EN ECB -PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 29 October 2012  
on amendments to the Law on Latvijas Banka  
(CON/20 12/80) 
 
Introduction and legal basis  
On 8 October 2012,  the European Central Bank (ECB) received a request from Latvijas Banka for an 
opinion on draft amendments to the Law on Latvijas Banka (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third  indent of Article  2(1) of Counci l Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions1, as the draft law  relate s to Latvijas Banka. In accordance with the first sentence of 
Article  17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted 
this opinion.  
 
1.  Purpose of the draft law 
The draft law  address es a number of issues raised by the ECB and the European Commission in their 
Convergence Reports2 in relatio n to the Law on Latvijas Banka. In this regard , amendments are made to 
the provisions concerning Latvijas Banka’s independence, prohibitions on monetary financing and 
privileged access, and the legal integration of Latvijas Banka into the Eurosystem.  
The draft law introduce s additional amendments  to the Law on Latvijas Banka compared to the previous 
draft legislation on which the ECB commented in Opinion CON/2012/733. In particular, t he draft law 
aligns the grounds for dismissal of the Governor, the Deputy  Governor and other members of the Council 
of Latvijas Banka under  Article 22(4) of the Law on Latvijas Banka with grounds for dismissal set out in 
Article 14.2 of the Statute of the European System of Central Banks and of the European Central Bank (herein after the ‘Statute of the ESCB’) .  
The draft law amends Article 41 of the Law on Latvijas Banka, by explicitly providing  that Latvijas 
Banka shall, inter alia , contribute  to the stability of the financial system.  
The draft law also amends Article 34(3) of the Law on Latvijas Banka , providing that  the requirements 
for euro cash processing systems and the quality requirements for euro banknote processing  must be  
performed in compliance with Union law . 
                                                 
1  OJ L 189, 3.7.1998, p.  42. 
2  See the ECB’s  Convergence Report 2012, p. 237 and the  European Commission’s  Convergence Report 2012, p. 71.  
3  All ECB opinions are published on the ECB’s website at www.ecb.europa.eu.  
ECB -PUBLIC  
2  
2. General observations  
The ECB welcomes the fact that th e Latvian authorities have taken into account the ECB’s earlier 
observations in Opinion CON/2012/73. The ECB also notes that the compatibility of Latvian legislation , 
including the Law on Latvijas Banka and the Law  on prevention of conflict of interests in activities of 
public officials4, with Article 130 and 131 of the Treaty  will be assessed in the ECB’s next Convergence 
Report.  
 
3. Specific observations  
3.1 The ECB welcomes the amendments to Article 22 of the Law on Latvijas Banka that r efer to 
Article 14.2 of the Statute of the ESCB  as regards the grounds for dismissal of the Governor, the 
Deputy Governor and other members of the Council of Latvijas Banka.  
3.2 As regards institutional independence , the ECB reiterates its observations in paragraph 3.2 of 
Opinion CON/2012/73, specifically that it underst ands that the term  ‘supervision’  in the context of 
Article 43(1) of the Law on Latvijas Banka refer s to the Parliament’s right to ask questions 
pursuant to the Law on the Rules of Procedure of the Parliame nt5 so as to enhance Latvijas Banka’s 
accountability for its decisions. Based on this understanding, Article 43(1) of the Law on Latvijas 
Banka is compatible with the principle of central bank independence enshrined in Article 130 of 
the Treaty and mirrore d in Article 7 of the Statute of the ESCB . 
3.3 The ECB welcomes the amendment to Article 34(3) of the Law on Latvijas Banka which takes into 
account the observation made by the ECB in paragraph 3.5 of Opinion CON 2012/73 on the legal 
integration of Latvija s Banka into the Eurosystem . 
3.4  The ECB further welcomes the amendment to Article 41 of the Law on Latvijas Banka which 
provides for  Latvijas Banka  to contribute to the smooth conduct of policies pursued by the 
competent authorities relating to the prude ntial supervision of credit institutions and the stability of 
the financial system. This amendment takes into account the role of the Eurosystem under 
Article  127(5) of the Treaty , as recommended by the ECB in paragraph 3.6 of Opinion 
CON/2012/73.  
3.5 Furthermore , the ECB is of the view that it would be beneficial, from a financial stability 
perspective, to establish an effective macro -prudential policy framework at  a national level, where 
Latvijas Banka plays a key role6. 
 
                                                 
4 In the request of 8 October 2012 from Latvijas Banka for an opinion on draft amendments to the Law on Latvijas Banka , 
Latvijas Banka  informs the ECB that it has taken into account the E CB’s  observation made in Opinion CON/2012/73.    
5  Saiemas Kārtības rullis , "LV", 96 (227), 18.08.1994.  
6 See Recommendation ESRB/2011/3 of the European Systemic Risk Board of 22 December 2011 on the macro -prudential 
mandate of national authorities  (OJ C 4 1, 14.2.2012, p.  1). 
ECB -PUBLIC  
3 This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 29 October 2012.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI