM, US), the collector coin "Honey Coin" issued by Latvijas Banka in 2018 was announced the Coin of the Year (it was the second time a coin issued by Latvijas Banka received this award). The "Honey Coin" was also awarded the first place in the category "Most Artistic Coin of the Year".

Digital teaching aid "My economics"

On its economic education website "Money School", Latvijas Banka started to publish a digital teaching aid "My Economics" ("Mana Ekonomika") in September 2020. The content and methodology included in the teaching aid are intended for the social science teachers (1–12 grades) covering the subject of economics in general education schools.

Latvijas Banka implements transition to a single-tier management model

In line with the amendments to the Law on Latvijas Banka passed by the Parliament of the Republic of Latvia, Latvijas Banka is switching to a single-tier management model, ensuring more effective management decision-making and information exchange.

The amendments provide for management changes and discontinue the operation of the Board of Latvijas Banka. Consequently, all decisions, except those within the competence of Governor of Latvijas Banka, will be made by the Council of Latvijas Banka.

New monetary policy strategy has aproved

The Governing Council of the European Central Bank (ECB) has published its new monetary policy strategy, which it has set out in a monetary policy strategy statement.

The new strategy that is being announced today follows a thorough review, which was launched on 23 January 2020.  Over the last 18 months, the Governing Council has held numerous seminars, presentations, discussions and meetings dedicated to all elements of the review, under the overarching idea of leaving no stone unturned.

In the framework of the review, the ECB and the national central banks also hosted numerous listening activities with the general public, civil society organisations and academia. Ideas and perspectives shared at these events have fed into the Governing Council’s deliberations.

New Law on Latvijas Banka

The Saeima (the Parliament) adopted the new Law on Latvijas Banka. The Law provides for the integration of Latvijas Banka and the Financial and Capital Market Comission (FCMC) to become a single institution as of 2023.

The new Law on Latvijas Banka establishes the integrated institution's operational principles, tasks and governance framework, as well as its role in implementing the macroprudential policy. The Law provides for the integration of the FCMC with Latvijas Banka, respecting the independence of its monetary policy functions and the functions of the finance and capital market supervision and resolution authority.

The national coordinator for financial literacy issues in Latvia

As a result of gradual implementation of preparatory work for the integration of Latvijas Banka and the Financial and Capital Market Commission (FCMC) into a single institution, Latvijas Banka has become the national coordinator for financial literacy issues in Latvia as of 1 January 2022.