Latvia’s Participation in the Exchange Rate Mechanism of the European Monetary System

Abstract

The first objective is to investigate the on-going monetary policy of the Bank of Latvia, to analyse the basic principles of its operations and influence on national economic growth. The second objective of this article is to follow the main trends in the development in the Latvian’s monetary policy and the European Monetary system accession process, with a focus on the local currency stability problems. It discusses the process and strategies for choice of the strategy as well as the main issues that have arisen in the accession process. Both objectives fully corresponding to the article’s research object, i.e. to a monetary policy of the Bank of Latvia. Regarding the developed countries the general monetary policy objectives deals not only with maintenance of stability of the exchange rate and general price level, but also with stimulation of economic development, growth of employment and incomes of the citizens. The period from 2004 till 2011 is being investigated. The author uses a wide range of research methods, such as : grouping method, method of comparison of financial ratios, etc.