Latvijas Banka has set the 2026–2028 priorities for resolution and compensation schemes, which form the basis for the approved plan of action for 2026. Several activities are planned to ensure effective resolvability of financial institutions and the protection of the interests of customers – depositors, investors, and insured persons – in the event of a crisis.
The 2026 plan of action for resolution and compensation schemes encompasses three activities.
1. Establishment of an insurance resolution framework. The Insurance Recovery and Resolution Directive was published in early 2025. It provides for the implementation of a resolution framework for insurance and reinsurance undertakings as of 30 January 2027. The work initiated on the development and implementation of this framework in Latvia will actively continue in 2026, including preparations for its practical implementation.
2. Enhancing the resolution and compensation scheme framework in line with the European Union's Crisis Management and Deposit Insurance (CMDI) framework. In the summer of 2025, a political agreement was reached in the European Union regarding the CMDI framework, its adoption and implementation timelines. Following its publication, work will be commenced on transposing these requirements into the national legislation. At the same time, work is ongoing to enhance the Deposit Guarantee Fund (DGF) framework, including the setting of its maximum target level planned for 2026.
3. Updating the application of resolution tools and the action framework for a potential financial crisis situation. Work continues on the application of resolution tools and the establishment of clear processes for a potential crisis situation, with the aim of enabling Latvijas Banka to exercise the statutory powers to apply resolution tools. At the same time, a DGF stress test will be conducted to verify its ability to disburse guaranteed compensation to depositors in the event of a credit institution's insolvency, as well as to examine its options of additional DGF funding.