Published: 02.04.2015

Publishing date: 12.02.2015.

The principal changes in the assets and liabilities of Latvijas Banka on the 31 January 2015 balance sheet as compared to 31 December 2014 and the reasons for these changes.

In January 2015, Latvijas Banka raised its investment in securities issued by non-euro area residents and euro area residents, and this was the main driving factor behind the increase of 699 million euro reported under the balance sheet items "Claims on non-euro area residents denominated in foreign currency", "Claims on euro area residents denominated in foreign currency", "Claims on non-euro area residents denominated in euro", and "Securities of euro area residents denominated in euro".

In January 2015, loans granted as a result of targeted longer-term refinancing operations by Latvijas Banka remained unchanged standing at 85.5 million euro.

In view of the fact that euro cash is issued in circulation by all national central banks (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. Consequently, 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 banknotes issued by the Eurosystem is larger than the amount of euro banknotes issued in Latvia. As a result of the above adjustment, the respective claims on the ECB for the allocation of banknotes are reported under Latvijas Banka's balance sheet item "Claims related to other operational requirements within the Eurosystem". As at 31 January 2015, the balance sheet item "Banknotes in circulation" comprised the euro banknotes actually issued in circulation in the amount of 628 million euro. As of 1 January 2015, the lats banknotes in circulation which had not been exchanged for euro were reclassified from the balance sheet item "Banknotes in circulation" to the balance sheet item "Other liabilities" in the amount of 77 million euro.

As a result of several credit institutions' liquidity management transactions, in contrast to the growth of deposits reported in December 2014, deposits of credit institutions shrank by 1 202 million euro or 49.6% in January 2015 as reflected in the balance sheet item "Liabilities to euro area credit institutions related to monetary policy operations denominated in euro".

As a result of cross-border payments of credit institutions and the Latvian government, an increase was recorded in liabilities to the ECB reported under the balance sheet item "Liabilities related to TARGET2 and national central bank correspondent accounts (net)", reflecting settlement result in the TARGET2 settlement system.

J. Caune
Chief Accountant
Latvijas Banka