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Ensuring stability of financial system must be Bank of Latvia's top priority - Cerps
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    News

    Ensuring stability of financial system must be Bank of Latvia's top priority - Cerps

    RIGA, Nov 21 (LETA) - Responsibility for ensuring stability of the financial system must be a top priority for the Bank of Latvia, Uldis Cerps, a potential candidate for governor of the Bank of Latvia and former chairman of the Financial and Capital Market Commission (FCMC), told LETA.

    According to Cerps, it is important to specify this responsibility in the Law on the Bank of Latvia, as the central bank should pursue this goal more actively. The Latvian financial system faces many major challenges, for instance, approximately ten banks in Latvia have to change their business models to shift away from serving high-risk non-residents.

    All three institutions involved - the Bank of Latvia, the FCMC and the Finance Ministry - should work together to ensure stability of the financial system, Cerps believes.

    According to the FCMC head Santa Purgaile, five banks need to take significant risk mitigation measures, Cerps said. In this context, the Bank of Latvia should provide a vision of what needs to be done to reduce systemic risks, he added.

    Another priority is to quickly restore the Bank of Latvia's reputation, stressed Cerps. He pointed out that the Bank of Latvia was currently trusted by 45 percent of residents, but that figure could be higher.

    It is also necessary to improve the governance of the Bank of Latvia by increasing the diversity of opinions at the Council of the Bank of Latvia, said Cerps, but declined to comment how this would be done technically.

    Furthermore, the efficiency of the Bank of Latvia's operations, needs to be improved, as the central bank's operations are currently rather costly. Cerps mentioned the Estonian central bank as an example. He went on to say that the number of employees at the Bank of Latvia was higher than that at Sweden's central bank, even though Sweden's population is five times larger than Latvian, while Swedish financial market is 30 times larger than the Latvian financial market.

    As reported, the other potential candidates for the Bank of Latvia governor are current Bank of Latvia Council member Martins Kazaks and Fiscal Discipline Council member Inna Steinbuka.

    The current Bank of Latvia Governor Ilmars Rimsevics' term of office will run out on December 21.

    • Published: 21.11.2019 13:46
    • Ainars Leijejs, LETA
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