Eesti Pank's Deputy Governor Madis Müller gave a speech today at the conference marking the tenth anniversary of the Financial Supervision Authority (FSA), saying that the changeover to the euro has strengthened the Estonian financial sector's resilience to shocks.

"The Estonian banking sector is closely linked to strong Nordic banks. Risks to banks have eased after the accession to the euro area, since the Eurosystem’s central bank can provide them with liquidity should they need it," Müller said.

"Considering the strong interrelation between the Estonian financial sector and Scandinavian banking groups, it is important to emphasise our central bank's and FSA's close cooperation with our colleagues in Nordic countries. We have similar views of the measures to be taken to maintain financial stability, including sufficiently strict capital requirements for commercial banks. Eesti Pank tightened up commercial banks' capital and liquidity requirements at the start of the past credit boom in 2005 and 2006. Today, we support the establishment of stricter rules in the entire Europe. Each Member State should be able to set stricter requirements on the banking sector also in the future, should it be necessary to alleviate risks to financial stability," he added.

The start of 2011 saw the launch of the European Systemic Risk Board (ESRB), which conjoins the tasks of central banks and supervisory bodies in assessing risks and maintaining financial stability. "Several countries are now setting up inter-institutional structures similar to that of the ESRB, whereas cooperation between Eesti Pank and the FSA has in fact followed the same principles all along," the Deputy Governor said.

In Estonia, financial stability has for about ten years been maintained by a well-functioning triangle between the FSA, the central bank and the Ministry of Finance, each having their own tasks and responsibilities. "For the central bank, successful cooperation with the Financial Supervision Authority is of utmost importance, since any central bank needs a well-functioning and strong banking sector in order to properly implement monetary policy and to ensure financial stability in the country," Müller added.

The presentation is available at Eesti Pank's website.

For further information:
Ingrid Mitt
Eesti Pank
Public Relations Office
Telephone: +372 668 0965, +372 512 6843
E-mail: [email protected]