EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 9 June 2006  
at the request of the Latvian Ministry of Finance 
on a draft law amending the Latvian Constitution 
(CON/2006/27) 
 
Introduction and legal basis  
On 8 May 2006, the European Central Bank (ECB) re ceived a request from the Latvian Ministry of 
Finance for an opinion on a draft law entitled amendmen ts to the Constitution of the Republic of Latvia 
(hereinafter the ‘draft law’). 
The ECB’s competence to de liver an opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the third indent of Article 2(1) of Council 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 relates to the status of  Latvijas Banka under the Latvian Constitution 
(hereinafter the ‘Constitution’). In  accordance with the first sentence of Article 17.5 of the Rules of 
Procedure of the European Central Bank, th e Governing Council has adopted this opinion.  
 1.  Purpose of the draft law 
1.1 The draft law is designed to reconcile the te xt of the Constitution, which provides that all 
administrative institutions of the State shall be unde r the authority of the Cabinet of Ministers, and 
the existence in practice of independent admini strative institutions, which are not placed under the 
authority of the Cabinet of Ministers.  
1.2 These provisions concern, inter alia, Latvijas Banka . While the general principle provided for in the 
draft law is to entitle the Parliament to designate  those institutions which are not subordinated to 
the Cabinet of Ministers and to legislate on their tasks and structure, Latvijas Banka is explicitly 
mentioned in the text of the draft law as a cen tral bank whose organisation and competences are 
provided for by a special law and which is supervised by the Parliament.  
 
                                                     
 
1  OJ L 189, 3.7.1998, p. 42. 
 
2 2.  General observation 
The ECB welcomes the fact that the draft law ai ms to confirm Latvijas Banka’s status in the 
Constitution and would like to stress the importance of ensuring that the proposed amendments do 
not entail any changes with regard to the status a nd functions of Latvijas Banka, but only restate its 
position in the hierarchy of different in stitutions at the constitutional level.  
 3.  Specific observations 3.1  The ECB has two concerns with regard to the content of the provisions governing Latvijas Banka 
in the draft law. First, the ECB takes note of the fact that the wording used in Article 88 of the 
Constitution in relation to Latvijas Banka is differe nt from the wording in Article 87 in relation to 
the State Audit Office. Following adoption of the draft law, the State Audit Office and Latvijas Banka will be the only independent  bodies defined specifically in the text of the Constitution. 
However, while Article 87 clearly provides that th e State Audit Office is an independent collegial 
body, Article 88 on Latvijas Banka merely identifi es Latvijas Banka as the central bank. For details 
concerning the central bank’s organisation and comp etences, Article 88 instead refers to a specific 
law, namely the Law on Latvijas Banka, which in tu rn provides that Latvijas Banka is independent 
in the adoption of its decisions a nd in their practical implementation
2.  
3.2 The ECB notes that the independence of Latvijas Banka, which is also a member of the European 
System of Central Banks, is laid down in Article 108 of the Treaty and Article 7 of the Statute on 
the European System of Central Banks and of the European Central Bank. These two provisions 
prohibit the national central banks (NCBs) and the members of their decision-making bodies from 
seeking or taking instructions from Community inst itutions or bodies, from any government of a 
Member State or from any other body. In additi on, they prohibit Community institutions and 
bodies and the governments of the Member States fro m seeking to influence those members of the 
NCBs’ decision-making bodies whose decisions may affect the fulfilment of the NCBs’ ESCB-related tasks. These requirements already apply to Latvia, and the ECB understands that the 
wording of Article 88 of the Constitution does not entail a restriction on Latvijas Banka’s 
independence. If, however, this understanding is incorrect, the word ing of Article 88 will need to 
be further considered and amende d in order to reflect the independent status of Latvijas Banka.   
3.3  Second, the ECB notes that the draft law provides that ‘Latvijas Banka shall be supervised by the 
Parliament’. Although this provision might be inte nded to clarify that Latvijas Banka is not an 
institution under the authority of the Cabinet of Ministers, but instead an independent authority 
under the Parliament, there is a clear risk that the language used will be in terpreted differently. The 
ECB notes in particular that the absence of a sim ilar provision in Article 87 in relation to the State 
Audit Office, together with the absence of constitutional confirmation of Latvijas Banka’s 
independence, may be interpreted as li miting Latvijas Banka’s independence.  
                                                     
 
2  Article 13(2) of the Law on Latvijas Banka.  
 
3 3.4 While similar wording is currently used in Article 43(1) of the Law on Latvijas Banka, the ECB 
notes that the term ‘supervision’ is usually app lied to designate a much stronger link between the 
supervisor and the supervised entity than, for example, oversight or accountability. The ECB would 
therefore like to stress that the notion of ‘supervisio n’ is misleading, since it could be interpreted as 
allowing the Parliament to interfere with Latvij as Banka’s tasks in a manner which goes beyond the 
level covered by the accountability regime and doe s not adequately reflect the requirement of 
central bank independence under the Treaty and the Statute. The ECB’s May 2006 Convergence Report, contains the following statement: ‘dialogue  between NCBs and third parties, even when 
based on statutory obligations to provide information and exchange  views, is compatible with 
central bank independence provided that: (i) th is does not result in interference with the 
independence of the members of the NCB’s decision-making bodies; (ii) the special  status of 
Governors in their capacity as members of the ECB’s General Council is fully respected; and 
(iii) confidentiality requirements resulting from the Statute are observed’
3. In accordance with 
Article 113(3) of the Treaty and Article 15.3 of the Statute, the ECB addresses an annual report on 
the activities of the ESCB and on the monetary policy of both the previous and the current year to the European Parliament, the Council and the Co mmission, and also to the European Council. 
Against this background, the ECB would welcome it if the proposed provision pursuant to which 
Latvijas Banka will be supervised by the Parliame nt were replaced by a provision on the status of 
Latvijas Banka as an independent authority under the Parliament or, alternatively, if this provision 
were deleted. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 9 June 2006. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                     
 
3  ECB Convergence Report May 2006, p. 63.