Latvia and the euro

Latvia replaced its previous currency, the lats, with the euro on 1 January 2014, after a European Union (EU) assessment in June 2013 asserted that the country had met all convergence criteria necessary for euro adoption. The adoption process began 1 May 2004, when Latvia joined the European Union, entering the EU's Economic and Monetary Union. At the start of 2005, the lats was pegged to the euro at Ls 0.702804 = €1, and Latvia joined the European Exchange Rate Mechanism (ERM ll), four months later on 2 May 2005.

Latvia's Treaty of Accession to the European Union (EU) obliged it to eventually adopt the euro. Latvia had originally planned to adopt the euro on 1 January 2008, but for various reasons this was subsequently delayed several times. After being elected in 2011, Latvian President Andris Bērziņš announced the official goal was for Latvia to join the eurozone in 2014, saying "personally I'm very optimistic we'll join the euro on 1 January 2014. It's our goal and we are working hard to implement this process." In September 2012, Latvian Prime Minister Valdis Dombrovskis reiterated that "Latvia is on track for 2014 and permission to join would be sought in 2013."

Before Latvia could adopt the euro, it had to meet five convergence criteria set by the EU. An assessment by the European Central Bank (ECB) in April 2012 found that Latvia met three of the five criteria. The Latvian Finance Minister announced in December 2012 that since convergence checks were only conducted biennially, an extraordinary report would be requested in February 2013, but in January 2013 Prime Minister Dombrovskis stated that for "technical reasons" the request had been delayed until March. However, he was confident that Latvia was "fulfilling the Maastricht euro adoption criteria with a considerable reserve, therefore I don't see any basis on which this convergence report would be negative." The Latvian government formally applied for a convergence check at the beginning of March, and the resulting convergence report, published on 5 June 2013 by the European Commission, concluded that "the Commission considers that Latvia fulfils the conditions for the adoption of the euro." The ECB simultaneously published a report which noted that "Latvia is within the reference values of the convergence criteria". Latvia's adoption of the euro, a legal obligation now that the convergence criteria have been met, was given final approval by the Economic and Financial Affairs Council on 9 July, and the lats was replaced with the euro on 1 January 2014. The Euro switchover ceremony took place at a site where Latvia’s crisis began – the former headquarters of the collapsed Parex bank, now headquarters of state-owned Citatele bank, which emerged from Parex’s ruins.

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