Clearings Through Eesti Pank

Clearings Within Estonia

The majority of inter-bank clearings within Estonia pass through Eesti Pank. The amount of settlements carried out by electronic payment orders has increased by 47.5% in 1995. The daily turnover was 587.9 million kroons, on the average. The number of payment orders a day reached 24.5 thousand on the average (see Table 41. Number of electronic payments passed through Eesti Pank).

Table 41. Number of electronic payments passed through Eesti Pank, volume (EEK mn) and structure (%) of clearings

 

Total

Daily
average

Structure (%)

up to
50,000

50,001-
200,000

200,001-
1,000,000

over
1,000,000

1995

The number of payment orders

6,215.6

24.5

95.2

0.3

3.6

1.0

Volume of clearings

149,325.7

587.9

18.9

50.3

14.2

16.7

1994

The number of payment orders

3,903.3

15.3

94.5

0.3

4.0

1.1

Volume of clearings

105,814.3

415.0

18.7

49.2

14.3

17.9

95% of payments were smaller than 50,000 kroons. These payments formed only one fifth of the daily turnover.

Money transfers carried out on the basis of documentary payment orders are also included in the total turnover (see Figure 26). Every year in January and August, a seasonal decrease in turnover takes place. A purchase boom before Christmas is followed by a certain decline in January. August is a month connected with holidays and a symbolic year-end when turnover decreases. From September turnover increases up to the end of the year.

Figure 26. Daily turnover of settlements and surplus of settlement account in the post-monetary reform period (EEK billion)

The Clearing Division of Eesti Pank uses a multilateral payment clearing system where commercial banks can use the sums received on the same day the payments are performed for the carrying out of their payments. The payment clearing system was introduced in August 1993. The rise in efficiency of this clearing system is shown by the fact that while in 1993 payments to the amount of 0.6 kroons per one clearing account kroon were carried out daily, the same figure for 1995 was 7.9 (see Figure 27).

Figure 27. Settlements efficiency multiplier (per one settlement account kroon) in the post-monetary reform period

The introduction of the clearing system in 1993 laid the basis for the inter-bank money market, which makes it possible for the banks to optimise the balance on their clearing accounts after they receive the results of their first clearing. The main instruments for the inter-bank money market are overnight loans. Redistribution of free funds makes it possible for the banks, which lack current funds for final settlements, to end their day successfully. The inter-bank overnight loans' market has developed favourably. Its size depends on the total amount of payments. Since domestic financial markets do not provide other short-term investment opportunities which guarantee primary liquidity, supply tends to be higher than demand and due to that the weighted annual average interest on overnight loans has continued to decrease (see Table 42. Inter-bank overnight loans between June 1993 and December 1995).

Table 42. Inter-bank overnight loans between June 1993 and December 1995

 

Loans
(EEK mn)

Weighted average
interest rate (%)

06.93

6.8

11.24

07.93

6.3

10.87

09.93

25.7

7.16

10.93

104.3

6.82

11.93

179.1

6.40

12.93

504.1

6.30

01.94

574.3

6.01

02.94

857.4

5.81

03.94

1,197.9

5.61

04.94

1,492.0

5.59

05.94

1,675.9

5.54

06.94

2,251.6

5.58

07.94

2,737.1

5.87

08.94

1,259.4

5.56

09.94

969.8

5.54

10.94

1,214.0

5.95

11.94

1,438.8

5.55

12.94

950.0

5.43

01.95

598.6

5.40

02.95

899.7

5.26

03.95

945.5

5.23

04.95

883.2

5.18

05.95

1,065.6

5.11

06.95

1,188.8

5.15

07.95

1,118.6

5.19

08.95

765.6

4.90

09.95

866.6

4.72

10.95

1,094.2

4.46

11.95

1,379.7

4.36

12.95

1,018.4

4.28

* The present data differ from those earlier published by the Eesti Pank Financial Markets Department since the original data have been adjusted

International Payments

The turnover of international payments which passed through Eesti Pank in 1995 was twice as high as earlier. Incoming and outgoing payments have been balanced. The average of total payments in 1995 was 15% higher than in 1994: 244.6 thousand kroons as to incoming and 206.9 thousand kroons as to outgoing payments (see Figure 28).

Figure 28. The turnover of international payments between January 1994 and December 1995 (EEK billion)

Means of Funds Transfers

The rise in the number of PLASTIC CARDS in 1995 was sixfold, from 20 thousand to 120 thousand. This figure includes both international and domestic credit and debit cards as well as cash cards for automatic teller machines (see Tables 43. International credit and debit cards issued by the Estonian commercial banks by the end of 1995; and 44.  Domestic debit and cash cards issued by the Estonian commercial banks by the end of 1995).

Table 43. International credit and debit cards issued by the Estonian commercial banks by the end of 1995

 

Number of
cards

Bank

VISA (Electron
and Classic)

9,888

Eesti Ühispank
Põhja-Eesti Pank
Eesti Forekspank
ERA Pank

Eurocard / MasterCard

1,296

Tallinna Pank
Eesti Forekspank
Hansapank
Eesti Hoiupank

American Express Card

22

Eesti Forekspank

Total

11,206

 

Table 44. Domestic debit and cash cards issued by the Estonian commercial banks by the end of 1995

 

Number of
cards

Bank

Debit and cash cards

21,976

Hansapank
Virumaa Kommertspank
Tallinna Äripank
Eesti Hoiupank

Cash cards

86,182

Hansapank
Eesti Hoiupank
Eesti Forekspank
Tallinna Pank
Virumaa Kommertspank

Total

108,158

 

The turnover of payments carried out with plastic cards reached 180 million kroons in December 1995. The year before the same figure was 35 million kroons. Between 90 to 95% of transactions carried out with plastic cards were made for cash withdrawal. By the end of 1994 there were approximately 30 automatic teller machines, by the end of 1995 approximately 150. When the possibilities to use the cards become wider and the customers get accustomed to them, the share of payments in cash should decrease.

The number of businesses where VISA and Eurocard/MasterCard were accepted reached approximately 550. The most used local debit card is the Hansapank card which can be used to pay for goods and services in 150 shops and businesses. From December 1995 the Hoiupank cash card operated as a debit card too, but only in three firms. However, a large agreement package for the use of this card is being worked out.

A significant role in enhancing possibilities to use plastic cards lies in the Inter-bank Card Centre which was founded in 1993. By the end of 1995, the following 5 banks were the shareholders of the Centre - Eesti Hoiupank, Hansapank, Tallinna Pank, Eesti Forekspank and EVEA Pank. The main service of the Card Centre is to provide information on payments with plastic cards. In 1995, the turnover of payments passing through the Card Centre was twofold, reaching 22.3 million kroons in December. Almost half of the total turnover belonged to VISA card, one third to Eurocard/MasterCard and 13% to the Hansapank card. The Inter-bank Card Centre also provides information on payments made with Diners Club card. The aim of the Centre in the nearest future is to initiate a network of automatic teller machines for the plastic cards of Hansapank, Tallinna Pank, Eesti Forekspank and Hoiupank. In addition to that, preparations for the connection of ATMs with the Visa and Europay payment systems and for widening the use of domestic cards have been made.

The use of TRAVELLER'S CHEQUES in Estonia expanded in 1995. All the biggest banks in Estonia accept payments by cheque. The use of DOMESTIC CHEQUES has decreased because they have been successfully replaced by user-friendly plastic cards.