The above amendments introduce in Latvia the requirements of several legislative acts of the Eurosystem related to the monetary policy implementation, the amended Guidelines of the European Central Bank ECB/2016/31, ECB/2016/32 and ECB/2016/33.
Thereby the eligibility criteria of collateral in monetary policy operations have been adjusted with respect to unsecured bonds, secured bonds, asset-backed securities (ABS), and credit claims. An option to accept as collateral marketable assets and non-marketable debt instruments backed by eligible credit claims (DECCs) with negative cash flows has been provided for. Also, the valuation haircuts of collateral in monetary policy operations have been adjusted.
Latvijas Banka's rights have also been extended in cases where the participants in monetary policy operations default on their obligations.
Latvijas Banka is the central bank of Latvia - an independent institution and a member of the Eurosystem. The primary objective of Latvijas Banka is the same as that of the central banks of other euro area countries and the European Central Bank – price stability (inflation rates below, but close to, 2% over the medium term). This is an essential precondition for a strong and growth-oriented economy. To achieve that, Latvijas Banka participates in the formulation of the Eurosystem's monetary policy, related decision-making and implementation.
Furthermore, acting in the public and economic interests, Latvijas Banka carries out the following main tasks within the Eurosystem:
– manages foreign reserves;
– issues cash in Latvia and participates in ensuring the cash circulation process in the euro area;
– promotes smooth operation of the payment systems;
– compiles financial and monetary statistics, as well as balance of payments statistics;
– maintains and develops the Credit Register.
Latvijas Banka promotes analysis and research of macroeconomic and financial issues, thereby laying a secure foundation for professional activities in these areas. The role of the leading industry expert helps Latvijas Banka enhance the public understanding of the fundamentals of the economy and the monetary system and the current situation. Latvijas Banka takes an active part in promoting economic education among the general public.