On 23 September 2021, the Saeima of the Republic of Latvia adopted the new Law on Latvijas Banka in its final reading. It stipulates the merger of Latvijas Banka and the FCMC as of 2023, respecting the independence of monetary policy functions, as well as the functions of the finance and capital market supervisor and resolution authority. At the same time, the Saeima of the Republic of Latvia also approved amendments to the Law on Latvijas Banka that provide for the main transitional provisions to be followed during the merger.
It was already in April 2021 that Latvijas Banka and the FCMC, in the runup to the merger, commenced work on the governance framework of the project, as well as the development of the objectives to be attained and a detailed work plan by agreeing on the basic principles of the project implementation at the start. On 30 June 2021, a cooperation agreement between Latvijas Banka and the FCMC was concluded. It was aimed at ensuring successful, efficient and timely preparation for the integration and its process. Within the cooperation agreement, the Commission of the FCMC Merger with Lavijas Banka or the Integration Commission was established. It is responsible for taking decisions related to a successful process of the integration and its implementation, except those decisions that are within the competence of the Council of Latvijas Banka or the FCMC Council. The Integration Commission is chaired by the Governor of Latvijas Banka, and its Deputy Chair is the Chairperson of the FCMC. Within the framework of the cooperation agreement, 10 working groups dealing with the issues of integrating the FCMC core functions and the provision of support functions were established. The working groups are composed, on a parity basis, of representatives of Latvijas Banka and the FCMC. These working groups perform practical work to ensure the integration process, as well as make proposals and draft decisions for the Integration Commission. Each institution has appointed a project manager to coordinate the activities of the working groups. The project managers are responsible for efficient organisational management of the integration process, including cooperation with the Integration Commission to address the issues of the management and organisation of the merger process, and for coordinating the work of the working groups.
Since the adoption of the Law on Latvijas Banka in the final reading, the operation of the Integration Commission is regulated by transitional provisions of the law.
On 7 October 2021, the Integration Commission approved the framework for the integration project composed of the integration plan, the key performance indicators and the key milestones. Taken together, they define the work to be carried out, its sequencing, deadlines and the expected results. On 25 October 2021, the integration plan was approved by the Council of Latvijas Banka.
Active implementation of the integration plan was commenced in autumn 2021. In October 2021, an organisational structure of the integrated institution was drafted. It forms the basis for further detailed development of the organisational structure of the integrated institution and opening of positions for the FCMC employees who will continue their career at Latvijas Banka. Examination of the key features of and distinctions between the two institutions' cultures was completed, thus constituting the basis for defining the institution's common culture. Strong and positive culture of an organisation with shared values has been recognised as being one of the major success factors of the integration project.
At the end of 2021, the take-over of one of the FCMC tasks, i.e. enhancement of financial and economic literacy of the public, was fully completed at Latvijas Banka. The absorption of this basic function by Latvijas Banka as of 1 January 2022 served as a pilot project for the whole integration process, facilitating a smoother and more timely integration of the FCMC functions, while ensuring well-timed integration of human resources, integration of the financial literacy content and planning of IT resources.
Pursuant to the transitional provisions of the Law on Latvijas Banka, Latvijas Banka is entitled to provide the services of support functions to the FCMC that are required for the implementation of the FCMC's tasks. In 2021, Latvijas Banka began to provide archive, as well as certain IT support services to the FCMC.
Latvijas Banka and the FCMC managed and implemented the integration project using almost exclusively their own resources in 2021. External consultants were only involved in the project aimed at exploring cultures of both organisations.