Latvijas Banka in English

From 13 to 15 August, Latvijas Banka hosts training during which the US experts educate the representatives of Latvia's financial supervisory and law enforcement authorities on the operational risks of virtual asset service providers and supervision of these risks. The training programme developed by the U.S. Securities and Exchange Commission, the New York State Department of Financial Services, the U.S. Department of the Treasury, and Latvijas Banka is designed to be a forum for the exchange of best practices and experience related to the operational risks of virtual asset services. It focuses on objective assessment of these risks and proportionate management solutions within the framework of establishing regulatory requirements, licensing procedures, and supervision practices. Upon opening the international experience exchange training session, Christopher Robinson, US Ambassador to Latvia, emphasised: "Virtual currencies and blockchain technology offer great potential. Striking a balance between regulation and innovation is key to achieving economic growth while maintaining resilience." Mārtiņš Kazāks, Governor of Latvijas Banka highlighted: "We extend our gratitude to the US institutions for the valuable exchange of experience, which will bolster the security and resilience of Latvia's financial sector. This marks a crucial step toward fostering the emergence of new segments within the Latvian financial sector and elevating its competitiveness on the global stage." The following topics are discussed during the training: 🔸 The regulation of virtual asset services, that stipulates compliance, market integrity, and consumer protection. 🔸 Licensing of virtual asset service providers. 🔸 Various types and functions of virtual asset services.   🔸 Current issues in monitoring the operational risks associated with virtual asset services.   🔸 Technologies that enable anonymity. 🔸 Various blockchains. 🔸 The potential for banks to transition into virtual asset service providers. 🔸 The identification of unlicensed virtual asset service providers. ➡ The training brings together more than 30 experts from Latvijas Banka, Finanšu ministrija/ Ministry of Finance of the Republic of Latvia, Financial Intelligence Unit (FIU) Latvia, the Nordic and Baltic countries. 🔗 More information find here: https://lnkd.in/dyujWAjz

According to a recent survey by Latvijas Banka aimed at exploring the innovations used in the financial sector in Latvia, AI is emerging as one of the top innovative technologies. The insurance sector, investment firms, and investment management companies are at the forefront of AI adoption. Half of the companies not yet using AI are planning to implement it in the future. Market participants cite increased efficiency and productivity as key benefits of using AI. Companies also noted that AI optimizes resources and improves process automation in daily activities💥. However, integrating AI solutions poses challenges, particularly regarding data protection and security. To tackle these challenges, companies have taken various steps: ✅ Employee training sessions. ✅ Additional security measures against malware. ✅ Data encryption. ✅ Secure information exchange channels. ✅ Confidentiality clauses. ✅ Enhanced user rights management and controls. As of 2024, other leading technologies in the Latvian financial sector include APIs, cloud solutions, digital customer onboarding, and biometric solutions. Find out more about top innovative technologies in the Latvian financial market in the blog article by Marine Krasovska, Head of Financial Technology Supervision Department at Latvijas Banka,👉https://lnkd.in/dQM-cvSc For market participants considering implementing innovative financial services based on AI technologies, Latvijas Banka invites them to explore the Regulatory Sandbox 👉 https://lnkd.in/eHnfB-xZ

🏦 The Eurosystem has adopted a harmonised policy that allows non-bank payment service providers direct access to payment systems maintained by euro area central banks, including the TARGET system. ➡ Thus, Latvijas Banka will ensure the direct participation of payment and electronic money institutions in the EKS (the Electronic Clearing System) and TARGET-Latvija. 🗨 Latvijas Banka aims at creating a modern, diverse, accessible, and internationally competitive financial sector. The early adoption of the Eurosystem's harmonised policy, supported by Latvijas Banka, will enhance competition and drive innovation within the European payments market, as well as foster wider implementation of instant payments across the EU, emphasises Mārtiņš Kazāks, Governor of Latvijas Banka. Latvijas Banka has completed the necessary system modifications to ensure the direct participation of payment and e-money institutions in the EKS. The system is already available for testing, and at present, Latvijas Banka is consulting payment and e-money institutions about the opportunities to use the new service. 📆 Payment and e-money institutions will be eligible to join the EKS upon the parliament's (Saeima's) adoption of the necessary amendments to the national legislation. 📆 The access to the TARGET system is planned as of April 2025. 🔗 Read more on our website: https://lnkd.in/dx-43DDg 🔗 More information on the Eurosystem's harmonised policy is available on the European Central Bank website: https://lnkd.in/dm3hpTYb

🚀 Here is an insightful interview on what Latvia has to offer for those looking to develop in the FinTech sector! From predictable legal framework and highly educated workforce to supportive regulatory regime – this is why Latvia is a great destination for FinTech innovation. In this interview our colleague Marine Krasovska also navigates the path through the jungle of new regulation: MiCA, DORA, PSD3 – you name it! 👀👇

This week Santa Purgaile, Deputy Governor of Latvijas Banka, participated in the Point Zero Forum, the annual gathering of the world’s central bankers, regulators, policymakers, industry leaders and technologists to align policy, finance and technology roadmaps, and share the latest innovations and developments to advance financial ecosystems.   ➡ On 2 July, the round table session “Peak political risk: Impact on innovation” was held, and one of the topics was dedicated to discuss whether there is reason to believe that the Brussel effect is death amid geopolitical divides. Santa Purgaile shared her views, that it is likely that Brussel effect will continue to influence the regulation of digital finance and emerging/ critical technologies because of:   🔶 European economy represents a substantial portion of the global market and companies seeking EU markets must comply with regulations to streamline operations (and as the result - reduce cost!); 🔶 Taking into account already implemented regulations (like GDPR, PSD2, Crowdfunding, Basel rules) EU demonstrated leadership in the regulating digital finance and now MiCA, DORA, AI act (and FIDA/OpenFinance as proposal) will help multinational companies to operate in European market; 🔶 European approach often seeks to balance between innovation and customer protection and security by setting high standards in global practice in cybersecurity, data protection, pioneering and encouraging other regions to adapt similar measures; 🔶 Many countries struggling due to absence of similar model (ex. Payments in Asia) of developing regulation especially in digital finance through harmonization. #PZF2024

We have released our second Climate-Related Disclosures Report 📗, shedding light on our initiatives to foster sustainable development and address ESG issues. 🌱 The report reveals that we have made steady progress in reducing our carbon footprint within our developed markets equity portfolio. In 2023, the carbon footprint decreased by an additional 22% compared to 2022 data, resulting in a total reduction of 59% since the implementation of the sustainability strategy. 🌱 The report also discloses that due to a change in the benchmark index of the emerging market fixed income portfolio, the ESG score of the portfolio improved by 13%, from 46 at the end of March 2024 to 52 at the end of April 2024. 🗨️ The release of this second disclosures report underlines Latvijas Banka's dedication to sustainability, transparency, and sound governance. This report reflects our ongoing efforts to provide the public with a clear and comprehensive understanding of our activities, said Mārtiņš Kazāks, Governor of Latvijas Banka. Latvijas Banka’s disclosures are part of a concerted effort by all Eurosystem’s central banks to publish climate-related financial disclosures on their euro-denominated non-monetary policy portfolios. This is done using a common framework that sets minimum reporting requirements based on the recommendations of the Task Force on Climate-related Financial Disclosures. The report is available here 👉 https://lnkd.in/dBbVTB7h

We’ve published a report summarising our progress on the digital euro project since the preparation phase started on 1 November 2023. Let’s recap! We’ve been working on key pillars of the digital euro’s design: 🔒 State-of-the-art privacy features, including an offline functionality that would offer users cash-like privacy levels 🗺 Making the digital euro user friendly and accessible via existing banking apps and a new digital euro app 📄 A first version of the digital euro rulebook that would guarantee a standardised payment experience wherever you are in the euro area 🔗 Press release https://lnkd.in/dD3mmtWh Read the full report https://lnkd.in/dxThAVup

🎓 It was a joyful day today as Latvijas Banka awarded prizes to the winners of the 22nd Competition of Student Scientific Research Papers.   Our jury assessed 33 papers submitted by 53 authors. It was very fulfilling to meet you at the event!   With that said, let's move to the results: 🥇 The first prize was awarded to Igors Tatarinovs and Reinis Fals (Rīgas Ekonomikas augstskola - Stockholm School of Economics in Riga) for paper "Phillips Curve in the Eurozone: Forecasting Inflation and the Output Gap Using Explainable Neural Networks". The second prize: 🥈 Luīze Mestere and Anastasija Sergela (Rīgas Ekonomikas augstskola - Stockholm School of Economics in Riga) for paper "Navigating Climate Risks: Assessing Cross-Border Spillovers of African Climate Shocks on European Union through International Trade. Stockholm School of Economics in Riga". 🥈 Abigeila Keirane and Jekaterina Šagejeva (Rīgas Ekonomikas augstskola - Stockholm School of Economics in Riga) for paper "Latvian Labour Market under the Microscope: Minimum Wage Impacts on Income Disparities Across Different Occupations". The third prize: 🥉 Polina Karaseva and Ilze Katrīna Lumpova (Rīgas Ekonomikas augstskola - Stockholm School of Economics in Riga) for paper "Removing China from the EU's equation: The replacement of imports during Covid-19". 🥉 Ieva Vitaitytė (Vilnius University Business School) for paper "Determination of Indicators Influencing Investment Yields in the Baltic Commercial Real Estate Market". 🥉 Oliver Strastin and Rasmus Strastin (Rīgas Ekonomikas augstskola - Stockholm School of Economics in Riga) for paper "European Emissions Trading Scheme (EU ETS) impact on firm economic performance". The honorauble mention: 🏅 Markuss Baltais and Evita Sondore (Rīgas Ekonomikas augstskola - Stockholm School of Economics in Riga) for paper "Economic impact potential of real-world asset tokenization".   🏅 Ilze Verpakovska (University of Latvia Faculty of Business, Management and Economics) for paper "Factors Affecting the Risk of Long-term Unemployment in the Latgale Region".   🏅 Matīss Jānis Rekerts and Sirle Saareväli (Rīgas Ekonomikas augstskola - Stockholm School of Economics in Riga) for paper "Private Equity Activity in the Baltics: Impacts on Portfolio Firm Financial Performance".   👏  Thanks to all participants! It is safe to say that all of you are winners – by submitting your research papers you have already done more than the university requires of you. The results 👉 https://lnkd.in/dHKBwziy Rīgas Ekonomikas augstskola - Stockholm School of Economics in Riga | Latvijas Universitate | University of Latvia Faculty of Business, Management and Economics | University of Life Sciences and Technologies | Rīga Stradiņš University | RISEBA University of Applied Sciences | Vilniaus universitetas / Vilnius University | Vilnius University Business School

👋 Sharing a valuable resource: an informative material has been developed that outlines the availability of financial services during a crisis situation.   This collaborative effort by Latvijas Banka, the Ministry of Defence of Latvia, Finanšu ministrija/ Ministry of Finance of the Republic of Latvia and the banking sector offers some valuable insights for: 🟪 Understanding critical financial services guaranteed by Latvian commercial banks in a crisis  🟪 Taking proactive steps to prepare your finances for unexpected situations   This material is a continuation of the recommendations of the Ministry of Defence on how to act in a crisis situation, but it explains in more detail what financial services commercial banks must provide in a crisis situation, what each individual can do to better prepare for a crisis situation, and what to consider to protect their money.   Latvijas Banka is constantly working on issues of the continuity of the financial sector in cooperation with commercial banks. Preparatory work has been carried out to ensure that in a crisis situation that threatens the functioning of the state, including the financial sector, all critical financial services are provided in Latvia: 🟪 Payments via internet banking or a mobile app 🟪 Payments with a payment card 🟪 Withdrawing cash from an ATM   In general, in crisis situations, all Latvian commercial banks will provide financial services to the extent possible. However, critical financial services will be provided by by the Latvian commercial banks holding at least 5% of all deposits in Latvia: Swedbank Latvija, SEB Latvija, Citadele banka, Luminor Latvija.   Here are some tips for preparing for a situation of crisis: ☂️ Keep a small-denomination cash at home ☂️ Familiarise yourself with the map of the critical ATMs and find the nearest ATM ☂️ Keep the phone number of your commercial bank's customer service centre handy For more information and tips look here 👉https://lnkd.in/dbTg9hrR Download the material and share it with your network!

💼From June 10-12 representatives from Latvijas Banka are attending OECD - OCDE (Organisation for Economic Co-operation and Development) IOPS (International Organisation of Pension Supervisors) Committee Meetings and the IPRA (International Pension Research Association) Conference in Paris. The meetings and conference are focused on current pension sector regulatory, development and supervisory issues. On Committee Meeting Evija Dundure, Director of the Insurance and Pension Supervision Department at Latvijas Banka, presented "Pension savings landscape and development challenges in Latvia". On June 12 The IPRA conference will be held as the closing event, focusing on academic perspectives and research on topical issues in the pension sector. Key themes to be explored during the conference: 🔸The role of technology and artificial intelligence in pension savings; 🔸Decision-support systems for retirement; 🔸Types and applications of pension payments. 🤝Latvijas Banka has been a member of IOPS since 2024. IOPS brings together private and public pension supervisors from around the world to enhance the quality and effectiveness of private pension system supervision. IOPS also sets international standards for pension supervision, while taking into account the diversity of pension systems.