The work of Eesti Pank's highest organizational body, the Board of Eesti Pank which supervises the activity of the Bank, was headed in 1997 by Uno Mereste whose mandate expired on 21 December. The members of the Board included Ants Erm, Raimund Hagelberg, Ardo Hansson, Vahur Kraft, Heiki Kranich, Kalev Kukk, Ilmar Pärtelpoeg and Mart Sõrg. Minister of Finance Mart Opmann attended the Board meetings as an observer with the right to speak.

The management of the Bank is based on the Strategic Development Plan of Eesti Pank which defines the guidelines for the Bank's activity in 1997--1999, and the concrete tasks for 1997.

In accordance with the goals set down in the Bank's Strategic Development Plan, requiring the improvement of the structure of the Bank and labour division within it, a management reform was carried out and changes were made in the Bank's organizational structure (see Figure).

Organizational Chart of Eesti Pank as of 31 December 1997

In order to achieve the goals set in the development plan, changes were made in the division of labour among the top management: the areas of responsibility and direction of activity of each leader were specified, and the post of a Director of Administration Services was established to bring all administration-related issues under the competence of one top manager.

The activities of the Bank were managed by the President of Eesti Pank Vahur Kraft whose sole competence was to organize the work of the banking sector, proceeding from the general principles of monetary and banking policy determined by the Board, to see to the observance of the decisions of the Board and implement the necessary measures for it.

From 5 March, the post of Eesti Pank Vice President was taken up by Peter Lõhmus whose responsibilities were to elaborate and implement monetary policy.

Vice President Heldur Meerits was responsible for the payment system, its reliability, cost effectiveness and all-round development, as well as for organizational development of Eesti Pank, finding the necessary resources for development and their utilization.

From 16 January Eesti Pank's Director of Administration Services was Vello Roosiaas who was responsible for the technical side and security of the Bank's activities.

Pilvia Nirgi was responsible for organizing supervision over credit institutions, heading the Banking Supervision, an independent unit within Eesti Pank and autonomous in supervisory issues.

The activities of the Bank were managed by the eight-member Executive Management, chaired by the President of Eesti Pank. The members of the Executive Management in 1997 were Vice Presidents Heldur Meerits (until his departure on 31 December) and Peter Lõhmus (from 5 March), Adviser Urmas Kaju (until 18 February), Head of the Banking Supervision Pilvia Nirgi, Head of the Central Pank Policy Department Aare Järvan, Chief Accountant Andres Penjam, Head of the Financial Markets Department Valdur Laid (from 19 February) and Head of the Information Technology Department Rein Minka (from 19 February).


The reform of committees as integrated management bodies was completed and their working principles (statutes, work arrangement) unified. The committees developed into links between the Executive Management and Bank's structural divisions. The committees were the integrating institutions in issues that involved several of the Bank's structural divisions. A committee, as a rule, was chaired by the member of the Executive Management responsible for the given sphere of activity, and committee members included heads of the structural divisions of the respective sphere and, in case of need, experts from other areas. The committee reform improved co-operation between structural divisions and constituted an important step towards the democratization of management and decision-making.

The standing Financial Committee and Banking Supervisory Committee were reorganized; on 9 April the Payment Committee and Development Committee were launched.

The task of the Financial Committee is to plan the monetary and economic policy activities and decisions, and to advise the Bank's Management in this area. The Committee prepares the solutions for the action plans drawn up in the framework of the Bank's strategic development in the sphere of economic and monetary policy and organizes co-operation of various divisions on implementing these plans. The Financial Committee organizes monitoring of monetary policy and drafting of monetary policy decisions and prepares the Bank's estimations on the Estonian economic situation and economic policy. The Committee also monitors the general management of the Bank's foreign exchange reserve and domestic market operations and discusses the related major monetary policy issues.

The Banking Supervisory Committee supports and directs the activities of the Banking Supervision in developing supervision in Estonia. The Committee works on the development of integrated supervision and co-operation between the different spheres of the financial market, endorses the banking supervision strategy, action plans and main areas of focus. The Committee analyses the economic situation of credit institutions, their risk positions, risk resistance and risk management systems, with the aim of increasing the stability of financial markets. The Committee prepares or evaluates the decisions, decrees and projects on the foundation of credit institutions, their licensing, suspension or revoking of licenses, and evaluates the work and suitability of managers of credit institutions.

The Payment Committee co-ordinates the decisions and activities in the field of payment and settlement system within the Bank and advises the Management on these issues. The Committee makes payment and settlement system-related decisions, and co-ordinates the drafting and implementation of the goals and development plans of the payment and settlement system of the Bank.

The task of the Development Committee is to co-ordinate and solve the development issues of the Bank's organization, secure the continuation and integrity of development as well as advise the Management on these issues. The Committee co-ordinates the development and improvement of the Bank's organizational structure and work procedures, the management instruments and methods of the organization and the technological systems. The Committee also co-ordinates the motivation systems of the employees and the cultural development of the entire organization.


In 1997, several major changes took place in the structural divisions of the Bank.

The Payment and Settlement Systems Department was founded to facilitate the creation of a modern payment and settlement system in Estonia that would meet international requirements.

The work of the Clearing Division was reorganized and its main task became the creation of the Real Time Gross Settlement System and the new Designated Time Net Settlement System for the banking system. A concept for the information system of the Clearing Division was drafted and became the basis for designing the information system of the Division.

The continuing consolidation of the banking sector and the development of consolidated supervision necessitated the elaboration of the new concept for the Banking Supervision. The staffing of both the Banking Supervision management and three subdivisions (monitoring, on-site and general supervision) with additional personnel was carried out with good results.

In the sphere of monetary policy, the priorities were set on improving the coverage, reliability and presentation of the balance of payments and financial statistics, the launch of regular monitoring and analysis of the financial markets and financial intermediation, improving the overall monitoring and analysis of monetary policy, and the issues related to the European Union. Proceeding from the above considerations, the Balance of Payments Department was reorganized into the Statistics Department which comprises the subdivisions of the balance of payments statistics and the economic statistics.

In the Central Bank Policy Department the international subdivision was reorganized, aimed at facilitating Eesti Pank to carry out its fundamental tasks through organizing international monetary policy co-operation and analysing the monetary and economic policy of foreign countries. Besides the monetary policy issue, the Central Bank Policy Department developed the comprehensive analysis of financial intermediation as an integrated sphere of work.

The reform of the monetary policy area led to rearrangements in the Macroeconomic Research Department as well.

A EU co-ordinator was appointed in each department, and a decision was made to form a European integration team in the Bank.

The development of the Internal Control Department continued.

On 12 June, the Eesti Pank Museum was opened where visitors can look at all the banknotes and coins issued in Estonia.

The most important inter-department projects included:

  • commissioning a credit rating for Estonia from international rating agencies;
  • drawing up the development programme for the inter-bank payment system.


As of 31 December 1996, Eesti Pank had a total of 286 employees. In the course of 1997, 43 people were employed by the Bank and 44 people left the Bank's employment (15% of the total). On 31 December 1997, Eesti Pank had 285 employees, 54% of them women and 46% men.

14% of the employees were managers, 44% were senior officials, 23% were junior officials and clerical staff, 19% was the service staff.

The average age of the Eesti Pank employees was 39 years. The youngest employees were engaged in the Central Bank Policy Department and the Financial Markets Department where the average age was 29 years.


In 1997, the principles of strategic planning, work planning and budgeting were defined, and planning and budgeting rules were updated. The Bank's 1998 budget, work plans in main areas of activity, work plans of divisions and, for the first time, also the Personnel Plan and the General Training Plan were drawn up in accordance with the qualitatively renewed planning and budgeting principles. In October, the annual planning seminar was held where the plans for the next year were presented and discussed.

In 1997, constant attention was paid on the issues of developing the organization, including descriptions of the organization and jobs as well as development conversations. These conversations provide an opportunity for periodically fixing the skills of each employee and the needs of the Bank and comparing it with the self-improvement goals of the employees. The manual for the development conversation was compiled, a questionnaire was designed, action plans elaborated and preliminary work started with pilot departments. Evaluation of the jobs in the Bank was carried out and on this basis the salary system guidelines were drawn up as well as the classification of jobs.

The problems of organization and development were the main topics of discussion also in the Development Committee and at the annual spring development seminar.

Work continued on the employer's pension plan for creating social guarantees for the Bank's employees.

As in earlier years, the main lines of training in 1997 were professional in-service and managerial further training as well as computer and language courses. In co-operation with Mercuri International Eesti AS, managerial training was continued which has already been passed by the Bank's top and middle managers. The two-month courses in 1997 focussed on the reserve of managers, a total of 18 people from 16 departments.

The Eesti Pank employees gave lectures in most of the major universities of Estonia. Two foreign students from the Notre Dame University of Indiana, USA, trained at the Bank.

Eesti Pank organized two international training courses in 1997:

  • Macroeconomics and Financial Policies from 20 to 31 October in Pärnu. Organized in co-operation with the IMF Institute, the course was attended by 36 people from the central banks, ministries of economic affairs and finance and the statistical offices of Estonia, Latvia and Lithuania;
  • Financial Analysis for Banking Supervision from 30 June to 4 July in Tallinn, in co-operation with the Bank of England studies centre. The course was attended by 19 people from Eesti Pank and the Bank of Latvia (Latvijas Banka).

By arranging these courses Eesti Pank set itself the long-term goal of becoming the main training centre in the Baltic countries.

Co-operation continued with such long-term training partners as the Centre for Central Banking Studies (Bank of England), Banka d'Italia, Deutsche Bundesbank, Suomen Pankki, Studienzentrum Gerzensee (Stiftung der Sweizerische Nationalpank), Joint Vienna Institute (IMF, World Bank, EBRD, BIS, OECD) and the IMF Institute.