In line with the amendments to the Law on Latvijas Banka passed by the Saeima of the Republic of Latvia on 8 April 2021, Latvijas Banka switched to a single-tier top management as of 1 June 2021, ensuring a more effective management decision making and information exchange. In accordance with the above changes, the Council of Latvijas Banka is the principal decision-making institution of Latvijas Banka.
Transition to a single-tier top level management, with the Board being dissolved
Pursuant to the amendments to the Law on Latvijas Banka adopted by the Saeima on 21 November 2019 the term of office of Latvijas Banka's Governor, Deputy Governor and Members of the Council is five years. Members of the Council of Latvijas Banka elected by 2019 remain in office by the end of the six-year term of office. The composition of the Council of Latvijas Banka, as at the end of 2021, was as follows:
- Governor Mārtiņš Kazāks;
- Deputy Governor Māris Kālis;
- Members of the Council: Arvils Sautiņš, Aivars Skopiņš, Andris Vilks, Zita Zariņa.
In order to ensure quality performance of Latvijas Banka's tasks, several committees, commissions and working groups established by the Council of Latvijas Banka continued their work in 2021.
The Research Committee of Latvijas Banka, whose basic task is to identify the lines of research and the main analytical work to be carried out by Latvijas Banka in economic and financial fields and to monitor their execution, was established in 2021.
To ensure the performance of Latvijas Banka's tasks, including partici- pation in the European System of Central Banks, Latvijas Banka has defined its functions and processes.
The following activities have been carried out to ensure quality, efficient and continuous performance of Latvijas Banka's processes:
- the organisational structure has been set up, responsibilities of the departments, committees and commissions have been defined, as well as the division of the areas of accountability and responsibilities of the Council members of Latvijas Banka has been fixed;
- planning of operation and monitoring of its performance have been carried out on a regular basis in compliance with the procedure of Latvijas Banka by drawing up work plans, as well as monitoring of the fulfilment of work plans has been ensured;
- appropriate resources have been allocated by approving the budget of Latvijas Banka, as well as total income and expenditure of Latvijas Banka have been projected on a regular basis;
- monitoring of the execution of processes and their results has been carried out by defining objectives of the respective processes and the results to be achieved, inter alia considering the indicators to be achieved within the strategic development strands.
In 2021, Latvijas Banka continued to play an active role in drafting and coordinating the new draft Law on Latvijas Banka. It was approved by the Saeima on 23 September 2021, and it will enter into force on 1 January 2023. Two major objectives were behind the new law. One of them was to draw up a modern legal framework for the operation of Latvijas Banka.
Another one was to provide a legal framework for the merger of the FCMC and Latvijas Banka (FCMC integration) in compliance with the amendments to the Law on Latvijas Banka adopted by the Saeima on 21 November 2019 and the assessment carried out by the Ministry of Finance, Latvijas Banka and the FCMC in spring 2020. The analysis of benefits and risks included in this assessment concludes that integration of the FCMC into Latvijas Banka will enable more effective supervision and development of the financial sector, as well as acceleration of decision making and reduction in administrative costs, thus increasing public good. The synergy of information and competences will help to assess risks more comprehensively in financial institutions, as well as take more operational decisions. The risks identified in the process of the merger of the FCMC and Latvijas Banka are manageable through the implementation of appropriate measures to limit risks, including the respective division of duties, rights and responsibilities. The merger of the FCMC and Latvijas Banka will take place, respecting the independence of functions of the monetary policy, as well as those of the finance and capital market supervision and resolution authority.