Today June 5 Latvia made important historical step- the European Commission and European Central Bank have approved Latvian entry into the Eurozone. Latvia will join the Euro club in 2014 and replace its historical national currency the Lats (LVL) For years Lats was the symbol of the Latvian national sovereignty. It was also one of the most beautiful European currencies. It will be no wonder if in following decades Latvian coins will become the hit among the collectors. This article is about this currency and its history.
When the Republic of Latvia was proclaimed in 1918, it had no national currency. It was a currency chaos Russian Czarist rubles and German Ostmarks were all used at the same time. The first Latvian national currency was the Latvian Ruble that was supposed as the provisional currency until peace and economical stability was to be reached. The law establishing Lats as the national currency was approved in 1924. The law was made after long discussions. The Finance Minister Ringolds Kalniņš (Kalning) desired to remove state treasury notes and use the state gold fund to issue golden Lats. His plan was influenced by banker Izidor Friedman who advised to fill the state treasury with gold. However, the parliament turned down their plans as the Latvian golden reserves were too low and extra golden import was required to make golden Lats. Kalnings was forced to resign. On November 14, the parliament voted to keep state treasury notes and introduced the dual currency system. The Ministry of Finances was responsible for the state treasury notes while the Bank of Latvia emitted the paper currency. There was 10, 20, 25,50, 100 and 500 paper banknotes. And 1,2 and 5 silver Lats. 1, 2 and 5 Santims were made from bronze and 10, 20, 50 Santims were made from nickel. The name Santīms came from French word centime. Centime was used in France and is still used in many of its former colonies.
Latvian banknotes had national motives. The women in folk costumes, national heroes like Krišjānis Valdemārs and Jānis Čakste. The Five Lats silver coins featuring the profile of Latvian women in folk costumes were the most famous of those times. Nicknamed Milda – it became a symbol of the independent Latvia. During the Soviet occupation the 5 Lats silver coins were kept as treasures a symbolic reminder of the past. On 1939 the Authoritarian leader Kārlis Ulmanis desired to make silver coins with his portrait. The sketch was made and despite coming war British coin mint received orders to issue them. The Soviet occupation halted this, however a prototype of this five Lats coin with Kārlis Ulmanis on it was made.
The Soviet occupation ended the life of Lats. After full annexation Lats was replaced with the Soviet ruble. Latvian Lats were kept by families as memorabilia. Others gathered them and sold them to collectors. After the regain of independence these old Latvian Lats became even more valuable.
Already in 1988 first calls of restoring the Lats were made. An art competition was made for new Lats design while official currency was still the Soviet Ruble. On July 31 1990 the Supreme Council of the Republic of Latvia (still unrecognized by Moscow) issued law for making the currency system for Latvia. Discussions about the new Lats lasted all 1900, while Latvia was not still fully sovereign. Latvia was still pretty much dependent on the Soviet Currency. After full independence on August 1991 Latvia again used the old scheme. Before Lats the Latvian ruble was used as the interim currency. People nicknamed them repšiki after the president of the Bank of Latvia – Einārs Repše.
On 1993 Lats again returned in peoples wallets. 5, 10, 20,50, 100, 500 Lat banknotes were issued. Five Lat banknote features oak the Latvian national tree, 10 Lats shows the view of the river Daugava, 20 Lats has the Latvian national housing. 50 Lats has sailing ship and the 100 Lats features Krišijānis Barons the Latvian intellectual worker. 500 Lats features the famous Milda from historic five Lats silver coins. 1 and 2 Lats are coins. 1 Lats coin has salmon on it. Interestingly the 1 Lats with Salmon is very similar to the Icelandic 1 krona that also has fish on it. For years the Bank of Latvia has released many special coins dedicated to national events or sightings. Collecting these coins are the national sport for the collectors. Latvian special coins have won many international prices.
In 2004 Latvia joined the European Union. Latvian government set path to fulfill the Mastricht criteria to join the Eurozone. It was a long road thwarted by economic crisis however on 2012 Latvian government finally voted for joining the Eurozone. Despite the general distrust on the Euro and political campaigns made by many groups on both political wings, at January 1 2014 Lats will be replaced by the Euro. This time this historic decision is based on the general will of the Latvian people as the majority of the Latvian citizens voted for joining the EU. Estonia had already joined the Eurozone on 2012 and Lithuania will probably do it in 2015. As historian I will not go into speculations about the future of the Eurozone and its positive or negative effect on the Latvian economy, however Latvia had do to this sooner or later. The joining Euroze is a question of geopolitical importance. Even Poland with their Zloty will do it someday and its the historic responsibility of the Latvian government to carry out this transition successfully on the behalf of the Latvian people.