The lats is the official currency of the Republic of Latvia. The lats is subdivided into 100 santims. The current lats was introduced in 1993 as Latvia’s first permanent currency after gaining independence from the Soviet Union. The name of the currency derives from the name of the country, a convention also used for another Baltic currency, the Lithuanian litas. Latvia became a member of the European Union in 2004, and the country is scheduled to adopt the euro in 2012. In the meantime, the Latvian lats is issued by the Bank of Latvia.
The Republic of Latvia was first established in 1918, and one of the first steps taken by the new country was to set up a banking and currency system. The Bank of Latvia began operating in 1922 and issued the first Latvian lats the same year as a replacement for the temporary currency, the rublis, introduced in 1918. The rublis was valued at 1.5 Russian rubles, and the first lats was introduced at a rate of 1 lats: 50 rublis. The lats remained the currency of Latvia until the country was annexed by the Soviet Union in 1940, and the lats was replaced by the Soviet ruble. In 1990, when the breakup of the Soviet was seen as imminent, Latvia passed a resolution to create the new Republic of Latvia monetary system. It began with the reestablishment of the Bank of Latvia and the introduction of a temporary currency, the Latvian ruble in 1992. The Latvian ruble was valued on par with the Soviet ruble until it was replaced in the lats in 1993 at a rate of 1 lats: 200 rubles.
Latvia has experienced one of the highest growth rates in GDP of any European country since 2000. However, the country was greatly affected by the world economic crisis of 2008 to 2009 and has yet to recover. In the first quarter of 2009, the Latvian economy dropped by 18 percent, the largest drop in the European Union. The drop was altogether due to primarily consumption-based growth financed by personal debt. Foreign investment in Latvia is considered modest when compared to other nations in the region. The primary industry in the country is transportation. Latvia has three major port cities that are used as a transit for crude oil. Other large industries include manufacturing and agriculture.