Investor considerations
?? The monetary system is stable, and inflation is low.
?? The banking system is well developed and regulated.
?? The insurance industry continues to develop.
?? The investment and pension funds industries are currently underdeveloped.
?? There are no restrictions on foreign currency transactions, profit repatriation and transfer of funds.
Banking system
The Latvian banking system has been marked by rapid growth over recent years. The total assets of the 22 banks of the country and branches of foreign banks were LVL 4.4 billion at the end of 2002. The three largest banks control approximately two-thirds of the banking market. Almost all banks are seeking to become full-service domestic banks. Some banks also actively target clients from CIS.
The market is relatively saturated in traditional banking services such as account maintenance and settlements, lending and leasing, but still underdeveloped in corporate finance, asset management and other services.
Central bank
The Bank of Latvia is the independent central bank of Latvia. It is responsible for the development and execution of monetary policy.
The Bank of Latvia has followed a tight monetary policy. The domestic currency, the lat, is stable and the inflation rate during recent years has been around 3 % or below per annum. The exchange rate of the lat is fixed to the SDR (a basket of currencies) and has remained stable since the early 1990s. The monetary policy has followed a process of intervention in the local foreign exchange market, changes in the refinancing rate for loans issued to Latvian banks and trade with debt securities issued by the government. The Bank of Latvia holds large foreign exchange currency reserves mainly in U.S. dollars and this ensure ...