The Council of Latvijas Banka has approved the Annual Report of Latvijas Banka for 2020. In addition to the financial statements and a favourable independent auditors' opinion, it provides an overview of the last year's economic environment and developments in Latvia and the euro area as well as gives an insight into the operation of the national central bank and its accomplishments in the areas within its mandate.
Mārtiņš Kazāks, Governor of Latvijas Banka, stresses in the Foreword to the Report that quite a few important things have been accomplished despite the Covid-19 pandemic and the associated changes.
Addressing the economic fallout from the Covid-19 pandemic required a strong and coordinated response, and central banks provided swift and crucial assistance to national governments, businesses and population by implementing accommodative monetary policies and safeguarding financial stability. "The record-low interest rates maintained by central banks encouraged governments to provide unprecedented crisis support to households and businesses. Accommodative monetary policies helped the global economy to steer confidently through this raging storm", says Governor Kazāks.
The past geopolitical choices in favour of joining the European Union and the euro area have meant that, for the first time in its history, Latvia has been able to counter the crisis independently: we can make our own decisions and define our economic policy preferences, we enjoy free access to financial markets at very good prices, benefiting from the favourable financing conditions.
Central banks, including Latvijas Banka, underwent further operational changes in 2020, increasingly focusing? on providing public good. Central banks broaden the scope of their policies from merely pursuing the price stability objective in its traditionally narrow interpretation to a wider perspective encompassing sustainability and climate policy aspects that are equally important to deliver an effective monetary policy as well as to improve the population's quality of life. They also increasingly listen to the views of the general public; the monetary policy strategy review, to which Latvijas Banka is an active contributor, is an excellent tool assisting in this process in the euro area.
Turning to the latest developments in Latvijas Banka, Mārtiņš Kazāks highlights the changes in the institution's business strategy and outlines the near-term priorities and most significant milestones. "Our objective is to become the best-performing central bank in Northern Europe, working in the interests of Latvia's community and contributing to the Eurosystem's development. Latvijas Banka is primarily focussed on meaningful and active participation in the shaping and implementation of the Eurosystem's monetary policy and on being Latvia's leading economic and financial competence centre, contributing to analysis-based decisions aimed at sustainable economic development and safeguarding the stability of the financial system. We are building and supporting a safe, effective and innovative payment infrastructure, strengthening the economic and financial literacy of the community, we are a modern, open and effective national central bank", added Governor Kazāks.
He points out that the coming years are likely to be eventful, with many challenges and opportunities for both the Latvian economy in general and Latvijas Banka in particular, also considering the upcoming merger with the Financial and Capital Market Commission resulting in a fully integrated institution that will be building a stronger and more powerful backbone of Latvia's financial sector.
Latvijas Banka's profit for 2020 totalled 26.6 million euro. 70% or 18.7 million euro will be credited to the central government revenue, whereas the remainder will be transferred to the reserve capital of Latvijas Banka. Over the last five years, Latvijas Banka's aggregate profit has reached 104 million euro, with 71 million euro appropriated to the central government revenue.
More detailed information about Latvijas Banka's accomplishments in 2020 and plans for 2021.
The Annual Report of Latvijas Banka for 2020 will be available at www.bank.lv. Financial statements of Latvijas Banka for 2020 are published separately on the website of Latvijas Banka together with an independent auditors' report.
