GOALS AND PRINCIPLES

The main objective of Eesti Pank (Bank of Estonia)" as the central bank is to ensure the stability of the Estonian kroon and its full suitability in fulfilling the functions of money. Also, Eesti Pank has to defend the stability of the banking sector as well as that of the whole financial system, maintain the integrity and efficiency of the payment systems and promote the development of financial markets. In other areas, Eesti Pank proceeds from these targets to support economic growth and general welfare.

Eesti Pank has different instruments available to it to achieve these goals. It carries out independent monetary policy within the framework set by the Law on the Security for Estonian Kroon. Estonian monetary policy is based on the Estonian kroon peg to the German mark and the full convertibility of the Estonian kroon in current and financial account transactions. Eesti Pank is solely responsible for the supervision of credit institutions operating in Estonia. Eesti Pank participates directly in the payment system as the bank of banks. In addition, Eesti Pank supervises the whole payment system. In order to promote the development of financial markets, Eesti Pank has directly or indirectly supported the establishment and launching of several institutions.

Eesti Pank considers the publication of neutral and reliable economic information to be an important means of achieving its own goals and supporting the general economic growth.

When performing its tasks, Eesti Pank cooperates with state and local governments, giving them advice and consulting them when more important decisions are being made.

An important role is played also by the cooperation with international financial organisations, other central banks and research institutions.

HISTORIC OVERVIEW

The Republic of Estonia was proclaimed on 24 February 1918. A year later, the Interim Government of the Republic of Estonia confirmed the Statute of Eesti Pank. Mihkel Pung was appointed the first President of Eesti Pank. The Interim Government allocated 10,000,000 marks from the Treasury as the equity capital of Eesti Pank. On 3 May 1919 this amount was entered into the books of Eesti Pank and the bank opened its doors to customers.

The first Estonian currency - the Estonian mark - was introduced already in November 1918. Up to 20 May 1919 the mark was in circulation together with Russian, German and Finnish notes, after which date it became the sole legal tender. As the monetary system in Estonia was at that time closely connected with the state budget, burdening the state bank with investment loans and inadequate reserves for maintaining the mark value, resulted in the steep decline of the mark exchange rate. On 1 January 1928 the Estonian kroon was introduced, equal to 100 Estonian marks. The kroon became a stable currency backed by adequate gold and foreign exchange reserves. The state also stopped financing the economy through Eesti Pank.

The activities of Eesti Pank were interrupted and the kroon was abolished by the Soviet occupation in summer 1940.

On 16 November 1988 Eesti NSV Ülemnõukogu (the Supreme Council of the Estonian SSR) adopted the Declaration of Independence. By the Supreme Council decision of 15 December 1989 Eesti Pank was re-established from 1 January 1990. Rein Otsason was appointed the President of Eesti Pank.

Directly after re-establishment, Eesti Pank also fulfilled some commercial bank functions. On 1 October 1991 Siim Kallas was appointed the President of Eesti Pank. On 19 December of the same year Eesti Vabariigi Ülemnõukogu (the Supreme Council of the Republic of Estonia) proclaimed Eesti Pank the legal successor of the bank that was established in 1919.

During the period 1990-1991 discussions were held whether to introduce an interim means of payment or the Estonian kroon as currency. During the monetary reform carried out on 20-22 June 1992 Soviet rubles were exchanged for Estonian kroons.

The kroon was pegged at 1:8 to the German mark and the "currency board principle" was introduced whereby the base money supply depends on the supply of foreign exchange. The success of the reform was guaranteed by the pre-WW2 gold reserves of the Republic of Estonia that were returned by the Bank of England, Sveriges Riksbank, the Federal Reserve Bank of New York and the Bank for International Settlements.

On 27 April 1995 Vahur Kraft was appointed President of Eesti Pank.

THE BOARD OF EESTI PANK

Chairman: Uno Mereste
Members:
      Ants Erm
      Raimund Hagelberg
      Ardo Hansson
      Siim Kallas (until resignation as a President on 21 March 1995)
      Vahur Kraft
      Heikki Kranich
      Kalev Kukk (suspended from 10 November 1995 when appointed Minister of Transport and Communications)
      Ilmar Pärtelpoeg

EXECUTIVE MANAGEMENT

Chairman: Vahur Kraft (President).
      Siim Kallas (until resignation as a President on 21 March 1995)
Members:
      Aare Järvan (Department Head, Central Bank Policy)
      Urmas Kaju (Adviser to President)
      Vahur Kraft (Vice President until 27 April 1995 when appointed President)
      Heldur Meerits (Vice President, from 4 September 1995)
      Enn Teimann (Vice President)

Financial Committee

Chairman: Vahur Kraft (President)
      Siim Kallas (until resignation as a President on 21 March 1995)
Members:
      Raimund Hagelberg (Board Member)
      Aare Järvan (Department Head, Central Bank Policy)
      Vahur Kraft (Vice President until 27 April 1995 when appointed President)
      Valdur Laid (Department Head, Financial Markets)
      Heldur Meerits (Vice President, from 4 September 1995)
      Vallot Neumann (Department Head, Balance of Payments)
      Mihkel Nõmmela (Acting Department Head, Banking Statistics and Analysis)
      Andres Penjam (Department Head, Central Accounting)
      Kaupo Pollisinski (Department Head, Information)
      Urmas Sepp (Department Head, Macroeconomic Research)
      Enn Teimann (Vice President)

Supervising Committee

Chairman: Vahur Kraft (President)
Deputy Chairman: Pilvia Nirgi (Head of Banking Supervision)
Members:
      Raimund Hagelberg (Board Member)
      Aare Järvan (Department Head, Central Bank Policy)
      Urmas Kaju (Adviser to President,from 28 November 1995)
      Heldur Meerits (Vice President,from 4 September 1995)
      Mihkel Nõmmela (Acting Department Head, Banking Statistics and Analysis)
      Andres Sutt (Deputy Head, Banking Supervision)
      Urve Treisalt (Head of Legal Department, until 28 November 1995)

Information Technology Committee

Chairman: Enn Teimann (Vice President)
Members:
      Aare Järvan (Department Head, Central Bank Policy)
      Aadu Kaar (Senior Expert, Central Accounting)
      Kaja Kell (Deputy Head, Information)
      Rein Minka (Department Head, Information Technology)
      Pilvia Nirgi (Head of Banking Supervision)
      Mihkel Nõmmela (Acting Department Head, Banking Statistics and Analysis)
      Villu Praks (Department Head, Personnel and Training)
      Innar Vainre (Senior Expert, Balance of Payments)