Overview
Latvijas Banka is the central bank of Latvia and the country's integrated financial regulator. On 1 January 2023, Latvijas Banka formally merged with the Financial and Capital Market Commission (FKTK), consolidating all financial supervision functions into a single institution.
Leadership
Governor: Mārtiņš Kazāks (until 20 December 2024)
Acting Governor (Designate): Māris Kālis (appointed pending Saeima confirmation for new full term)
Integration Rationale
The merger of Latvijas Banka (central bank) and FKTK (financial regulator) was authorized by Saeima decision on 23 September 2021 and implemented to:
- Increase effectiveness of macroprudential policy
- Reduce operational and administrative redundancy
- Improve policy coordination and institutional efficiency
- Enhance systemic risk monitoring
- Strengthen financial sector oversight
Operational Efficiency Gains
- Estimated annual operating cost reduction: EUR 1.6 million (3.4%)
- Consolidated staffing: 539 employees post-integration (previously 732 at Latvijas Banka + 95 at FKTK pre-2001 separation)
- Unified regulatory infrastructure
Basic Identity
| Field | Value |
|---|---|
| Official Name (English) | Latvijas Banka (Bank of Latvia) |
| Official Name (Local Language) | Latvijas Banka (Bank of Latvia) |
| Acronym | [Not applicable] |
| Country | Latvia |
| Jurisdiction Level | National |
| Official Website | https://www.bank.lv/en |
| Official Website Language(s) | Latvian (primary), English (partial) |
| Headquarters | Latvia |
| Year Established | Not publicly documented |
| Current Status | Active |
Classification
| Field | Value |
|---|---|
| Entity Type | Central Bank |
| Control Layer | Layer 1 — Sovereign/Government Regulator |
| Legal Authority Level | Binding |
| Jurisdiction Level | National |
| Scope of Power | Licensing, Supervision, Enforcement, Rulemaking |
Inclusion Justification
| Field | Value |
|---|---|
| Why This Entity Is Included | Primary monetary authority with statutory powers over banking supervision, monetary policy, payment systems, and financial stability |
| Type of Influence | Direct |
| Exclusion Risk | Removes the foundational monetary and banking regulatory authority from the directory, making the jurisdiction's financial control structure incomprehensible |
What This Entity Oversees
Single Supervisory Mechanism (SSM)
Latvijas Banka supervises less significant institutions (LSIs) under ECB oversight:
- Commercial banks
- Credit unions
- Mortgage credit institutions
- Savings banks
- Non-bank credit institutions
Significant Institutions: Direct ECB supervision (Eurosystem-wide)
Prudential Standards
- Minimum CET1 ratio: 8% plus capital buffers
- Tier 1 capital ratio: 10.5% minimum
- Total capital ratio: 12.5% minimum
- Liquidity Coverage Ratio (LCR) standards
- Net Stable Funding Ratio (NSFR) compliance
- Large exposure limits and concentration controls
Post-ABLV Crisis AML Reforms
Following the ABLV Bank collapse (2018) due to massive AML compliance failures, Latvijas Banka implemented:
- Enhanced customer identification and verification
- Beneficial ownership verification protocols
- Source of funds verification procedures
- Cross-border transaction monitoring intensification
- Regular AML compliance audits and inspections
- Stricter Politically Exposed Persons (PEP) screening
Market Supervision
- Nasdaq Riga (stock exchange) oversight
- Investment services providers (ISPs)
- Alternative Trading Systems (ATS)
- Fund managers and administrators
- Custodians and depositaries
Market Conduct Standards
- Insider dealing prohibition and enforcement
- Market manipulation prevention
- Prospectus approval and continuous disclosure
- Fund licensing and governance
- Securities issuance framework
Latvijas Banka oversees:
- Non-life insurance undertakings
- Life insurance providers
- Reinsurance companies
- Insurance intermediaries and brokers
- Solvency II capital framework
Capital Requirements
- Minimum Solvency Capital Requirement (SCR)
- Own Risk and Solvency Assessment (ORSA)
- Internal model authorization
- Governance and internal control standards
Regulatory Framework
- FATF 40 Recommendations implementation
- 5th and 6th EU AML Directives (AMLD5/AMLD6)
- Money Laundering and Terrorism Financing Prevention Act
- Financial Intelligence Unit (FIU) coordination
- ABLV crisis-driven enhanced protocols
CDD and EDD Requirements
- Know Your Customer (KYC) standards
- Enhanced Due Diligence (EDD) for high-risk customers
- Beneficial ownership identification and tracing
- Politically Exposed Persons (PEP) screening
- Source of funds verification
Suspicious Activity Reporting (SAR)
- Mandatory reporting to FIU
- Quarterly statistical reporting
- Cross-border transaction monitoring
- Terrorist financing prevention
- Trade-based money laundering detection
Regulatory Powers
Administrative Actions
- License issuance, suspension, revocation
- Administrative fines and penalties
- Capital surcharge imposition
- Business conduct restrictions
- Cease-and-desist orders
Resolution Authority
Post-2023 integration, Latvijas Banka exercises resolution powers:
- Bank resolution and wind-down authority
- Bridge bank establishment
- Deposit protection coordination
- Asset sale and consolidation
- Shareholder loss allocation
Regulatory Role and Function
| Role | Description |
|---|---|
| Primary Role | Monetary policy formulation and implementation; banking system supervision |
| Licensing Role | Licenses and authorizes banking institutions and payment service providers |
| Supervisory Role | Prudential supervision of banks and financial institutions |
| Enforcement Role | Enforcement of banking laws, regulations, and prudential standards |
| Payment Systems Oversight Role | Operation and oversight of national payment and settlement systems |
| AML / CFT Role | AML/CFT supervisory authority for banking sector |
Legal Foundation
Law on Latvijas Banka (Amended 2023)
The amended Law on Latvijas Banka incorporates FKTK functions and establishes:
- Integrated central banking and financial supervision authority
- Function separation through internal governance mechanisms
- Separate Supervision Committee for regulatory decisions
- Distinct Resolution Committee for resolution authority
- Information barriers and internal control systems
- Independent audit and compliance monitoring
EU Regulatory Framework
As an Eurosystem member:
- Alignment with ECB regulatory framework
- Basel III/CRD IV/CRR implementation
- Single Supervisory Mechanism (SSM) participation
- Payment Services Directive (PSD2) compliance
Licensing and Authorization Relevance
Markets in Crypto-Assets Regulation (MiCA)
Latvijas Banka now issues MiCA-compliant licenses to crypto-asset service providers (CASPs):
- Crypto-asset exchange services
- Custodian services
- Trading, placement, portfolio management
- Stablecoin issuance and provision
- AML/KYC compliance for VASPs
First MiCA License
In 2024, Latvijas Banka issued its first MiCA license to BlockBen, demonstrating Latvia's active participation in EU crypto regulation framework.
Capital and Governance
- Tiered capital requirements based on service type
- Operational resilience standards
- Cybersecurity and digital operational resilience (DORA)
- Customer asset segregation
- Enhanced governance for institutional providers
Payments and Money Movement Relevance
Euro Adoption
Latvia joined the Eurosystem on 1 January 2014, making Latvijas Banka a full participant in:
- European Central Bank (ECB) Governing Council
- Monetary Policy decisions via the Governor
- Eurosystem operational framework implementation
- Common currency circulation management
Monetary Policy Framework
- Primary objective: Price stability within Eurosystem
- Coordination with ECB monetary policy
- Implementation of ECB policy rates in Latvia
- Foreign exchange reserves management
PSD2 Framework Implementation
- Payment service providers (PSPs)
- Payment initiation services (PIS)
- Account information services (AIS)
- Money transmission and funds transfers
- Electronic money institution (EMI) authorization
Capital Requirements
- EMI minimum capital: EUR 350,000 (unrestricted activity)
- PI minimum capital: EUR 125,000
- Safeguarding and deposit protection
- Customer due diligence requirements
Payment Systems Oversight
- Payment clearing and settlement infrastructure
- Real-time gross settlement (RTGS) systems
- Interbank payment arrangements
- Cross-border payment coordination
Payment Systems Governed or Overseen
The Latvijas Banka (Bank of Latvia) operates and/or oversees the national payment and settlement infrastructure of Latvia. Specific systems include:
| System Name | Relationship Type | Notes |
|---|---|---|
| National RTGS System | Direct operator / Oversight | Real-time gross settlement for high-value transfers |
| National ACH/Clearing System | Oversight | Automated clearing for retail and batch payments |
| National Payment Switch | Oversight | Domestic interbank payment switching |
[Further detail on specific system names requires verification from official sources]
Relationship to Other Regulators
Eurosystem Membership
- Participation in ECB Governing Council (via Governor)
- Implementation of ECB monetary policy decisions
- Eurosystem operational framework compliance
- Foreign exchange reserves management
- Emergency liquidity assistance framework
EU and EEA Coordination
- European Banking Authority (EBA) alignment
- European Securities and Markets Authority (ESMA) cooperation
- European Insurance and Occupational Pensions Authority (EIOPA)
- Single Supervisory Mechanism (SSM) with ECB
- Financial Stability Board (FSB) participation
Bilateral Cooperation
- MOU agreements with other EU central banks
- VASP and crypto asset intelligence sharing
- Cross-border supervisory coordination
- Joint enforcement and crisis management protocols
Geography and Jurisdiction Notes
| Field | Value |
|---|---|
| Applies Nationwide | Yes |
| Applies at State or Sub-National Level Only | No |
| Cross-Border or Regional Reach | No |
| Special Territorial Notes | National jurisdiction within Latvia |
Important Departments and Divisions
| Division / Department | Primary Function |
|---|---|
| Banking Supervision Department | Prudential supervision of banks and deposit-taking institutions |
| Monetary Policy Department | Formulation and implementation of monetary policy |
| Payment Systems Department | Operation and oversight of payment infrastructure |
| Financial Stability Department | Systemic risk monitoring and macroprudential policy |
| Foreign Exchange Department | FX reserves management and exchange rate policy |
| AML/CFT Compliance Unit | Anti-money laundering supervision and enforcement |
| Research and Statistics Department | Economic research and data collection |
Key Public Resources
Latvijas Banka (Bank of Latvia)
- Address: K. Valdemara iela 2A, Rīga LV-1050, Latvia
- Telephone: +371 67022300
- Email: [email protected]
- Website: https://www.bank.lv/en
- Supervisory Inquiries: [email protected]
- MiCA/CASP Licensing: [email protected]
- AML/CFT Compliance: [email protected]
Notes on Naming and Language
| Field | Value |
|---|---|
| Preferred English Rendering | Latvijas Banka (Bank of Latvia) |
| Official Local-Language Rendering | Latvijas Banka (Bank of Latvia) |
| Primary Language | Latvian |
| English Availability | Partial |
| Official Website Language(s) | Latvian (primary), English (partial) |