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Saeima committee tells Finance Ministry to assess merging FCMC with Bank of Latvia.

RIGA, Sept 11 (LETA) - Saeima Budget and Finance Committee on Wednesday instructed the Finance Ministry to consider merging the Financial and Capital Market Commission (FCMC) with the Bank of Latvia by mid-2020.

During a review of amendments to the Law on the Bank of Latvia and the central bank governor's term of office, the deputies began discussing the possibility of merging the FCMC with the Bank of Latvia. According to the committee's head Martins Bondars (For Development/For), this proposal was formulated as the committee's opinion.

Bondars explained that there were different models for managing the financial sector in the European Union countries. In some countries, the function is performed by the central bank, while in other countries the financial sector is supervised by an independent authority. It has to be analyzed whether in a country as small as Latvia, with limited human resources, the current banking supervision model should be maintained, or maybe it would be appropriate to merge the supervisory authority with the central bank, said Bondars.

MP Igors Pimenovs (Harmony) added that the FCMC was established in 2001 for more professional supervision of the financial sector. Accordingly, Pimenov wished to know the benefits of merging the FCMC with the Bank of Latvia, without the argument that Latvia was a small country. In his opinion, expert judgment is needed on the merits of merging the FCMC and the Central Bank. MP Vjaceslavs Dombrovskis (Harmony) agreed, saying that he would like to see an evaluation of the two options.

The Bank of Latvia Council member Arvils Strautins admitted at the committee's meeting that the proposal to merge the FCMC with the Bank of Latvia was nothing new. At the same time, he declined to comment on the proposal, as such a merger would be a political decision.

"If politicians decide so, we can do it. Logically, if the two institutions are merged, it would achieve better efficiency and resource savings. Currently, the Bank of Latvia employs about 500 people and the FCMC has a staff of about 200. However, it is clear that the workload of the FCMC is not decreasing, only increasing," said Strautins.

The FCMC's representatives also told the committee members that merging the commission with the central bank had a rational basis, especially if the purpose was to optimize the two institutions. At the same time, the FCMC representatives pointed out that the FCMC's workload was increasing.

The Saeima committee told the Finance Ministry to submit an assessment of the FCMC's merger with the Bank of Latvia by June 30 next year, so that necessary legislation could be drafted by next October.

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Publication:LETA
Geographic Code:4EXLA
Date:Sep 11, 2019
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