Latvia Replaces Lats Coins with Euros|
March 05, 2014
Latvia replaced its lats coins and bank notes with euros as of Jan. 1. Both currencies were to circulate side-by-side for two weeks, at which time the lats would be considered to be officially withdrawn.
Latvia is the 18th European Union member to embrace the currency union as well. There are now approximately 333 million people using the single currency.
While Latvia receives the euro, the world loses one of its most valuable bank notes. The 500-lats note had an exchange value of about $982 at the time this article was being written. The Swiss 1,000-franc note was worth an exchange value of about $1,123, while the 10,000 Singapore dollar note had an exchange value of $7,908. The Japanese 500-yen coin was valued at $4.73 at the time this article was being written, making it the highest value circulating coin now in use. (This statistic excludes bullion and commemorative coins.)
The road to the euro was not easy for Latvia. At the moment Latvia has the fastest growing economy within the EU. The lats has been pegged to the euro since 2005, stubbornly continuing this policy throughout a Latvian recession in 2008 to 2009. Latvia Prime Minister Valdis Dombrovskis resigned in November following a deadly store collapse in the capital city of Riga.
Some surveys suggest about half of Latvia’s two million citizens do not want the currency union. A survey conducted in December 2013 by SKDS indicated 8 percent of those surveyed “fully support” the euro, while 16.5 percent “generally favor” the euro, this totaling less than 25 percent giving an acceptable opinion.
According to Latvia’s Unity Party member Rasma Karklins, “The reason [for Latvia joining the currency union] is simple. Latvia has continued to be a primary target for Russian soft and not-so-soft power, including unfriendly rhetoric, cyber attacks, and military exercises on its border.” The Unity Party is currently the ruling party in Latvia.
The EU is cautious of its new currency member, this being due to the significant number of Russian depositors whose money is in Latvian banks. Russia is not an EU member, nor does it look towards becoming a member.
The other two Baltic nations, Estonia and Lithuania, joined both the EU and the North Atlantic Treaty Organization in 2004, further irritating neighboring Russia. Estonia adopted the euro in 2011. Lithuania hopes to join the currency union in 2015. For Latvia the euro is the fourth currency it has used within the past 20 years.
The Bank of Latvia, central bank for the nation, supplied domestic banks with both euro coins and bank notes in advance of the conversion. The banks were then to supply appropriate businesses with the new coins and notes. The central bank also distributed 800,000 starter kits to the public on Dec. 10, 2013.
The Bank of Latvia indicated lats can be exchanged at a rate of one euro for 0.702804 lats at no charge through post offices until March 31, through commercial banks until June 30, and then through the central bank itself with no time limitations. Automatic Teller Machines were to distribute euro bank notes exclusively beginning on the first of the year.
A “Fair Euro Introducer” campaign launched in July 2013 meant to ensure merchants would not profit from exchange rate conversions during the crossover period. Prices for goods and services were to be posted in both lats and euros between Oct. 1, 2013 and June 30, 2014. The campaign was to be monitored by the Consumer Rights Protection Center.
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