In preparation for the euro - a step by step

Dace Kalsone, 07.05.2012. Photo: Bank of Latvia, 07.05.2012

Mr Andris Ruselis

Interview with the Head of the Money and Payment Systems Working Group, the vice-president of the Bank of Latvia – Mr Andris Ruselis

Money and Payment Systems Working Group is the only working group out of five Steering Committee's working groups that does have a stable and constant institutional experience and a stable and constant management. Could you please tell about this working group and its activities?

Money and Payment Systems Working Group (MPSWG) started its work in 2005. The main tasks of the working group are related to the cash and non-cash euro introduction activities, as well as with the euro securities settlement systems.

I am the head of the working group since its launch. In the working group there are numerous institutions and organisations presented, i.e. the Association of Commercial Banks of Latvia, the Ministry of Transport, the Ministry of Welfare, State JSC "Latvijas Pasts", Latvian Central Depository, the Bank of Latvia, the Treasury, State Chancellery and the Ministry of the Interior.

Please elaborate about the issues that your working group is dealing with?

Speaking about more detailed MPSWG activities, I am not afraid to affirm that the MPSWG supervises many of euro project's core issues.

In this context, firstly I should mention about the cash changeover issues. In the competence of the MPSWG there is to maintain the necessary amount of euro banknotes, the organisation of national euro coins competition and the coinage, the delivery of euro banknotes and coins to the credit institutions, as well as withdrawing of lats banknotes and coins from circulation. In addition the MPSWG is going to plan the delivery of banknotes and coins to the customers of credit institutions, for example, to the post offices, merchants and other entrepreneurs. Under the auspices of the MPSWG there are also security issues of euro introduction.

The MPSWG is taking care that the introduction of the euro is smooth and effective in all Latvia's regions. It is known that one of the core principles of the Latvian National Euro Changeover Plan is to focus on the worst positioned inhabitants in terms of the access to financial services. In other words, this means that the euro project is to ensure that the outermost regions of the country is covered for exactly the same services as, for example, residents of Riga, to exchange their lats cash reserves to the euro. To choose the most appropriate strategy to ensure that core principle, the Bank of Latvia, the Association of Commercial Banks of Latvia and the State JSC "Latvijas Pasts" is working on financial services (credit institutions and their branches, ATMs, post offices) providers' location identification. Admittedly, over time, the service providers' location may change, thus, the service availability of the database will be updated periodically. With the help of the database we hope to get a clear picture of the regional population that will need more support at the euro changeover process.

As well as in the field of non-cash there is much to be done to prepare the Latvian payment systems for euro environment. This means that MPSWG institutions have to maintain a series of measures to ensure the Latvian payment and securities settlement systems comply with the requirements of the euro area.

Estonia adopted the euro in 2011. Is the neighbour experience also useful for the preparation of the introduction of the euro in Latvia?

Yes, Latvia can learn a lot from Estonia. This time, I do not think about the macroeconomic policy, but more about the project organization, content and management. We have no time to invent a new bicycle. Instead, we are trying to use the best of our northern neighbour's experience. This applies as to the drafting of the euro introduction act, as to the principles of the National Euro Changeover Plan, as well as to a variety of organisational and administrative matters.

We highly appreciated Estonian colleagues' help to keep us informed about the introduction of the euro success factors, as well as about the aspects that might be useful to plan a little differently.

Has the MPSWG being influenced by the society cautious attitude towards the euro introduction in Latvia?

Not at all. The working group has been active since its beginning. Likewise currently, the amount of work and activities is constantly growing. For example, working group members are currently very actively involved in the drafting of the euro introduction act. Working group's institutions are interested that the euro introduction act as much as possible reflects all participants' interests. Therefore, the commentaries received in the drafting process are sometimes contrary to each other. However, to say that MPSWG working methods are very transparent and all received proposals are discussed in detail at the working group meetings. As a result, we are able to come to the adjusted compromise decision.

In parallel, the working group used the opportunity to consult with other euro project working groups and organisations on any matter further development or formulation. For example, preparation of proposals for the Steering Committee of the shortening of the dual circulation period we were consulting with both – Non-financial Corporation and Consumer Working group to learn what could be response of consumers, as well as with the Public Awareness and Communication Working Group to advice on the issue in the scope of euro communication campaign. A similar consultation with the other working groups is implemented quite often, because as I mentioned – one of the main MPSWG working principles is transparency and debate.

Future plans for your working group are very impressive. Are the current tasks fulfilled at the same pace and success?

Absolutely. We are following the working group's plan that includes all tasks to be performed for the euro introduction. At present, our topical issues are related to the changeover of the euro cash. For example, since the beginning of 2012 the Bank of Latvia has started preparations for Latvian euro coin minting.

Also, looking back, I am happy to conclude that MPSWG working group members were not sitting around and doing nothing. A number of MPSWG tasks included in the work plan have already been completed. For example, Latvia has successfully joined the TARGET 2 system, the clearing system of the Bank of Latvia is ready for payments in euro, there was performed the contest for the Latvian national side of euro coins design, etc.

At the end of our interview what would you wish to Latvian inhabitants in relation to the euro introduction?

Firstly, I fully understand people's concerns about the loss of our national pride and symbol of independence – Latvian lat. However, to say that the Latvian euro coins will continue to display Latvian national pride – the folk maiden and Latvian small and large coats of arms. This means that even after the euro introduction the lat elements will not be lost, but will continue to delight us, as well as foreign inhabitants, including outside the European Union. The Bank of Latvia will exchange Latvian lats against the euro forever.

Secondly, I would like to emphasize that the euro introduction is not the monetary reform, and people do not have to worry that their stocks will decline in value. The euro introduction means that the monetary value of all lats will continue to be expressed in euros, by applying the exchange rate specified by the Council.

Thirdly, to facilitate their daily life at the beginning of 2014 and to escape needless worries about the opportunities to exchange lats cash stocks against the euro, I would like to encourage everyone to timely considerations about the advantages of non-cash savings. According to the euro project all non-cash savings in lats will be automatically converted to euro on the 1st January 2014. Believe me, at the beginning of a year there are much more pleasant exercises then concerns about how to convert own lats cash reserves in euros.

Thank you very much for the interview and I wish you success in the future!

Thank you and taking the opportunity, I would like to thank the MPSWG members for their cooperation and activity in a preparatory process of the euro introduction. I hope that in the future our cooperation will be just as good and professional.