History
On 1922-9-7, the Constitutional Assembly adopted the Law on the Establishment of the Bank of Latvia,[4] which granted its issuance privilege. The Bank's interim statutes were approved on 1922-9-19 by the Cabinet of Ministers, with its initial capital set at 10 million lats. On 1923-4-23, the Saeima approved a permanent Statute of the Bank of Latvia, signed by President Jānis Čakste on 2 July. The bank was headed by a council and board. The council consisted of a chairman, a deputy, and 11 members; the board included a director general, his deputy, and three directors.[13] The bank's mandate extended beyond a pure monetary authority, as it also entailed a developmental role with the possibility of allocating short-term credit to industry and agriculture.[14]
On 17 June 1940, Latvia was occupied and was incorporated into the USSR on 5 August. On 25 July, the Law on the Nationalization of Banks and Large Industrial Enterprises was adopted. After the Second World War, both money emission and the Treasury's functions were performed by the USSR State Bank, but the money system of the Latvian SSR was under its full control.
On 2 March 1990, the Latvian SSR Supreme Council passed the Law "On Banks" and the decision "On the Bank of Latvia". It determined that the Bank of Latvia, a local central bank, was reestablished as an independent state bank, a money issuing center, a central bank in relation to commercial banks, an organizer of the execution of the state budget, and a monetary policy regulator.
However, only after the Declaration of 4 May 1990 on the restoration of independence of the Republic of Latvia and the collapse of the USSR with the decision of the Republic of Latvia Supreme Council of 3 September 1991 "On the Reorganization of Banking Institutions in the Territory of the Republic of Latvia", the Bank of Latvia became the only central and issuing bank. It took over the ownership and structure of the USSR banks, Latvijas Republikānisko banku, and other state credit institutions.
On 4 March 1992, the Supreme Council of the Republic of Latvia passed the Law "On the Acquisition of the Bank of Latvia established in 1922". The Bank of Latvia's status as the central bank of the country and the issue bank was definitively consolidated by the laws of the Republic of Latvia "On Banks" and "On the Bank of Latvia" adopted on 19 May 1992. For the first time in Latvia, the independence of the national central bank from the government policy was ensured through legislation. The Law "On the Bank of Latvia" did not envisage its commercial activities, therefore, a decision was taken on the restructuring and privatization of 49 Bank of Latvia branches.
