) were sold at the average yield of 5. 98 %. in september, broad money m2x grew by 0. 5 % month - on - month and 18. 8 % year - on - year, totalling 1 736. 2 million lats. as in the past months repayments were made under currency swap arrangements, in october the bank of latvia's net foreign assets declined by 47. 0 million lats, while the backing of the national currency with the bank's net foreign assets remained high at the end of october, at 110. 2 %. in october, the demand for cash continued to increase, and currency in circulation grew by 7. 2 million lats ( by 6. 5 million lats in september ), reaching 576. 2 million lats. at the same time, no major changes were observed in banks'deposits with the bank of latvia. hence, the monetary base rose 7. 6 million lats over its september level ( to 665. 5 million lats ). at the end of october, the exchange rate of the us dollar against the lats, 0. 606, was unchanged from end - september, while the exchange rate of the euro, 0. 595, was up slightly. at the end of october, exchange rates of the above currencies as quoted by banks equalled official rates set by the bank of latvia. bank of latvia the main objective of the bank of latvia, as defined by the law " on the bank of latvia ", is to implement monetary policy by controlling the amount of money in circulation with the aim of maintaining price stability. the independence of the bank of latvia is guaranteed by the law " on the bank of latvia " and ensured in practice. the bank also meets all prerequisites, as established by the european monetary institute, for independence of the central bank. no institution or person can influence the bank's decisions. the governor is appointed by the saeima of the republic of latvia. likewise, upon the governor's recommendation, it appoints members of the board of governors. all the above officials are appointed for a six - year term. the governor, the deputy governor and members of the board of governors may be discharged before their term of office only if they have tendered their resignation, if a court decision on sentencing any of them for a deliberate crime has taken legal effect, or the governor, the deputy governor or a member of the board of governors

licensing. the required minimum initial capital to establish a bank is 5 million euros. foreign banks that want to establish representative offices or branches in latvia face no restrictions. the prudential requirements that they must meet are the same as for domestic banks. legislation. the principal relevant law, the " law on credit institutions ", has been in force since october 24, 1995, and it has been amended on several occasions. the regulations of the financial and capital market commission and the bank of latvia detail the requirements set by the law. the whole set of regulations normally used by a supervisory authority is in place and corresponds with the eu standards. the law " on the prevention of laundering of proceeds derived from criminal activity " came into effect on june 1, 1998. the law fully conforms with the relevant eu directive : it requires customer identification and keeping records on all transactions, defines suspicious transactions and obliges banks to report them to a special control institution ( disclosures office ). the law " on natural person deposit guarantees " came into effect on october 1, 1998. from january 1, 2002 until december 31, 2003, deposits will be guaranteed up to the level of 3 000 lats. this applies to all deposits made with banks that are subject to this law, regardless of the day a deposit was made. the law prescribes a schedule for increasing this amount to the level required by the eu directive ( 13 000 lats ) in six years. as of 2003, the guarantees will also be applied to deposits of legal persons. as of july 1, 2001, the financial sector is supervised by a single supervisory authority, the financial and capital market commission, the successor, in this area, to the bank of latvia. hence, the financial sector will continue to benefit from the supervision framework that is among the strictest in central and eastern europe. latvia's integration in the european union and the introduction of the euro the bank of latvia's policy responses are based on this country's strategic goal, which is accession to the eu, and the task of the bank of latvia is to prepare the country for joining the economic and monetary union. in light of its commitment to joining the eu, latvia is aiming towards both nominal and real convergence with the eu member states. real convergence is a long - term objective, but latvia is well on its way of achieving it. since 1996 real gdp growth in latvia has exceeded gdp growth in the eu ( except in 1999 ), thus narrowing per capita income differences