lb gp 2023 citats 2 ilzeposumaThe availability of financial resources is a key part of public resilience. The critical financial services that must be ensured if there is a threat to national security are cash and non-cash payments provided by credit institutions, as this means that people in Latvia have reliable access to their money.

 

 

Critical financial services

The availability of financial resources is one of the key elements of public resilience in the event of a threat to national security. The National Security Law establishes that the critical financial services that must be ensured if there is a threat to national security are cash and non-cash payments provided by credit institutions, as this means that financial resources are available to people in Latvia. Under the National Security Law and the criteria established by Latvijas Banka, the banks that have been designated providers of critical financial services in Latvia are Swedbank AS, AS SEB banka, AS Citadele banka and the Latvian branch of Luminor Bank AS.

Latvijas Banka works with the financial sector, the Ministry of Finance and the Ministry of Defence to make sure that the framework of critical financial services is relevant to the current risk level and that those services remain resilient and available to the public through the best available solutions. The requirements for critical financial services were coordinated with all stakeholders across the Baltic States to keep them uniform whenever possible, and extensive consultations were held in 2023 with international and foreign institutions and organisations, including providers of global payment card services such as MasterCard and Visa, and Eesti Pank and Lietuvos bankas. This coordination resulted in a significantly upgraded framework for critical financial services, which was achieved both by finding new solutions for providing the services and by refining the procedures surrounding them.

In planning the updates to the framework of critical financial services, the following issues were assessed and taken into account:

  • changes in the internal and external environment, including current scenarios for a threat to national security;
  • experience gained from providing critical financial services, including that from preparing, analysing and testing the solutions for operational continuity;
  • the latest available solutions for providing critical financial services, including technological developments and changes in the area of financial services.

The Council of Latvijas Banka adopted the new requirements for critical financial services on 9 October 2023 by approving Latvijas Banka's Regulation No 252 "Regulation on the Management of Critical Financial Services". The new regulation defines that providers of critical financial services are those that provide the following critical financial services:

1) non-cash payments:

  • credit transfers between the providers of critical financial services, other credit institutions and the Treasury when the STEP2 system is not available. Such transfers previously only had to be ensured between the providers of critical financial services;
  • offline card payments that do not access the internet allowing natural persons to purchase basic goods up to a maximum total value of 200 euro if the infrastructure for payment cards is not available. Credit institutions have until 1 January 2025 to introduce this solution. The previous rules required the execution of payments by payment cards, including online payments, to be ensured unless access to the infrastructure of international cards or settlement intermediaries was disrupted;

2) cash payments:

  • the providers of critical financial services ensure that cash is continuously available in ATMs designated as critical ATMs. Latvijas Banka has worked with the providers of critical financial services to establish a network of critical ATMs that contains at least 10% of the number of ATMs operated daily by the providers of critical financial services as at the end of the previous calendar year, including one in each There are currently 99 ATMs in the network of critical ATMs (the map of critical ATMs);
  • to ensure the continuous operation of the critical ATMs and allow as many people as possible to access cash, the providers of critical financial services plan the minimum amount of cash that must be provided in the critical ATMs so that each customer using each of their payment cards issued by a financial market participant other than the operator of the ATM can withdraw 500 euro per day in cash irrespective of the number of payment cards they have or the number of payment accounts they have with the service provider;
  • the new regulation introduces various requirements for critical ATMs that the provider of critical financial services needs to comply with if there is a threat to national security, while also strengthening the requirements for cash infrastructure, such as:
    • the critical ATM must be available to the customer and operate during the hours of availability and operation of the ATM set for each day by the provider of critical financial services before the threat to national security emerges, and for no less than 14 hours per day;
    • cash must be available in the critical ATM;
    • solutions need to have been developed to ensure an uninterrupted connection between the critical ATM and the information systems, and an uninterrupted power supply to the network of critical ATMs.

The new regulation establishes that Latvijas Banka coordinates the provision of critical financial services if there is a threat to national security, and clarifies the requirements for the plans of the providers of critical financial services for continuity of operation.

A test was run in 2023 to demonstrate whether the availability of critical financial services was successfully ensured. Latvijas Banka worked with the providers of critical financial services, the economic operators involved in providing those services, the Ministry of Finance, the Ministry of Defence and the Treasury to carry out a simulation to assess whether the availability of critical financial services could be ensured in the event of a threat to national security. The lessons and conclusions drawn from the test were instrumental in shaping the new framework of critical financial services and addressing other issues related to ensuring and coordinating the availability of critical financial services.

In the second half of 2023, Latvijas Banka ran a communication campaign to inform the public about the providers of critical financial services, the financial services defined as critical, and the size of them, and also about how to respond in a crisis event. Latvijas Banka also compiled and published an information booklet Learn about cash and other financial services in a crisis that gave advice on the cash preparations everyone can make to be better prepared to deal with a crisis.

Latvijas Banka is set to improve the framework of critical financial services in 2024, primarily by introducing the solutions developed in 2023.

Financial literacy

Latvijas Banka serves as the national coordinator for financial literacy in Latvia. In 2023, Latvijas Banka strengthened its strategic approach to improving financial literacy by starting to roll out its strategy for financial literacy for 2023–2026. The objectives of the strategy are:

  • to coordinate and bolster successfully national cooperation in this area and enhance the skills of the parties involved and the availability of data on the financial literacy of the population of Latvia so that financial literacy materials can be created and disseminated that strengthen financial resilience and sustainability;
  • to improve the awareness and capacity of teachers by providing materials and support for teaching economics and financial literacy in Latvia's schools.

Latvijas Banka also continued to coordinate the National Strategy for Financial Literacy in Latvia 2021–2027 (the Strategy) and led the working group tasked with implementing it. The working group met several times during the year to discuss developments and thoroughly explore the priority topics for 2023 of:

  • reducing financial fraud;
  • making materials on financial literacy available to people with mental and physical disabilities.

The working group ran over 60 initiatives in Latvia in 2023, advancing the objectives of the Strategy notably.

During 2023, Latvijas Banka and its partners significantly broadened the array of educational materials on finance tailored to people with physical and mental disabilities and improved the availability of digital materials. To boost access to education on finance, Latvijas Banka organised meetings between the cooperation partners involved in implementing the Strategy and non-governmental organisations. Their representatives assessed whether the materials on financial services and financial education were available to people with mental or physical disabilities and explained the major financial challenges that such people face.

Towards the end of the year, Latvijas Banka held a seminar on the changing financial behaviour of the population of Latvia. The seminar aimed to promote the long-term welfare of society and focused on the people involved in implementing the Strategy. There were over 30 participants in the audience, representing more than ten public, private and non-governmental institutions.

An assessment of the financial literacy of Latvia's population was commissioned by Latvijas Banka as part of the Strategy. The results were incorporated in the report by the OECD International Network on Financial Education (INFE). This allowed the results to be analysed across 39 countries and sparked wider debates in the expert discussions held by Latvijas Banka. The level of financial literacy in Latvia was 59% of the maximum possible, while the OECD average was higher at 63%. The financial behaviour score of Latvia's population was slightly higher than that in other OECD member states but the level of financial knowledge was significantly lower, while the score for financial attitude corresponds to the OECD average.

Latvijas Banka also coordinated Financial Literacy Week in 2023, and it was held at the end of March.

During Financial Literacy Week, 22 partners ran a variety of events, with a total of 39 digital and in-person activities around the regions of Latvia. This was the most extensive array of partners and activities involved in Financial Literacy Week to date.

To promote planning for retirement and long-term savings in Latvia, Latvijas Banka also coordinated the Pension Awareness Week. Various materials were prepared, and they garnered nearly a million views online. The events were held under European Retirement Week, and the Finance Latvia Association, the Latvian Insurers Association and several financial market participants also ran their own activities as part of it.

3 gada tema finansu pratiba eksp sarunaExpert discussion "Financial Literacy and Wellness. How to Achieve a Breakthrough?"

The second half of the year marked the start of the education programme Enhance your money management skills!, which was developed by Latvijas Banka together with the Ministry of Education and Science, and the project National Coordinators for the Implementation of the European Agenda for Adult Learning in Latvia as part of the EU programme Erasmus+. The programme's first module Planning my personal finances was run by 22 local governments across Latvia. Over 200 participants across Latvia have by now completed the module since it launched in October 2023. The work on the module will continue in 2024, when it will be updated with topics on financial security and the everyday use of financial services.

Latvijas Banka continued to work with teachers in Latvia, providing support for teaching economics and finance. Two seminars were held during the year that gave teachers the chance to learn more not only about economic developments, particularly the topics featured in the education programme, but also about investment. More than 400 people took part in Latvijas Banka's in-person and online seminars in 2023.

Latvijas Banka updated the contents of the financial and economic education website Money School in 2023, adding topics of financial literacy on security, loans, pensions, savings, deposits, insurance, budget planning, cash and transactions, and sustainable finances. To make information available to all the different groups in the population of Latvia, materials have also been developed in plain language, such as Learn about cash in a crisis and How my pension is calculated. In 2023, the education website Money School drew 669 thousand views and the number of unique visits grew by 144%.

Latvijas Banka's Knowledge Centre is dedicated to in-person education on economic and financial topics. It welcomed 4425 visitors in 2023, up from 3163 visitors in 2022, who included school pupils, students, and staff of businesses and organisations.

Topics of the year