As of 1 January 2023, the Financial and Capital Market Commission (FCMC) will be integrated into Latvijas Banka. In accordance with the decision adopted by the Saeima of the Republic of Latvia on 23 September 2021, Latvijas Banka takes over all functions related to the supervision and the promotion of the development of the financial and capital market as well as the functions of the resolution authority.
"I would like to thank my colleagues at the FCMC and Latvijas Banka, our partners at the Saeima, the Ministry of Finance and the European Central Bank as well as financial market participants for their active involvement and participation in the integration of Latvijas Banka and the FCMC. For over a year, we have worked productively and paved the way for the strengthening of the already joint team of Latvijas Banka and the FCMC, the establishment of new goals and objectives as well as the transformation of the institution. We will not stop at this point, and we will continue making Latvijas Banka better every day and with every decision," emphasises Mārtiņš Kazāks, Governor of Latvijas Banka.
Santa Purgaile, Chairwoman of the FCMC, after 1 January – Deputy Governor of Latvijas Banka: "In conjunction with Latvijas Banka and cooperation bodies, we have done extensive work to implement the Saeima's decision to merge both institutions. 1 January 2023 will mark the beginning of a new stage in the supervision of Latvia's financial sector, as the integration will provide opportunities to ensure the supervision and development of the financial market by combining knowledge and competence, infrastructure options and capacity as well as jointly establishing and implementing Latvijas Banka's strategic priorities. We will continue acting as a supervisor that, by engaging in an open dialogue with the financial sector, is able to find new solutions to ensure the sector's improvement and further development."
Since the adoption of the Saeima's decision, important preliminary steps have been taken to establish a powerful, professional and modern institution, by focusing resources on the coordination and promotion of the stability and development of the financial sector and at the same time ensuring that this process does not significantly affect the financial market participants and maximum economy of resources is achieved.
The integration into a single institution will also entail the merging of the employees and knowledge of Latvijas Banka and the FCMC into one team and will bring a number of gains, for instance, a better opportunity to foster financial stability, mitigate systemic risks and ensure a more coordinated financial sector development. It is expected that a single institution will also respond more efficiently to situations of shocks and crises.
More efficient resource management
As a result of the integration of both institutions, it is possible to use labour force and other resources (for example, IT, premises, etc.) more efficiently.
On 1 January 2023, after the integration of the FCMC, the number of Latvijas Banka's employees will total 539: by one third less than during the first year after separating the FCMC from Latvijas Banka (in late 2001, the number of employees reached 732 at Latvijas Banka and 95 at the FCMC). The majority of the FCMC employees will continue working for Latvijas Banka and ensure the further execution of the functions they have performed so far. Before and during the FCMC integration, both institutions implemented measures to utilise staff resources more efficiently, including a reduced number of people in the management team. At the same time, a smaller number of employees is not an end in itself; the objective is a powerful and efficient institution able to perform all tasks entrusted to it in a quality manner.
As of 1 January 2023, the number of members of the Council of Latvijas Banka will decrease by two compared to the total number of the members of the Council of Latvijas Banka and the FCMC Board up to the integration. Latvijas Banka's organisational structure has also been changed: nine Latvijas Banka's departments will perform the functions implemented previously by the FCMC (see the new structure).
It is expected that in the medium term the total operating expenses of the joint institution will also be lower than the total expenses of the two separate institutions.
Instead of four previously used buildings, both institutions will work in three buildings (during the energy crisis – temporarily in two buildings). For the attention of the FCMC clients and cooperation partners! The FCMC employees are already working on the premises located at K. Valdemāra iela 2A, Riga (previously – Kungu iela 1, Riga) and will continue working in the current Latvijas Banka's buildings.
New Law on Latvijas Banka
On 1 January 2023, the new Law on Latvijas Banka will enter into force, while the Law "On Latvijas Banka" and the Law on the Financial and Capital Market Commission will be repealed. The FCMC regulations, including those affecting the financial market participants, will remain in force also after 1 January 2023.
The new Law on Latvijas Banka establishes the principle of function separation, for instance, a separate committee for the supervision decisions and a separate committee for resolution; different information flows as well as an appropriate internal control system are envisaged. A two-tier decision-making procedure for supervision matters has been established. The Supervision Committee will be the primary decision maker in the financial market supervision. In supervision matters, the Council of Latvijas Banka will act as an institution where supervision decisions can be challenged, looking comprehensively, also from the point of view of other Latvijas Banka's areas of responsibility. The principle of separating the functions of monetary policy supervision and financial market supervision will also be strictly adhered to.
The integration does not affect the supervision framework and the regulations governing supervision financing.
Tasks of the integrated institution
In line with the delegation by the Saeima of the Republic of Latvia, Latvijas Banka performs various tasks relevant to the development of the economy and financial sector:
- participates in the formulation and implementation of the euro area's monetary policy;
- manages Latvia's foreign currency and gold reserves and other financial investments;
- ensures cash circulation in Latvia and participates in ensuring cash circulation in the euro area;
- participates in promoting the smooth operation of payment systems in the Eurosystem;
- prepares and publishes statistical information in compliance with the provisions of the EU legislation;
- represents Latvia's interests in international financial institutions;
- within the scope of its competence, consults the government and other institutions on monetary policy matters;
- manages the Treasury's payments;
- informs and educates the public;
- performs other tasks, for example, in financial stability and macroprudential supervision and in currency exchange company supervision, maintains the Credit Register, supervises institutions recirculating euro banknotes and coins, etc.
As of 1 January 2023, in addition to the above-mentioned tasks, Latvijas Banka:
- defines and implements macroprudential policy;
- regulates and supervises the operation of Latvia's financial market and its participants;
- implements the tasks of a resolution authority, including the development of resolution plans pursuant to the Law on Recovery of Activities and Resolution of Credit Institutions and Investment Firms;
- ensures the operation of the Deposit Guarantee Fund and the Fund for the Protection of the Insured as well as the disbursement of guaranteed compensations to investors.
Where to look for information?
The main source of information for the public and market participants will be Latvijas Banka's website https://www.bank.lv/en/ which will include an overview of the institution's areas of operation and where users will be able to find the necessary information as conveniently and quickly as possible.
Interested parties will have the possibility to follow the relevant information by subscribing to social media accounts (Twitter, LinkedIn, Facebook, Instagram, YouTube, Flickr, SlideShare) and to the receipt of news by e-mail.