Estonian Economy and Monetary Policy 9/2002Monetary Developments & Policy Survey. September 2002CONTENTSI. SURVEY OF THE ECONOMIC POLICY Monetary Policy EnvironmentFinancial SectorInflationReal EconomyGovernment SectorOutlookII. ECONOMIC DEVELOPMENTS EXTERNAL ENVIRONMENTThe United States of AmericaEuro areaJapanNordic CountriesLatin AmericaAsiaCentral and Eastern EuropeRussiaInternational Financial MarketsESTONIAN ECONOMYDomestic DemandPrivate Consumption and InvestmentsPublic SectorDomestic SavingEconomic GrowthDomestic SupplyEmploymentBACKGROUND INFORMATIONIMPACT OF THE DEPRECIATION OF THE US DOLLAR ON THE EXTERNAL BALANCE OF THE ESTONIAN ECONOMYIII INFLATIONSlowdown of the Price IncreaseChanges in the Real Rate of the KroonIV MONETARY SECTOR DEVELOPMENT Liquidity Environment and Money MarketCapital FlowsMoney SupplyCredit MarketInterest Rates in Real SectorV. FINANCIAL SECTOR DEVELOPMENT BankingBanks' Assets and Their QualityLiabilities and Equity CapitalProfitabilitySecurities MarketBond MarketStock MarketOther Financial IntermediariesInvestment FundsInsurancePayment SystemFailidSURVEY OF THE ECONOMIC POLICYECONOMIC DEVELOPMENTSIMPACT OF THE DEPRECIATION OF THE US DOLLAR ON THE EXTERNAL BALANCE OF THE ESTONIAN ECONOMYINFLATIONMONETARY SECTOR DEVELOPMENTFINANCIAL SECTOR DEVELOPMENT