Latviski English По-русски
Sunday 23.02.2020 | Name days: Haralds, Almants

Kazāks: FKTK merge with the Bank of Latvia has more advantages than disadvantages

(No Ratings Yet)

Bank of Latvia, FKTK, reform, merge, economy, supervision

Mārtiņš Kazāks

The merge of the Bank of Latvia and Finance and Capital Market Commission (FKTK) has more advantages than disadvantages. Nevertheless, in this case it is important to separate monetary policy and financial market monitoring functions, as well as ensure reserves of the Bank of Latvia are not affected in litigations with the supervisory institution, said governor of the Bank of Latvia Mārtiņš Kazāks.

«It is necessary to perform a detailed assessment. Still, there are more potential benefits. One is associated with information exchange – it can be made faster and more efficient. The same applies to views and possibilities of influencing the development of the financial services market in the future. I believe this would be more useful this way. Latvia’s economy is small, so there is also the matter of qualified specialists. A single institution can find a way to achieve a much better synergy in relation to different kinds of competences,» said Kazāks, adding that the cost reduction topic is no less important.

He does stress, however, that a potential merge of both institutions also creates risks, which have to be taken into account when making decisions.

«The most important factor – monetary policy and financial market supervision have to be clearly separated functions. There needs to be a very clear and very well-functioning Wall of Chine separating them,» stresses the governor of the central bank.

Kazāks also notes that the Bank of Latvia manages the country’s strategic investments and gold reserves, but the financial sector’s regulator in engaged in litigations over decisions market participants do not agree with.

«I allow the desire to sue the Bank of Latvia, which manages large investments, including Latvia’s gold, may increase more. This is why it is necessary to clearly define that by overtaking the financial sector’s supervision function all of the state reserves are put at risk,» stresses Kazāks.

He notes that this may make the merging process very complicated. To make this decision, it is necessary to hold a discussion and assessment to balance risks with benefits.

«If it is decided that both institutions should be merged, this will mean amending the Law on the Bank of Latvia. Based on the current plan, the legislative draft needs to be submitted to the Saeima by 31 October. Hopefully the decision will have been made before the end of 2020. Additionally, both institutions have to be able to secure quality for their own functions so that the merging of both institutions is reasonable, well-organized and well-communicated. This cannot be done overnight – the process needs to be well-coordinated,» said Kazāks, adding that in any case both institutions are unlikely to end up under the same roof sooner than 2022.

The head of the central bank admits FKTK has done a lot of good in market supervision. «At the same time, if we look at the current finance market situation, we have to admit that there have been failures. Money laundering prevention cases have not been sufficiently well-supervised,» adds the governor of the Bank of Latvia.

Read also: Latvia is doing everything to avoid getting grey-listed, says Kazāks

He also says FKTK’s communication with the finance sector has not been good enough lately.

«Unfortunately, we can see in many cases banks choose to avoid risks instead of managing risks. There will always be unclear situations, the market will exaggerate. However, the situation in Latvia has gone too far. This is why it is good to see the new FKTK head to have named this topic as one of her priorities – discussing what is permitted and what is not, what should be done and what should not. Banks should learn to manage risks to avoid situations when financial institutions choose not to take risks,» says Kazāks.

Leave a reply

Financial Action Task Force decides to not add Latvia to its «grey list»

The world’s central anti-money laundering organization Financial Action Task Force has decided to not exercise increased monitoring of Latvia. This means the country will not be added to the organization’s «grey list», as LETA was informed by Latvian Prime Minister Krišjānis Kariņš’s office.

Latvian minister outlines Germany as an important strategic partner

Germany is a strategically important economic partner for Latvia, said Latvian Foreign Affairs Minister Edgars Rinkēvičs during his meeting with Germany’s Federal Minister for Economic Affairs Peter Altmaier on Friday, 21 February.

Access to illegal TV content denied to 11 000 Latvian households last year

In 2019 access to illegal TV content in Latvia was denied to 11 000 households. A dozen criminal processes have been commenced over illegal supply of audiovisual content, as reported by State Police.

Producer price level in Latvia’s industry down 1.3%

Compared to December 2019, the level of producer prices in Latvian industry didn't change in January 2020. Prices of products sold on the domestic market reduced by 0.7 %, but prices of exported products – increased by 0.7 %.

In China, coronavirus hits prisons as 500 prisoners and guards infected

In China, the outbreak of the dangerous coronavirus continues, over 500 cases of infections have been registered in prisons. Meanwhile, death toll from health problems related to the virus has reached 2 236, according to The Guardian.

Saudi Arabia provides Latvian companies stable tax regime

Latvia and Saudi Arabia have plans to provide businesses with stable tax regimes for companies working in each respective country without coverage from the other country’s regulations, as reported by Saeima’s press-service.

Estonia accuses Russia over large cyberattack against Georgia

Estonian Foreign Minister Urmas Reinsalu has stated that Estonia, just as Georgia and a number of Western countries, sees a Russian intelligence service as having perpetrated a large cyberattack on Georgia in autumn 2019, according to a statement on the web site of the Estonian Foreign Ministry.

Latvian Healthcare Ministry puts third stage of e-health project on hold

Healthcare Ministry plans to focus on existing e-health services and will not develop their next stage, said minister llze Viņķele at a press-briefing on Friday, 21 February.

Latvian Saeima decides to reduce planned excise tax rise for alcohol

The increase of excise tax rate for alcoholic beverages planned for 1 March will be more moderate. This much is provided by amendments to the Law on Excise Duties approved in the final reading by the Saeima on Thursday, 20 February, as reported by Saeima’s press-service.

Irish PM Varadkar loses confidence of parliament

Irish prime minister Leo Varadkar has stepped down from office after he failed to win the confidence of the majority of the new composition of the Irish legislature, British news portal The Guardian reports.

National Electronic Mass Media Council agrees on members’ duties

Latvian National Electronic Mass Media Council, following the election of two new council members, has agreed on duties of members, as confirmed by newly-elected NEPLP members in an interview to Latvijas Radio.

Shareholder Juris Radzevičs dismisses Rīgas namu pārvaldnieks board member

Juris Radzevičs, who is a shareholder in LLC Rīgas namu pārvaldnieks has dismissed RNP board member Ardis Pāvilsons, as LETA was told by the official.

Germany remembers victims of Hanau shooting; attacks investigated as terrorism

In Germany, the death toll of the Hanau shooting attacks has risen to nine people. Police has pointed to a possibly racist mindset of the suspected attacker and is investigating the crimes as terrorism, BBC and DW report.

Experts predict number of electric vehicles in Latvia exceeding 36 000 by 2030

There will be more than 36 000 electric vehicles in Latvia by 2030. This prediction was voiced by AS Latvenergo board member Kaspars Cikmačs during Clear Energy for Transports conference on Thursday, 20 February.

Highest volume of harvested grains recorded in Latvia’s history in 2019

In 2019 the highest harvested production of grain was recorded – 3.2 million tonnes, which is 1.1 million tonnes or 1.5 times more than a year ago.

Denmark cancels Misāne’s extradition to SAR in favour of extradition to Latvia

On Thursday, 20 February, the Danish court approved the decision of the Danish office of the prosecutor to cancel Latvian citizen Kristīne Misāne’s extradition to the South African Republic. On top of that, the Danish office of the prosecutor has also decided to extradite the woman to Latvia instead, as reported by Ritzau.

Warmest winter anyone can remember is wreaking havoc on Lithuania’s nature and store shelves

This winter, so abnormally warm in Lithuania, is bewildering everyone and is wreaking havoc both in the nature and on the store shelves.

Finnish court acquits Baltic online alcohol seller over tax evasion

A court in Finland has delivered a not guilty ruling in a case, where a man had been charged with tax evasion over the online sale of alcohol to Finns in Latvia and Estonia, using online platforms, Finnish broadcaster YLE reports.

Latvian Saeima committee to consider initiative to establish a park at former Marss cycling track

On Thursday, 20 February, the Saeima decided to submit the collective initiative on establishing a part on the territory of the former cycling track Marss to the parliament’s National Security Committee for review, BNN was told by Saeima’s press-service.

Ruling in Maxima tragedy criminal case to be appealed

Riga City Pārdaugava Court’s ruling in the Maxima tragedy criminal case will definitely be appealed, said senior prosecutor Aivars Ostapko in an interview to Latvijas Radio on Thursday, 20 February.

Proposal voiced to deny Aivars Lembergs the option to enter the Saeima

A proposal has been voiced to deny suspended Ventspils mayor Aivars Lembergs, who is accused of committing serious crimes and is added to the list of sanctions of USA, the right to participate in Saeima’s activities, according to information from LTV.

Latvian police liquidates fake news site Employee detained

Latvian State Police has detained a 2001-born young man for reporting fake news, BNN was informed by police.

Cyber security drill held by Estonia in NATO Parliamentary Assembly

In Brussels, during the NATO Parliamentary Assembly, Estonian experts have held a strategic cyber drill, where member state legislators have been asked to look for solutions in a simulated cyber incident, ERR reports.

Turkey warns of military operation in Syria to stop government-Russian forces

Turkish President Recep Tayyip Erdoğan has stated that Turkey’s offensive in north-eastern Syria could start at any moment with the aim of stopping an offensive of the Syrian government and Russian forces on opposition-controlled territory, BBC reports.

Riga Zoological Garden board members Līdaka and Morozovs laid off

Both Riga National Zoological Garden’s chairman of the board Ingmārs Līdaka and board member Andris Morozovs have been fired from their respective posts, as confirmed by Līdaka.

Newest comments

Do NOT follow this link or you will be banned from the site!