Publishing date: 12.03.2014
The principal changes in the assets and liabilities of Latvijas Banka on the 28 February 2014 balance sheet as compared to 31 January 2014 and the reasons for these changes.
The Statute of the European System of Central Banks (ESCB) and the ECB (hereinafter, the "Statute") stipulates that an NCB joining the Eurosystem shall pay up its share in the ECB capital in full, as well as in the ECB's reserve capital, provisions equivalent to reserves and the financial instrument revaluation account. Latvijas Banka paid up its share in the capital in full and paid a partial contribution to the financial instrument revaluation account at the beginning of 2014 (see Notes to the Balance Sheet as at 31 January 2014). On 21 February 2014, after the adoption of the ECB's annual accounts for 2013 Latvijas Banka transferred its proportionate share to the provisions equivalent to reserves in the amount of 30.5 million euro and the residual share to the financial instrument revaluation account in the amount of 12.3 million euro in compliance with the Statute. The above contribution is reported under the balance sheet item "Participating interest in the European Central Bank", with a respective decrease in the balance sheet item "Claims related to TARGET2 and national central bank correspondent accounts (net)".
A decrease in the balance sheet item "Other claims on euro area credit institutions denominated in euro" of Latvijas Banka was mainly on account of the repayment of the credit institution loan in accordance with the Regulation for frontloading and sub-frontloading of euro banknotes and coins approved by the Council of Latvijas Banka in the amount of 94.4 million euro. The above repayment reduced the balance sheet item "Liabilities to euro area credit institutions related to monetary policy operations denominated in euro" respectively.
In February 2014, the amount of loans granted by Latvijas Banka increased by 4 million euro, and this was determined by loans in longer-term refinancing operations in the amount of 4 million euro. At the same time, the amount of loans in the main refinancing operations remained unchanged, standing at 1 million euro at the end of the month.
In view of the fact that euro cash is issued in circulation by all NCBs of the Eurosystem, each NCB reports banknotes in circulation on its balance sheet in proportion to the share of the ECB's capital in the total amount of euro banknotes issued by the Eurosystem rather than the actual amount issued. As a result, the amount of banknotes actually issued is adjusted in the balance sheet (increased in the case of Latvijas Banka) as the proportionate share of Latvijas Banka in the total amount of euro banknotes issued by the Eurosystem is larger than the amount of banknotes issued in Latvia. As a result of the above adjustment, respective claims on the ECB for the allocation of banknotes are reported under the balance sheet item "Other claims within the Eurosystem" of Latvijas Banka. As at 28 February 2014, the balance sheet item "Banknotes in circulation" comprised the euro banknotes actually issued in circulation in the amount of 615.3 million euro, as well as the lats banknotes in circulation which have not been exchanged for euro (162.4 million lats). In line with the balance sheet structure the euro coins issued by Latvijas Banka and the non-exchanged lats coins in the amount of 33.7 million euro and 67.9 million euro respectively are reported under the balance sheet item "Other liabilities".
In February 2014, liabilities to euro area credit institutions related to monetary policy operations increased by 125.7 million euro, mostly as a result of credit institutions using the term deposit facility.