Latvijas Banka represents the Republic of Latvia in a number of international financial institutions and works with foreign central banks. Latvijas Banka also participates in the operations of other international financial and credit organisations where this is consistent with its objectives and tasks.
Latvijas Banka continued to represent Latvia's interests at the meetings of the IMF Board of Governors, and participated in coordinating operational issues.
- In 2023, the IMF focused particularly on enhancing the resilience of Member States to help them cope with past and potential future shocks like the Covid-19 pandemic, Russia's full-scale invasion of Ukraine, and climate change and resulting natural disasters, and their effects.
- The priorities of the IMF were related to developments in the global economy and the financial system, notably the need to reduce high inflation, maintain financial stability, restore fiscal buffers and debt sustainability, and protect free trade.
- The Member States of the IMF reached an agreement in 2023 on a proportional increase in quotas that will restore the primary role of quotas in the IMF's available resources and maintain the IMF's lending capacity. The IMF provided financial assistance of 84.6 billion US dollars in 2023 to 33 countries around the world.
Latvia's interests in the IMF are represented through the Nordic-Baltic Constituency, which consists of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. One Executive Director represented this constituency on the IMF Executive Board with a total of 3.3% of the votes in 2023. In January 2023, Vitas Vasiļauskas from Lithuania was appointed as the Executive Director of the Nordic- Baltic Constituency, representing the Baltic States. Since January 2023 the central banks of the Baltic States have accordingly been coordinating the cooperation between the central banks and Ministries of Finance of all the Nordic and Baltic countries on IMF issues, and drafting joint positions on items to be considered by the IMF Executive Board.
In 2023, Latvijas Banka continued to coordinate the cooperation of the Latvian institutions with the IMF within the framework of its surveillance mandate or the Article IV Consultation. The annual IMF report on Latvia containing policy recommendations was published in September. The involvement of institutions was also coordinated in the IMF's regional project for the Nordic and Baltic countries Financial Flows Analysis, AML/CFT Supervision, and Financial Stability. The results of the report were published in September.
Latvijas Banka continued its membership of the Bank for International Settlements (BIS) in 2023. Latvijas Banka actively participated in the work of the BIS Innovation Network, and in the work of the Eurosystem Innovation Forum (Innov8), where an expert from Latvijas Banka worked on two research projects on the use of artificial intelligence.
Latvijas Banka also continued to work with, exchange information with, and represent Latvia's interests in:
- the European Forum of Deposit Insurers;
- the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL);
- the Group of Banking Supervisors from Central and Eastern European Countries;
- the OECD;
- the International Organization of Securities Commissions (IOSCO);
- the International Association of Insurance Supervisors (IAIS).
At the end of the year, Latvijas Banka submitted a membership application to become a permanent member of the International Organisation of Pension Supervisors (IOPS), and it was admitted to this organisation by the Executive Committee of the IOPS on 13 February 2024.
In addition to working in various EU and international institutions and organisations, Latvijas Banka also cooperated with the supervisory authorities, protection systems or guarantee funds, and resolution authorities of other countries under bilateral cooperation and information exchange agreements. Cooperation with supervisory and resolution colleges also played an important role in exchanges of experience and information.
As is traditional, Latvijas Banka continued to maintain particularly close cooperation with the institutions of other countries within the framework of cooperation between the Nordic and Baltic countries, including the Macroprudential Forum of the Nordic and Baltic countries and its committees and working groups, and also did preparatory work to take over the presidency of this forum in 2024.
Latvijas Banka also continued active daily cooperation within the Baltic region, where similar challenges are often faced in the areas central banks are responsible for, and worked with colleagues from the central banks of Lithuania and Estonia by exchanging experience in issues concerning the availability of critical financial services and in cash processing, and by familiarising colleagues with the regulatory framework for a simplified mortgage refinancing process that was adopted in Latvia.
Experts from Latvijas Banka shared their experience in issues concerning the prevention of ML/FTP and the supervision of the application of sanctions with colleagues from the Netherlands, Czechia, Ireland, France, Spain, Belgium, Germany and other EU Member States in 2023 within the framework of various EU projects.
In its bilateral cooperation, Latvijas Banka provided support to:
- Ukraine, advising its central bank on information security and cybersecurity issues;
- Moldova, providing training on measures related to preventing ML/FTP in the process of customer due diligence and transaction monitoring;
- Bulgaria, sharing its experience in developing, implementing and coordinating the National Strategy for Financial Literacy;
- Croatia, exchanging experience in issues concerning the supervision of the prevention of ML/FTP, the macroprudential decision-making process, and the processes related to the provision of cash.
Latvijas Banka in the Eurosystem and the institutions of the European
Union
Latvijas Banka as a member of the ESCB and the Eurosystem complies in its activities with the legislation of the Republic of Latvia and the EU, including the ECB legal acts, in accordance with the Treaty on the Functioning of the European Union and the Statute of the ESCB and of the ECB.
In 2023, the Governor of Latvijas Banka participated in the work of the Governing Council and the General Council of the ECB, and was involved in setting the monetary policy of the Eurosystem and in making decisions about the tasks of the Eurosystem and the ESCB.
The Deputy Governor of Latvijas Banka participated in the work of the Supervisory Board of the ECB, ensuring that ECB tasks relating to the supervision of credit institutions were executed, and preparing the draft decisions to be submitted to the Governing Council of the ECB under the non-objection procedure. Representatives of Latvijas Banka also participated in the committees and working groups of the Eurosystem and the ESCB, addressing issues of monetary policy, market operations, financial stability, financial sector supervision, payment systems, euro cash and the digital euro, statistics, international relations, communications, sustainability, climate and innovative technologies, and more.
In 2023, Latvijas Banka participated in the work of the ESRB, which took decisions on issues related to EU macroprudential policy, and in the work of the ESRB's committees and working groups.
Continuing its membership in the ESRB, Latvijas Banka integrated the financial sector supervisory functions in 2023 and also became a member of other authorities that form the European System of Financial Supervision1, representing Latvia and making decisions in the Boards of Supervisors of the EBA, the ESMA and the EIOPA, and actively participating in the work of the committees and working groups of these authorities.
Latvijas Banka as the national resolution authority is a member of the Single Resolution Mechanism. The Member of the Council of Latvijas Banka who chairs the Resolution Committee of Latvijas Banka is a member of the SRB in its plenary session and participates in the SRB's plenary session meetings.
Visit of the representatives of the ECB and the Single Resolution Board at Latvijas Banka.
Representatives of Latvijas Banka also participated actively in the work of the committees and working groups of the EU Council, the EC and Eurostat, addressing issues related to financial sector regulation, euro coins, economic forecasting, statistics and other issues, and they provided support to the government in developing the national position on EU regulation.
During the reporting period, active work was under way on the EU legislative proposals published in previous years and on new initiatives published in 2023, including on:
- a set of legal acts concerning anti-money laundering;
- the proposals for strengthening the banking union through the capital requirements regulation for credit institutions and the resolution and crisis management framework, and promoting the further development of the Capital Markets Union through the regulatory framework for financial instruments and fund markets, and central securities depositories, and access to capital for small and medium-sized enterprises from listing their stocks on the stock exchange;
- proposals on the single currency, the euro, with proposals for establishing a legal framework for instant payments and the digital euro, and payment services;
- proposals concerning sustainability and consumer rights protection, and other
When participating in the meetings of the Economic and Financial Committee and its sub-committees, representatives of Latvijas Banka regularly helped prepare decisions concerning the economic development and financial stability of the EU and the development of EU economic policy strategy and the coordination of international relations issues, with a particular focus on assessing the economic consequences and the financial stability risks in the EU resulting from Russia's full-scale invasion of Ukraine, and helped assess the EC's legislative proposals for financial services.
