Functions of the central bank are forgotten in the process of selecting the governor of the Bank of Latvia - head of SEB Banka

RIGA - The functions of the central bank have been forgotten in the process of selecting the governor of the Bank of Latvia, said Ieva Tetere, Chairperson of the Board of SEB Banka in Latvia, in an interview with LETA.

"We have forgotten that we are not looking for an opportunity to influence the banking sector, fiscal policy or economic growth, because the Bank of Latvia has no such task," Tetere said.

She pointed out that the Bank of Latvia's experts can advise the government and politicians to take action and influence fiscal policy, but at the moment there is a feeling that politicians expect the Bank of Latvia to do this. "We seem to be confused about what the functions of the Bank of Latvia are," said Tetere.

She stressed that regardless of who is chosen to head the Bank of Latvia, it is important to remember what the tasks of the Bank of Latvia are. First, the governor of the Bank of Latvia must be politically independent. Secondly, the Bank of Latvia is responsible for monetary policy, not fiscal policy, and it is responsible for ensuring that there is financial stability in Latvia, but it does not provide consumer protection, which is the responsibility of other institutions. The Bank of Latvia is also responsible for good and sufficient banking supervision.

Financial stability, monetary policy and supervision - if these three things are well ensured by an independent institution that is a good advisor to the heads of state and the government, but is independent, then this is a good solution, said Tetere.

As reported, on Wednesday, the Saeima Budget and Finance Committee nominated the former Bank of Latvia Governor Martins Kazaks for a second term.

Saeima will vote on Kazaks at an extraordinary meeting today.

Kazaks has been nominated for the post of governor of the Bank of Latvia by MPs from the opposition United List and the National Alliance. Kazaks has also been nominated by politicians from the coalition-forming parties New Unity and the Progressives.