Latvia CBDC Tracker

Latvia is currently in the research phase. Unlike some other members of the European Union, Latvia appears to be largely deferring to the European Central Bank’s work on its CBDC (referred to as the digital euro). The Bank of Latvia provides some information, but it is all predicated on the European Central Bank’s work.

Note: This page is dedicated to the work done by the government in Latvia. However, Latvia is a member of the European Union and Eurozone. If the European Central Bank launches a CBDC (referred to as a digital euro), then this page will be changed to reflect that. Until then, the Eurozone page has notes about the development of the digital euro.

CBDC History and Development

In October 2022, Latvijas Banka’s Reinis Vecbaštiks and Emīls Dārziņš provided an update on the digital euro. They noted that privacy is a fundamental right that the European Central Bank would strive to provide, but they also acknowledged privacy would be balanced against financial surveillance efforts used to combat money laundering, terrorism, and the drug trade. The authors wrote that “a compromise will have to be achieved.”

Latvijas Banka’s 2022 Annual Report briefly mentioned CBDCs. The report noted that the central bank “participated in the investigation process” for the digital euro and “cooperated with the HLTF-CBDC (High Level Task Force on Central Bank Digital Currency) and its working group.”

In March 2023, Latvijas Banka’s Reinis Vecbaštiks wrote a brief essay on digital euro developments within the central bank’s spring update. Acknowledging that Latvian citizens were taking notice of the digital euro, Vecbaštiks explained that the digital euro was still in the research stage. Vecbaštiks further said, “From the perspective of the user, the role of private payment service providers in the digital euro ecosystem would be similar to that of existing payment solutions.”

In April 2023, the Financial Intelligence Unit of Latvia published a CBDC study. The study largely focused on the basics of CBDCs (e.g., design considerations, models, etc.). However, given the nature of the Financial Intelligence Unit of Latvia, the report also focused on the implications a CBDC might have for efforts to combat money laundering, terrorist financing, and other financial crimes. The report cautioned that “The digital euro is likely to have both positive and negative impacts on combating financial and economic crime.” Across the different design features, privacy and programmability were rated as the highest risks.

Human Rights and Civil Liberties Concerns

Latvia earned an 88 out of 100 in Freedom House’s 2023 Freedom in the World report. As such, it ranks highly across nearly all metrics. Furthermore, it must be said that the ability of the Latvian government to abuse a CBDC directly is debatable because the CBDC that would be used in Latvia would be provided by the European Central Bank—representing the European Union. Even then, however, it’s important to recognize that the creation of a CBDC could open the door to risks to financial privacy and financial freedom.

For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.