The principal changes in the Bank of Latvia's assets and liabilities on the 28 February 2007 balance sheet as compared to 31 January 2007 and the reasons for these changes.

• An increase of 66.1 million lats or 2.6% in foreign assets, with the Bank of Latvia engaging in currency swaps and as a result of an increase in the balance of the government funds in the Bank of Latvia's foreign assets, and in the gold price, with the latter contributing to the growing value of the gold reserves of the central bank, as well as due to a change in the lats equivalent of financial derivatives.

• A fall of 2.6 million lats or 2.0% in foreign liabilities resulting from a decrease in the lats equivalent of financial derivatives and in the European Commission funds in foreign currency with the Bank of Latvia, and an increase in the European Commission funds in lats with the Bank of Latvia.

• A rise of 3.0 million lats or 8.7% in domestic assets following a 2.7 million lats increase in loans granted to credit institutions.

• A rise of 74.3 million lats or 5.6% in domestic liabilities as a result of 68.0 million lats and 6.0 million lats increases in the respective balances of the credit institutions' funds and government funds with the Bank of Latvia.

• On the liabilities side of the balance sheet, the amount of lats in circulation was decreased by 16.6 million lats or 1.6% mainly due to the above changes.

• An increase of 14.1 million lats in the capital and reserves as the revaluation account balance changed due to securities market value fluctuations and retained earnings of the reporting year grew.

Vilnis Purviņš
Head of the Macroeconomic Analysis Division
Monetary Policy Department
Bank of Latvia