Latvia joined the ESM on 13 March 2014

The Republic of Latvia, which joined the euro area on 1 January 2014, became the 18th Member of the ESM on 13 March.

In July 2013 the Council of the European Union formally approved Latvia’s accession to the euro area from 1 January 2014. The Latvian authorities then sent an application to join the ESM, which was approved by the ESM Board of Governors in October 2013. According to the ESM Treaty, countries become ESM Members 20 days after depositing the “instrument of accession” (i.e. a national legal act confirming ratification of the ESM Treaty). This legal obligation was fulfilled by the Latvian authorities on 21 February, enabling Latvia to officially join the ESM following the specified time period.

Latvia will take part in the ESM’s decision-making process through its representatives in the Board of Governors and Board of Directors.

Latvia’s rights and obligations as ESM Member

ESM Members may request financial assistance if they experience problems with market financing, if such assistance is necessary to safeguard the financial stability of the euro area as a whole and of its Member States.

As an ESM Member, Latvia is obliged to subscribe to ESM capital, which provides backing for the debt instruments issued by the ESM in order to finance loans and other forms of financial assistance.

The technical terms of Latvia’s accession to the ESM were approved by the ESM Board of Governors, which is composed of the euro area finance ministers. These terms include the calculation of Latvia’s capital contribution to the ESM. Taking into account a temporary correction for new ESM members whose GDP per capita is less than 75% of the EU average, Latvia’s ESM capital contribution key was set at 0.2757%. This implies a capital subscription of €1.93 billion, including €221.2 million in paid-in capital. The payment of paid-in capital will be made in five annual instalments of €44.24 million each.  

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