In 2023, Latvijas Banka has achieved success both domestically and internationally. The foundation has been laid for a new cycle of economic growth. The decisive monetary policy action taken by the Governing Council of the European Central Bank – specifically, the swift increase in interest rates – helped to curb inflation across the euro area. The inflation dragon has been tamed, paving the way for gradual interest rate cuts already in the near future. Low inflation coupled with reduced interest rates will foster economic growth and improve the welfare of the Latvian population.

martins kazaks latvijas banka 2022 gada parskatsMārtiņš Kazāks

In 2023, the integration of colleagues from the Financial and Capital Market Commission marked a significant milestone for Latvijas Banka's team, taking our collective strength and resilience to a new level. A secure and developed financial sector, improved access to financial services and a banking sector that is welcoming to its customer underscore the significant progress made so far and chart a crucial path for our future work. Commercial banks have listened to Latvijas Banka's persistent urging and have initiated proactive measures to drive positive change. We stand firm in our commitment to upholding high standards in customer service, with a strong emphasis on the importance of refraining from imposing excessive requirements on low-risk customers. Basic bank account regulation has been simplified, manuals have been revised, and efforts are currently underway to improve the availability of banking services in the regions. The low point in the relationships between commercial banks and their customers is now in the past, making 2024 a pivotal milestone where previous initiatives will start to yield tangible benefits for customers.

The financial sector plays a crucial role in fostering economic development through active engagement and robust support initiatives. Last year, a number of measures were taken to increase the participation of the financial sector in the economy. These efforts included executing an agreement initiated by Latvijas Banka and reached at the Financial Sector Development Board to remove barriers hindering the expansion of bank lending. All measures under Latvijas Banka's purview have been implemented, including reducing regulatory barriers, conducting a thorough analysis of access to finance, and ensuring regular dissemination and publication of information on loan and deposit interest rates. The Saeima backed a legislative package proposed by Latvijas Banka that streamlines the refinancing process for household mortgage loans, strengthens competition and, according to our estimates, will reduce the collective payment burden of existing mortgage loans by 100 million euro. We are currently in the process of formulating a similar proposal aimed at loans to legal persons.

Given the current geopolitical landscape, our priority is to address security concerns and bolster the financial sector's resilience to diverse risks and crises. This entails strengthening the regulation of critical financial services and working closely with industry stakeholders to achieve tangible improvements in cash circulation and the accessibility of non-cash payments. The role of cash has been reinforced, and we will continue to build on this momentum throughout the year by actively proposing legislative changes.

Last year, Latvijas Banka developed legislative proposals aimed at enhancing the management of the second pillar pension scheme, including a proposal to reduce management fees. This initiative is expected to generate savings of over 100 million euro for pension system participants over the course of a decade. In dialogue with the FinTech sector, preparatory work has been carried out to secure access for non-bank payment service providers to central bank payment systems, once common euro area criteria have been approved. A comprehensive analysis has been conducted within the sustainability domain, empowering the Latvian financial sector to effectively prepare for future challenges. We have set the bar high with our initiative to organise sustainability breakfasts, which have become a highly anticipated event and now serve as an industry benchmark. Many significant milestones have been achieved – this list offers just a glimpse into the breadth of our work over the past year.

Latvijas Banka works for the benefit of Latvia and is highly regarded by society. We are proud of the fact that, according to sociological surveys, almost 60% of the population has confidence in Latvijas Banka. We rank among the TOP 5 institutions most trusted by the public, sharing this honour with the President of Latvia, the National Armed Forces, schools and the State Police. I would like to extend a heartfelt THANK YOU to my colleagues for their dedication and hard work! The accomplishments of the past year are a testament to our collective achievement, demonstrating the mighty contributions of a resilient and determined team.

We have set ourselves ambitious goals for 2024 as well. Our ethos is "powerful in development" – a concept I would like to extend both to my colleagues and the Latvian society overall.


mk paraksts

Mārtiņš Kazāks

Governor of Latvijas Banka
Riga, 23 April 2024