lv

Press Release of May 5, 1998

To promote the Latvian money market, the Bank of Latvia will make long-term lats resources available through currency swap facility. In addition to currency swap agreements with a maturity of three months, the Bank of Latvia will also offer one-year currency swap agreements. Once a quarter, the Bank of Latvia will auction currency swap agreements with a maturity of one year. The minimum total amount of lats made available at an auction will be 10 million. The first such auction will take place on May 12, 1998.

Availability of long-term resources will allow banks to improve the term structure of their assets and liabilities. At present, this is hindered by the dominant position of demand deposits in total deposits. Currency swap agreements with a longer maturity will also facilitate long-term lending and promote the interbank market.