CHRONICLE OF MONETARY POLICY OF 1997 OCTOBER

1 OCTOBER

Decree of the President of Eesti Pank (Bank of Estonia)
On Regulating the Information Technology in Credit Institutions

In view of the significance of information technology in the everyday work of the credit institutions and the importance of information as an asset of the credit institutions, the decree laid down the requirements on regulating the information technology in credit institutions. The decree defines the information technology related terms, organisation and management, system development and procurement, system usage, maintenance and security and the auditing of information technology.

30 OCTOBER

Decree of the President of Eesti Pank
On Setting Additional Liquidity Requirements on Credit Institutions

Proceeding from Article 36 of the Law on Credit Institutions, Article 14, Clause 4 of the Law of the Central Bank, the decision of the Board of Eesti Pank from 5 December 1995 on the prudential ratios of credit institutions (see Eesti Pank Bulletin No 1 (20), 1996, pp 5-6) and a similar decree of the President of Eesti Pank from 12 December 1995, the decree established the procedure of calculating and meeting additional liquidity requirements and set the date of introducing it on 1 November 1997.

From 1 November 1997, the minimum additional liquidity requirement for credit institutions is 2%, and from 1 December 1997, 3% of the reserve requirement of the reporting month.

The appendix of the decree specifies that credit institutions can use only their demand deposits in Eesti Pank for meeting the additional liquidity requirements. The funds kept at the central bank as the reserve requirement do not qualify for additional liquidity. The additional liquidity requirement for the next month takes effect from the first banking day of the month. The requirement has to be met as a monthly average, while the accounts are kept on the basis of daily (incl non-banking days) balance of the clearing account that exceed the minimum level of the reserve requirement. The interests paid on the sums included in the additional liquidity requirement are calculated on the basis of Deutsche Bundesbank's discount rate.

If the credit institution fails to meet the additional liquidity requirement, Eesti Pank has the right to increase the credit institution's reserve requirement from next month, under Article 90 of the Law on Credit Institutions.

Decree of the President of Eesti Pank
On Changing the Limits on Meeting the Reserve Requirement

Proceeding from Article 14, Clause 4 of the Law of the Central Bank, the decision of the Board of Eesti Pank from 7 May 1996 on the credit institutions' reserve requirement (see Eesti Pank Bulletin No 5 (24), 1996, p 6) and the decree of the President of Eesti Pank from 12 June 1996 on the procedure for calculating and meeting the reserve requirement (ibid, p 7), the decree changed the decree of the President of Eesti Pank from 12 June 1996 on establishing the limits for meeting the reserve requirement, and set the daily minimum level of the credit institutions' clearing account at the central bank at 40% of the reserve requirement.
The decree took effect from 1 November.

Decree of the President of Eesti Pank
On Changing Interest Rates

Proceeding from Article 14, Clause 4 and 6 of the Law of the Central Bank, the decision of the Board of Eesti Pank from 7 May 1996 on the credit institutions' reserve requirement and the decree of the President of Eesti Pank from 12 June 1996 on the procedure for calculating and meeting the reserve requirement, the decree changed the decree of the President of Eesti Pank from 12 June 1996 on establishing interest rates (see Eesti Pank Bulletin No 5 (24), 1996, p 8) and set the interest rate of the penal fine at 20% per year (0.056% per day) and the interest rate paid by Eesti Pank at Deutsche Bundesbank's discount rate valid on the last banking day of the month.

The decree took effect from 1 November.