lv

Riga, 13 January 2011

Taking into account stabilization of the economic situation as well as the fact that inflation at the beginning of the year will be determined by short-lived supply side factors - the rise in value-added tax and climbing global oil and food prices - and that in the medium term inflation can be expected to stabilize and risks to price stability are currently insignificant, the Bank of Latvia Council today resolved to leave unchanged the interest rates set by the Bank of Latvia and the mandatory reserve requirement in place for the banking sector.

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

24.03.2010.

3.5

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.

7.5

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.

15.0

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.

30.0

Bank of Latvia overnight deposit facility rate

24.11.2010.

0.25

Bank of Latvia 7-day deposit facility rate

24.11.2010.

0.375


The Bank of Latvia Council approved amendments to "The Regulation for the Use of the Bank of Latvia's Monetary Policy Instruments" related to ensuring continuity of the functioning of the Bank of Latvia's monetary operations and the evaluation of the collateral of the securities in these operations. The above regulates the procedure whereby banks participate in Bank of Latvia's monetary operations.
The amendments will take effect on 1 February 2011.

The Bank of Latvia Council made editorial amendments to "The Regulation for Participation in the Bank of Latvia's Securities Settlement System", emphasizing that this system developed and maintained by the Bank of Latvia ensures accounting for the collateral of securities pertaining to Bank of Latvia's monetary and day lending operations. The amendments will take effect on 1 February 2011.

The Bank of Latvia approved the "Policy Regarding Payments and Securities Settlements Systems" to the end of consolidating the oversight of payments and securities settlement systems. This policy combines "Bank of Latvia Policy Regarding Payments Systems" approved by 13 September 2001 Resolution No. 89/10 of the Bank of Latvia Council and the "Latvia's Policy for Oversight of the Securities Settlement Systems" approved by 11 May 2006 resolution No. 127/3 of the Bank of Latvia Council, without changing Bank of Latvia's basic principles concerning payments and securities settlement systems policies.

The "Policy Regarding Payments and Securities Settlements Systems" also explains how the Bank of Latvia fulfils the task it has been charged with by the Law "On the Bank of Latvia" regarding payment systems.
In order to promote smooth functioning of the payment systems, the Bank of Latvia performs oversight of the payment systems, ensures the operation of the interbank payment systems as well as provides settlement services to the participants of the financial market in the central bank currency, thereby reducing the possibility of systemic risk in the infrastructure of the Latvian payment systems. To promote smooth functioning of the payment systems, the Bank of Latvia likewise performs oversight of the securities settlement systems, for a part of payments are related to securities settlements and problems in the securities settlement infrastructure may cause problems in the functioning of the payment systems and make the execution of the monetary policy more difficult.

If necessary, the Bank of Latvia has the right to approve normative guidelines and regulations. The Bank of Latvia resorts to this means of influence only where it lacks other methods to ensure an effective and a safe functioning of the clearing and payments systems. Within the framework of oversight of payments and securities settlement systems the Bank of Latvia cooperates with institutions that ensure and service the operation of payments and securities settlement systems providing consultations and opinions on issues concerning the payments and securities settlement systems.

The Bank of Latvia organizes and ensures the operation of three interbank payment systems (SAMS, TARGET2-Latvija un EKS) in the Republic of Latvia to the end of ensuring the execution of monetary policy operations, interbank payment settlements and other payments and securities settlement systems end settlements.