Latvian lats Latvian lats The lats (plural: "lati" (2–9) "latu" (10 and more)), ISO 4217 currency code: LVL or 428) was the currency of Latvia from 1922 until it was replaced by the euro on 1 January 2014. A two-week transition period during which the lats was in circulation alongside the euro ended on 14 January 2014. It is abbreviated as "Ls" and was subdivided into 100 "santīmi" (singular: "santīms"; from French "centime"). The lats was first introduced on 3 August 1922, replacing the Latvian rublis at a rate of 1 lats = 50 rubļi. The lats was pegged against the gold
Currency substitution displaced by a stable currency. At the beginning of this process, the store-of-value function of the domestic currency is replaced by the foreign currency. Then, the unit-of-account function of the domestic currency is displaced when many prices are quoted in a foreign currency. A prolonged period of high inflation will induce the domestic currency to lose its function as medium of exchange when the public carries out many transactions in foreign currency. Ize and Levy-Yeyati (1998) examine the determinants of deposit and credit currency substitution, concluding that currency substitution is driven by the volatility of inflation and the real exchange