Latvia: EUR adoption planned for 1 January 2014
Further to our Marketflash LM13002, dated 10 January 2013, the Latvian lawmakers have, on 31 January 2013, passed the final reading of the Euro adoption bill setting rules for the transition to the single European currency in Latvia.
The new legislation is intended to ensure an effective and transparent transition, providing for:
- A simultaneous switch to the Euro in cash, non-cash and electronic transactions;
- Parallel price reflection for goods and services;
- Adjustment of book-keeping to the currency switchover; and
- Adjustments for the financial market.
Under the Euro adoption bill, both Lats and Euros will remain legal tender in Latvia for two weeks after the switch to the Euro currency.
The Euro adoption bill also provides for measures aimed at adjusting the financial market to the Euro adoption. For floating rate instruments pegged to the RIGIBOR index, RIGIBOR will be replaced with the EURIBOR index of the respective term. Creditors and borrowers will also be able to agree on replacing RIBIBOR with another money market index provided that it does not make the loan terms worse for the borrower.
The date for Latvia's switch to the Euro currency will be set by the Council of the European Union based on the convergence report on Latvia's readiness to join the Euro zone. It is planned that Latvia will make the transition on 1 January 2014. The Finance Ministry's information suggests that the Euro exchange rate, which the Council of the European Union is expected to set in the summer of 2013, will be close to the current rate of 0.702804 Lats per Euro.
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