The European Commission authorised, on 23 December 2008, the Latvian support scheme for the country's financial markets, which provides guarantees to eligible banks to ensure their access to financing. The measure is in line with the EU executive's guidelines on state aid for the banking sector to cope with the financial crisis (see Europolitics 3617). The scheme ensures non-discriminatory access, is limited in time and scope, requires market-based remuneration and contains sufficient safeguards to prevent abuse.

The guarantee covers all liabilities with the exception of interbank deposits, subordinated liabilities and collateralised liabilities, such as covered bonds, which have a maximum maturity of three years. In exceptional cases, the Latvian plan allows the takeover of ailing banks. The scheme has a ceiling that corresponds to around 10% of the country's GDP. Only solvent banks are allowed...

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