lv

Riga, 14 January 2010

The Bank of Latvia Council resolved today not to change the interest rates or the reserve requirement set by the Bank of Latvia.

With a view to the time lag between monetary policy decisions and their effect on the economy and expecting an economic downturn, the Bank of Latvia substantially reduced the lats interest rates set by the central bank as well as the reserve requirements applied to banks before the crisis developed to its current extent.  After the decisions taken in March-May of last year, both the central bank lending and deposit rates are low, whereas the reserve requirement was substantially reduced in the early stages of the cooling down of the economy. The liquidity or the amount of free resources has been high in recent months; the balance of bank deposits with the Bank of Latvia hovers around 250-300 million lats on average. As the country is gradually regaining the financial markets' confidence, the interbank rates from which the lats interest rates on loans granted to businesses and private individuals have been notably reduced and are close to the rates set by the Bank of Latvia.

The low lending activity is currently determined not by interest rates but by the cautious lending policies of banks in the complicated economic circumstances as well as by the low demand for loans both from households and businesses. 

The Report of the Governor of the Bank of Latvia, Ilmārs Rimšēvičs, at today’s press conference will be available in the news section of the Bank of Latvia’s home page www.bank.lv . 

The interest rates set by the Bank of Latvia are as follows:

 

In effect as of

% per annum

Bank of Latvia refinancing rate

24.05.2009.

4.000

Bank of Latvia marginal lending facility rate to banks that have used the facility no more than 5 working days within the previous 30 day period

09.12.2008.

7.500

Bank of Latvia marginal lending facility rate to banks that have used the facility no more than 10 working days within the previous 30 day period

09.12.2008.

15.000

Bank of Latvia marginal lending facility rate to banks that have used the facility more than 10 working days within the previous 30 day period

09.12.2008.

30.000

Marginal deposit facility rate with the Bank of Latvia

24.03.2009.

1.000


The Bank of Latvia adopted the "Regulation for Electronic Exchange of Information with the Bank of Latvia" (in effect as of 1 February 2010, but will be fully enforced as of 1 April 2010). Thus a single regulation will provide for the technical issues regarding the exchange of information with the Bank of Latvia in disseminating the credit institution and enterprise statistics, the Credit Register, using the payment systems, and others.    In addition, the supervision of the users of the participants of these various areas, which is to be carried out electronically, will become substantially more effective.
At the same time, a number of regulations currently providing for the exchange of information with the Bank of Latvia in each area separately, are to be abolished as of 1 April 2010.

With a view to the above mentioned unified system for exchanging information with the Bank of Latvia, including within the Credit Register, the Bank of Latvia Council adopted a revised version of the "Regulation for the Credit Register" and "Regulation for the Amount and Payment Procedure of the Credit Register Participant User Fees" (in effect as of 1 April 2010), revoking (as of the same date) the "Technical Regulation for the Credit Register".
Other changes have also been made in this Regulation, including ones dealing with the kinds of information to be included in the Credit Register and fees for its use. First, the Credit Register will from now on be supplemented with information on loans that a Credit Register participant grants for the benefit of a third person but in his/her own name, i.e. the so-called trust loans. Second, the Credit Register will no longer include information on reverse claims that follow from a court order or a contract on satisfying reverse claims granted by insurance companies for such information has to do with debt and not with loans granted. The Credit Register will thus contain only information on loans granted and the history of the recipient's loans. In view of the expected reduction in costs for maintaining the Credit Register, the Bank of Latvia reduced the participants’ fees for using the Register accordingly.

Also, with a view to the adopted unified procedure for exchanging information with the Bank of Latvia, the Bank of Latvia Council amended the Regulation for participation in the Bank of Latvia's payment systems: "System Regulation for Participation in EKS", "System Regulation for Participation in TARGET2-Latvia", "System Regulation for Participation in SAMS" and the relevant sample contracts (all amendments will take effect on 1 April 2010).

The above Regulations will be available to all interested parties in the Legal section of the Bank of Latvia’s website www.bank.lv.