Latvia replaced its previous currency, thelats, with theeuro on 1 January 2014,[1] after aEuropean Union (EU) assessment in June 2013 asserted that the country had met allconvergence criteria necessary for euro adoption.The adoption process began 1 May 2004, when Latvia joined the European Union, entering the EU'sEconomic and Monetary Union. At the start of 2005, the lats was pegged to the euro at Ls 0.702804 = €1, and Latvia joined theEuropean Exchange Rate Mechanism (ERM ll), four months later on 2 May 2005.[2]
Latvia'sTreaty of Accession to theEuropean Union (EU) obliged it to eventuallyadopt the euro. Latvia had originally planned to adopt the euro on 1 January 2008, but for various reasons this was subsequently delayed several times.[3][4] After being elected in 2011,Latvian PresidentAndris Bērziņš announced the official goal was for Latvia to join the eurozone in 2014, saying "personally I'm very optimistic we'll join the euro on 1 January 2014. It's our goal and we are working hard to implement this process."[5] In September 2012,Latvian Prime MinisterValdis Dombrovskis reiterated that "Latvia is on track for 2014 and permission to join would be sought in 2013."[6][7]
Before Latvia could adopt the euro, it had to meet fiveconvergence criteria set by the EU. An assessment by theEuropean Central Bank (ECB) in April 2012 found that Latvia met three of the five criteria. The Latvian Finance Minister announced in December 2012 that since convergence checks were only conducted biennially, an extraordinary report would be requested in February 2013,[8] but in January 2013 Prime Minister Dombrovskis stated that for "technical reasons" the request had been delayed until March. However, he was confident that Latvia was "fulfilling the Maastricht euro adoption criteria with a considerable reserve, therefore I don't see any basis on which this convergence report would be negative."[9] The Latvian government formally applied for a convergence check at the beginning of March,[10] and the resulting convergence report, published on 5 June 2013 by theEuropean Commission, concluded that "the Commission considers that Latvia fulfils the conditions for the adoption of the euro."[11] The ECB simultaneously published a report which noted that "Latvia is within the reference values of the convergence criteria".[12] Latvia's adoption of the euro, a legal obligation now that the convergence criteria have been met, was given final approval by theEconomic and Financial Affairs Council on 9 July,[13][14][15] and the lats was replaced with theeuro on 1 January 2014.[1] The Euro switchover ceremony took place at a site where Latvia's crisis began – the former headquarters of the collapsedParex bank, now headquarters of state-ownedCitatele bank, which emerged from Parex's ruins.[16]
| Assessment month | Country | HICP inflation rate[17][nb 1] | Excessive deficit procedure[18] | Exchange rate | Long-terminterest rate[19][nb 2] | Compatibility of legislation | ||
|---|---|---|---|---|---|---|---|---|
| Budget deficit toGDP[20] | Debt-to-GDP ratio[21] | ERM II member[22] | Change in rate[23][24][nb 3] | |||||
| 2012ECB Report[nb 4] | Reference values | Max. 3.1%[nb 5] (as of 31 Mar 2012) | None open (as of 31 Mar 2012) | Min. 2 years (as of 31 Mar 2012) | Max. ±15%[nb 6] (for 2011) | Max. 5.80%[nb 7] (as of 31 Mar 2012) | Yes[25][26] (as of 31 Mar 2012) | |
| Max. 3.0% (Fiscal year 2011)[27] | Max. 60% (Fiscal year 2011)[27] | |||||||
 Latvia | 4.1% | Open | 6 years, 11 months | 0.3% | 5.77% | No | ||
| 3.5% | 42.6% | |||||||
| 2013ECB Report[nb 8] | Reference values | Max. 2.7%[nb 9] (as of 30 Apr 2013) | None open (as of 30 Apr 2013) | Min. 2 years (as of 30 Apr 2013) | Max. ±15%[nb 6] (for 2012) | Max. 5.5%[nb 9] (as of 30 Apr 2013) | Yes[28][29] (as of 30 Apr 2013) | |
| Max. 3.0% (Fiscal year 2012)[30] | Max. 60% (Fiscal year 2012)[30] | |||||||
| Latvia | 1.3% | Open (Closed in June 2013) | 8 years | 1.3% | 3.84% | Yes | ||
| 1.2% | 40.7% | |||||||
Some members of Latvia's parliament, theSaeima, originally pushed for a referendum on euro adoption,[34] butLatvian Prime MinisterValdis Dombrovskis argued that a referendum is unnecessary because Latvians alreadyvoted in favour of their EU accession treaty in 2003, which binds them to adopt the euro as soon as the country is found to comply with all theconvergence criteria. He argued that, given the legal obligation, a referendum could only serve to delay or prevent euro adoption.[35] According to Latvian law, if more than 1/3 of all members of parliament object to a bill, and propose an alternative bill within two weeks of the original bill being passed by parliament, a referendum can be called to allow the public to decide between the two bills. On 31 January 2013, the Latvian parliament passed its "euro adoption bill". Four days later, the biggest opposition party,Harmony Center, stated that it would not support the alternative "referendum bill", which was tabled by the other opposition party,Union of Greens and Farmers.[36] Shortly after this, on 9 February, the referendum proposal had only gathered the support of 4 out of the Saeima's 100 members. These MPs stated that they would turn to the last remaining legal option to force a referendum: gathering a petition of at least 30,000 electoral signatories.[37] Latvia officially requested an extraordinary convergence report to assess their readiness for euro adoption on 4 March 2013.[38] Latvia's Central Election Commission rejected the proposed referendum on 18 March, as the proposed bill was considered not to comply with the Latvian constitution or Latvia's international obligations.[39]
A draft law outlining the euro switchover process was presented by the government's cabinet on 6 November 2012. It specified that:
The law was passed on 31 January 2013.[9][42]
| Euro adoption day | Changeover plan | Introduction[43] | Frontloading | Dual circulation period | Exchange ofLVL coins period | Dual price display | Mint company | Currency circulated (in units) |
|---|---|---|---|---|---|---|---|---|
| 1 January 2014 | A changeover law was passed 31 Jan 2013[9][40] | Big-Bang | Bank and credit institutions starts receiving euro banknotes and coins 2 months before €-day. Retailers also receive coins and banknotes ahead of €-day, between 10 and 27 Dec.2013.[44] | 2 weeks | Post-offices: 3 months Banks: 6 months Central bank: Indefinitely | 1 October 2013 until 30 June 2014 | Stuttgart Mint[45] | 87 million banknotes and 400 million coins[46] |
The Latvian Parliament adopted on 26 July 2005 "Regulation Nr.564", outlining that the official Latvian name of the euro currency would be "eiro". In December 2007 the regulation was amended, so that the name in all legal matters would be "euro" and in all non-legal matters "eiro". The ECB was asked to approve this special naming convention, but declined on 13 November 2012 and asked Latvia to repeal either the entire regulation or at least the paragraph that granted the euro currency a special Latvian name.[47] On 4 March 2013, the Latvian Ministry of Justice clarified that while the official name of the currency for all financial and legal documents shall be "euro", the public will continue to be able to use the Latvian name "eiro", furthermore it is required to write "euro" in italics indicating the word is in a foreign language.[48]
Latvian euro coins feature three separate designs on the national side,[49] which were publicised in July 2006 on the home page of theNational Bank of Latvia. The designs featured were theLatvian maiden, which was featured on the5 lats coin prior toWorld War II, on the 1 and 2 euro coins, the greatercoat of arms of Latvia on the 10, 20 and 50-cent coins, and the lesser Coat of arms of Latvia on the 1, 2 and 5-cent coins. Originally, it was planned that theFreedom Monument would be featured on the 2 euro coin, but the original design did not meet the regulations of the ECB since it reached out into the ring of the coin and changed one of the stars. Latvia decided that a changed design of the monument would not be as recognisable and decided to use the Latvian maiden, used on the 1 euro coin, on the 2 euro coin as well.[50]
However, some Latvian lawmakers recently sought a referendum on that country's move
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