Press Release of September, 21, 2003

The people of Latvia have voted 'for' at the referendum on Latvia's accession to the European Union (EU), thus, after May 2004, the Bank of Latvia will start preparations for introduction of the single European currency, euro, in Latvia. We expect introduction of the euro in the year 2008. The Bank of Latvia will continue as the key institution responsible for the monetary policy function in Latvia.

Commenting upon the referendum results, Ilmars Rimsevics, Governor of the Bank of Latvia, notes the following: "Latvia has strengthened its prospects for a steady development. We have been consistent in following the strategic goals the Republic of Latvia set for itself in the years of the Awakening."

"According to the Bank of Latvia's plan, we expect that the years 2005, 2007, and 2008 will be the milestones in the process of introducing the euro", says Mr. Rimsevics.

Alongside those aspects of the integration into the EU that fall within the Government's competence, the Bank of Latvia's action plan in relation to the introduction of the euro envisages the following:

  • on January 1, 2005, the Bank of Latvia will peg the lats to the euro and simultaneously plans to join Exchange Rate Mechanism II (ERM II). ERM II is both a currency peg mechanism and a procedure for testing countries poised to introduce the euro;  
  • at the beginning of 2007, the required two-year period of Latvia's participation in ERM II will expire and, at the end of the summer of 2007, Latvia will learn whether its performance has been assessed as successful; if so, then, 
  • on January 1, 2008, Latvia will start phasing in the euro, which will gradually replace the lats. It should be emphasized that this replacement will not constitute a currency reform; instead, it will be a simple exchange of one currency for another. Not a single person will lose anything as a result of this exchange. Everybody will be able to exchange all of his/ her lats for euros.

"The euro currency will have objective advantages both from the perspective of macroeconomic stability and that of better prospects for economic growth. The market where this currency is used continues to expand - today about 300 million Europeans use it, and very shortly this number will be 380 million, " remarks Governor of the Bank of Latvia.

In May 2004, the Bank of Latvia will become a member of the European System of Central Banks (ESCB). After joining the EU and the introduction of the euro in the Republic of Latvia, the Bank of Latvia will continue to implement and explain the monetary policy in Latvia, carry out macroeconomic analysis, oversee the operation of payment and settlement systems, as well as be in charge of the circulation of cash and compilation of the balance of payments.