Opinion of the European Central Bank of 29 October 2012 on amendments to the Law on Latvijas Banka (CON/2012/80)
Date: 2012-10-29
Institutions: European Central Bank
Subjects: Eurosystem, Latvia, central bank, dismissal, institutional activity, money, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 29 October 2012  

on amendments to the Law on Latvijas Banka 

(CON/2012/80) 

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 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 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  addresses  a  number  of  issues  raised  by  the  ECB  and  the  European  Commission  in  their 
Convergence Reports2 in relation 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 introduces 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,  the  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 

(hereinafter 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. 

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OJ L 189, 3.7.1998, p. 42. 
See the ECB’s Convergence Report 2012, p. 237 and the European Commission’s Convergence Report 2012, p. 71. 
All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 

 
 
 
 
                                                 
ECB-PUBLIC 

2. 

General observations 

The  ECB  welcomes  the  fact  that  the  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  refer  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 understands that the term ‘supervision’ in the context of 

Article  43(1)  of  the  Law  on  Latvijas  Banka  refers  to  the  Parliament’s  right  to  ask  questions 
pursuant to the Law on the Rules of Procedure of the Parliament5 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 mirrored 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 Latvijas 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 prudential 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. 

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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 ECB’s observation made in Opinion CON/2012/73.   
Saiemas Kārtības rullis, "LV", 96 (227), 18.08.1994. 
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 41, 14.2.2012, p. 1). 

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ECB-PUBLIC 

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 

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