Central bank reserves
The Eesti Pank reserves allow the central bank to remain independent of the government and ensure that it has sufficient capital to cover any possible losses. More broadly, the reserves help ensure confidence in the monetary system of the euro area and underpin the stability of the Estonian economy and financial system.
Eesti Pank had 1.76 billion euros of investment assets at the end of 20221, which is equal to about 5% of GDP. The investment assets were mainly in high-quality bonds, and partly in the stock markets of advanced economies. Investments are made in equities mainly to diversify risks, but also to earn additional income.
The value of the reserves denominated in foreign currencies was 1.58 billion euros at the end of 2022. The foreign currency reserve was made up of sovereign bonds from the USA, Australia, Canada and the United Kingdom, mortgage-backed securities from the USA, and bonds of international institutions. The equity portfolio stood at 180 million euros at the end of the year.
The return on Eesti Pank's investment assets was in 2022 very negative, despite the conservative distribution of assets at -9% or around 157 million euros.
Eesti Pank has 256.6 kg or 8250 Troy ounces of gold, and holds it more for historical reasons than for financial reasons. Eesti Pank sold the majority of its gold assets when Estonia regained its independence, to exchange them for bonds, which allowed the goals set for the reserves to be met better.
All the central banks of the euro-area countries have foreign reserves and the Eurosystem can use those reserves if needed to regulate its exchange rate policy.
When Estonia joined the euro area in 2011, Eesti Pank transferred assets to the foreign exchange reserve of the European Central Bank, and there is now a claim of 103 million euros against the European Central Bank in the balance sheet of Eesti Pank.
 The size of the Eesti Pank reserves is restricted and limited by the net financial assets agreement. The agreement has been signed between the central banks of the countries in the euro area and the European Central Bank. It sets out the rules and limits on financial assets not used for monetary policy that are used by national central banks for meeting their domestic responsibilities such as managing the central bank reserves. The net financial assets agreement is used to limit the ability of national central banks to create additional liquidity, in line with the goals of monetary policy. The amount of net financial assets depends on the size of both the assets and the liabilities on the balance sheet of the central bank.