Banks, Financial Services, Latvia

Economic expert for the central bank Vilnis Purvins indicated that the significant fall in demand for cash in 2009 was brought about by several factors, writes LETA.

First of all, for several years, the main factor affecting the decrease in the volume of cash currency in circulation has been the expanded use of non-cash currency, and the proportion of cash currency in use continues to shrink. In 2009, it decreased from 14.3% at the beginning of the year to 11.4% by its end.

Hence the most important role in the total amount of money was played by deposits in banks, whose annual increase amounted to 2%. Purvins noted that over an extended period of time, settlements in non-cash currency instead of cash have increased by several times, for example the percentage of the population which has a current account has almost tripled from 27% to 78%.

In addition, the demand for cash currency was further diminished by falling domestic demand and retail turnover. Influenced by the holiday season, the demand for cash did however increase substantially at the end of the year – by 4.3%. In some months of last year, exchange of cash in lats for foreign currencies was observed as a result of nervousness in the financial markets, indicated the central bank economist.

Of the total amount circulating in banknotes, 8.4% is in 5 lat notes, 8.6% in 10 lat notes, 53.1% in 20 lat notes, 8.4% in 50 lat notes, 12.9% in 100 lat notes, and 8.6 is in 500 lat notes.

Of total amount in coins, 2 lat coins account for 14%, 1 lat coins for 49.1%, 50 santim coins for 13.5%, 20 santim coins for 7.5%, and coins of other denominations for between 1 – 4.6% each.

5 lat, 10 lat and 20 lat banknotes are predominant, with 19.4 million 20 lat, 12.3 million 5 lat, 6.3 million 10 lat, 0.9 million 100 lat, 1.2 million 50 lat, and 125.7 thousand 500 lat banknotes in circulation.

Small denomination coins make up the majority of coins in circulation: there are 162 million and 108.2 million 1 santim and 2 santim coins respectively, along with 15.4 million, 27.9 million and 4 million 50 santim, 1 lat and 2 lat coins respectively.