CHRONICLE OF MONETARY POLICY OF 1997
JANUARY AND FEBRUARY

5 JANUARY

The Boards of Directors of Eesti Ühispank (Union Bank of Estonia) and Põhja-Eesti Pank (North Estonian Bank Ltd.) signed an agreement on the merger of these two banks. The merger was previously approved by the major shareholders of Põhja-Eesti Pank, i.e. the Government of the Republic of Estonia, Eesti Pank (Bank of Estonia) and Eesti Ühispank. The decision on merger has to be approved by the shareholders' meeting of Eesti Ühispank. The latter became a shareholder in Põhja-Eesti Pank in August 1995 by winning a bidding of limited participation of commercial banks and got the right to buy one third of the shares hold by Eesti Pank.

Based on the decisions of the Government and Eesti Pank, the loss of earlier periods of Põhja-Eesti Pank was written off prior to the merger. This was done at the expense of the share capital and profit of 1996 of Põhja-Eesti Pank as well as collateral assets transferred to the bank. As a result of the write-off, the Government and Eesti Pank lost their share in Põhja-Eesti Pank. This corresponds to the strategy to minimise the share of the state in Estonian commercial banks.

14 JANUARY

Decisions of the Board of Eesti Pank
On Relieving Enn Teimann of His Post as Vice President and Duties as a Member of the Executive Management

Pursuant to Article 9, Section 2, Clauses 3 and 4 of the Law of the Central Bank of the Republic of Estonia and considering the fact that the job contract between Enn Teimann and Eesti Pank was terminated on 30 December 1996, the Board of Eesti Pank relieved Enn Teimann of his post as Vice President and member of the Executive Management of Eesti Pank on 30 December 1996.

* * *

On Changing the Statute of Eesti Pank

Pursuant to Article 9, Section 2, Clause 5 of the Law of the Central Bank of the Republic of Estonia, the Board of Eesti Pank decided to make amendments to the Statute of Eesti Pank: to add the word Director after the words Vice Presidents in Clause 3.4 and the word Director after the word Chief Accountant in Clause 6.2, Sub-clause 1 (see Eesti Pank Bulletin No. 7/1996, pp. 4 and 6).

21 JANUARY

The Riigikogu (the Parliament) of the Republic of Estonia appointed Ruut Mägi and Hugh McNaughtan, auditors of the auditing firm Coopers & Lybrand, to perform the audit and verify the Annual Report of Eesti Pank of the 1996 fiscal year. The same auditors have also audited Eesti Pank in earlier years.

30 JANUARY

Decree of the President of Eesti Pank
On Establishing the Exchange Rates of the Estonian Kroon

The Decree confirmed an instruction for fixing the daily exchange rates of the Estonian kroon which took effect on 3 February 1997. The daily exchange rate of the Estonian kroon against other currencies is established by 12.00 o'clock (Estonian time) each banking day and is based on the exchange rate of the German mark and other foreign currencies valid in world foreign exchange markets.

The exchange rates are accessible to the public by the Eesti Pank automatic answering machine (372 2) 443 035 after 13.00 the same day. The rates of the same day and earlier days can be obtained from the electronic mailbox by way of modem by telephone (372) 6 310 952, password "info"(1).

The daily exchange rate of the Estonian kroon is established against the following foreign currencies:(2)
  Australian dollar AUD
  Austrian shilling ATS
  Belgian franc BEF
  Belorussian ruble BYB
  British pound GBP
  Canadian dollar CAD
  Czech koruna CZK
  Danish krone DKK
  Dutch guilder NLG
  European ecu XEU
  Finnish markka FIM
  French franc FRF
  Greek drachma GRD
  Hungarian forint HUF
  IMF unit of account SDR
  Irish pound IEP
  Italian lira ITL
  Japanese yen JPY
  Kazakh tenge KZT
  Latvian lats LVL
  Lithuanian litas LTL
  Moldavian leu MDL
  New Zealand dollar NZD
  Norwegian krone NOK
  Portuguese escudo PTE
  Russian ruble RUR
  Spanish peseta ESP
  Swedish krona SEK
  Swiss franc CHF
  Ukrainian hryvnia UAH
  US dollar USD
  Uzbek sum UZS

The Decree declared invalid:
  1. Regulations of Eesti Pank of 22 October 1993 "On Determining the Official Daily Exchange Rates of the Estonian Kroon Against Convertible Currencies", excluding Clause 3 regarding the revoking of the Regulations of Eesti Pank of 27 October 1992 (see Eesti Pank Quarterly Review 1993:4);
  2. Clauses 1-7 of Eesti Pank Regulations of 22 October 1993 "On the Official Daily Exchange Rate of the Estonian Kroon and Convertible Currencies" (see above);
  3. Decree of Eesti Pank of 12 December 1994 "On the Information on the Exchange Rates of the Currencies of the Ruble Zone States, Latvia and Lithuania" (see Eesti Pank Bulletin No. 1, 1995, p. 3).

(1) Rates of each day are in separate files, e.g. the rates of 3 February 1997 are in the file 030297.krs.
(2) In bold are the following 13 currencies quotation of which Eesti Pank began on 3 February 1997. (Editor's notes).

31 JANUARY

Decree of the President of Eesti Pank
On the Reporting Procedures of Credit Institutions

The expanding activities of credit institutions and new international requirements have made it necessary to improve the reporting procedures of credit institutions. According to the decree, from 28 February 1997, credit institutions must provide the following reports: Balance Sheet; Off-Balance Sheet Liabilities; Recording of Immaterial and Material Fixed Assets; Profit and Loss Account; Services Sold to and Bought from Non-residents. The decree also specifies how these reports have to be compiled.

Credit institutions have to submit the reports in an electronic format described in the Appendix of the decree to the Eesti Pank Banking Statistics and Analysis Department by the following deadlines:
  1. the monthly balance sheet and off-balance sheet liabilities - by the fifth banking day after the end of the reporting month;
  2. the appendix of the balance sheet on the material and immaterial fixed assets - by the fifth banking day after the end of the quarter;
  3. the profit and loss account and the report on services sold to and bought from non-residents - by the 10th banking day after the end of the quarter.

In addition to those reports, credit institutions have to submit by 17 March 1997, their monthly balance sheets for December 1996 and January 1997, and their profit and loss account for 1996.

The decree declared null and void:
  1. The balance sheet appendices No. 1-4 introduced by the Regulations of Eesti Pank of 5 November 1992;
  2. The Decree of Eesti Pank of 17 March 1995, on partial changes in the Regulations of 5 November 1992;
  3. The Instructions on evaluating of short-term dealing securities (see Eesti Pank Bulletin No. 3, 1996, p. 3) introduced by the Decree of the President of Eesti Pank from 1 March 1996, "The Mandatory Restricted Reserve of Credit Institutions and Evaluation of Short-term Dealing Securities."

12 FEBRUARY

Decree of the President of Eesti Pank
On Endorsing the Instructions for Compiling the Bank Statement

Proceeding from Section 1, Article 45 of the Law on Credit Institutions, the decree endorsed, from 1 March 1997, the Instructions for Compiling Bank Statement; the procedure has been coordinated with the Estonian Accounting Board and the Ministry of Finance. The instructions stipulates uniform requirements on the bank statements issued by credit institutions to the owners of bank accounts. The uniform bank statement allows the beneficiary's bank to abandon the practice of issuing paper copies of payment orders to the beneficiary. The bank statement is a basic document of bookkeeping for both the payer and the beneficiary.

At the same time the decree also made an amendment in Clause 1 of the Decree of the President of Eesti Pank of 13 December 1996, endorsing the Instructions for Forwarding and Receiving Payment Orders in full as of 1 March 1997. Clause 2.7.1.c of the above Instructions (see Eesti Pank Bulletin No. 1, 1997, p. 5) was reworded as follows: give either to the payer or beneficiary, respectively, a bank statement in accordance with the respective instructions of Eesti Pank.

INSTRUCTIONS FOR COMPILING THE BANK STATEMENT (3)

(3) The arrangement of data on the bank statement is regulated by the Appendix of the present Instructions. (Editor's note).

General

Under the present Instructions, the term payment denotes all kinds of transactions that result in the movement of money on the bank account.

The bank statement is a document corresponding to the requirements of the present Instructions issued by the account manager to the owner of the account or his authorized representative, reflecting all operations with money on the account during a given period of time. The bank statement can be either on paper or electronical.

In addition to the bank statement, the account manager can issue also other documents reflecting operations with money on the account that do not conform to the requirements of the present Instructions. The documents that do not meet the requirements of the present Instructions are not bank statements and are not considered official documents.

Under the present Instructions the term account manager refers to the credit institution.

1. Bank Statement Heading

The heading of the bank statement has to carry the following requisites:
1.1. The name, address and telephone number of the credit institution
1.1.1. In addition to the name of the credit institution, the heading may also include the name of the credit institution's sub-unit which holds the documents regulating the control, use and ownership of the account on which the bank statement is issued.

1.2. The name of the document
1.2.1. The name of the document is Bank Statement.

1.3. The number of the bank statement
1.3.1. The number of the bank statement consists of the number denoting the year of the period the bank statement concerns, and other information.
1.3.2. Every year the credit institution starts the enumeration of the bank statements of each given bank account with the number 1.
1.3.3. If there were no payment transactions in a given period of time and the account equals to zero, the credit institution does not issue the bank statement and does not reserve a bank account number for it.
1.3.4. The credit institutions are allowed to use the bank statement numbers only for bank statements corresponding to the requirements of the present Instructions.

1.4. Page numbering of the bank statement
1.4.1. If the bank statement on paper covers several pages, all pages of the bank statement have to be numbered progressively beginning with 1.

1.5. The bank statement period
1.5.1. The period of the bank statement indicates the period of time of payment transactions reflected in a given bank statement.
1.5.2. Credit institutions are obliged to issue at least one of the following bank statements for different periods of time:
1.5.2.1. for every banking day;
1.5.2.2. for every 10-day period (dates from 1 to 10, from 11 to 20, from 21 to the end of the month);
1.5.2.3. for every calendar month.
1.5.3. The owner of the bank account determines the bank statement(s) issued to him by the credit institution in accordance with the specifications provided in Clause 1.5.2. of the present Instructions.
1.5.4. The owner of the bank account is entitled to change the period of the bank statement. The credit institution issues bank statements for a new period:
1.5.4.1. at the transition from the monthly bank statement or to the monthly bank statement - from the beginning of the next month;
1.5.4.2. at the transition from the daily bank statement to the 10-day bank statement or vice versa - from the beginning of the next 10-day period.

1.6. The date of drawing up the bank statement
1.6.1. The date of drawing up the bank statement is the date when the bank statement was drawn up.

1.7. The name and address of the owner of the bank account
1.7.1. The name and address of the owner of the bank account can be followed by the name of a contact person.
1.7.2. In case the bank statement is sent on paper and by post, the data specified in Clause 1.7.1. are at the same time also the requisites of the beneficiary in the respective window of the envelope.

1.8. Account number
From 1 February 1998, credit institutions will use in bank statements only the account numbers corresponding to the agreement signed in the Estonian Banking Association.

2. Currency Heading

Provision of data on payment transactions made during the period the bank statement covers, always starts with the currency heading. If the owner of the bank account keeps different currencies on his account, the credit institution groups transactions with different currencies on the bank statement and differentiates the data in the respective currency heading with the abbreviation of the currency.

2.1. Abbreviation of the currency
2.1.1. The abbreviation of the currency is a combination of three letters that corresponds to the international standard ISO 4217.

2.2. The date of the initial sum of the bank account
2.2.1. The date of the initial sum of the bank account is the date of the beginning of the period covered by the bank statement.

2.3. The initial sum of the account and the sign for the beginning of the period covered by the bank statement
2.3.1. The plus (+) sign after the initial sum of the account indicates that the sum is positive (the credit institution has an obligation before the owner of the account).
2.3.2. The minus (-) sign after the initial sum of the account indicates that the sum is negative (the credit institution has a claim on the owner of the account).

3. The Banking Day Heading

All operations made in one and the same currency are grouped by the banking days in the statement for the 10-day or monthly periods.

3.1. The banking day
In the bank statement the banking day means the day when the credit institution actually carried out the bank transaction.

4. Data on Bank Transactions

The bank statement has to include the following data on bank transactions:

4.1. The order number of the transaction
4.1.1. All transactions on the bank statement have to be enumerated progressively starting from number 1.

4.2. The archival registration number of the credit institution
4.2.1. Credit institutions have to include the archival registration number used within the credit institution.
4.2.2. The bank statement of the payer has to carry the archival registration number of the payer's credit institution.
4.2.3. The bank statement of the beneficiary has to carry the archival registration number of the beneficiary's credit institution.

4.3. The code of the transaction operator
4.3.1. The code of the transaction operator indicates the person who fed the transaction data into the computer. In case of mistakes or misunderstandings concerning transactions within the credit institution, the payer or beneficiary can turn directly to the operator responsible for feeding the data into the computer.
4.3.2. In case of money transfers from one credit institution to another, the credit institution transferring data provides the credit institution receiving the data with the code of the operator which has to be included in the bank statement of the beneficiary without any changes.
4.3.3. If the code of the operator is unknown to the beneficiary's credit institution, the respective space on the form is left empty.
4.3.4. The codes of the transaction operator are the following:
  K - data put in by the client making a transaction using the services of a telebank, automatic payment machine or automatic teller machine (the credit institution does not have a document on the paper);
  T - an employee of the credit institution feeds in the data on the transactions on the request of the client (the original document for the transaction is kept at the office of the credit institution);
  P - transactions made on the basis of a contract, price list, transaction terms, etc. between the credit institution and the client. The data of the transactions are fed into the computer by the employee of the credit institution.

4.4. The code of the contents of the transaction
4.4.1. The following letter combinations are used to explain the nature of the transaction:
Code Explanation
   MK Payment instruction on the basis of which a sum of money is transferred from the payer to the beneficiary; it is used in the bank statement of both the payer and the beneficiary
  SR Payment of cash onto one's own account and withdrawing cash from one's own account
  FX Conversion of currency
  TT Service charge of the credit institution
  L Payment of loan, interest and fines
  H Payment of interest on deposits
  PR Corrections and reversing entries made by the credit institution on earlier entries

4.5. Number of the payment order
4.5.1. If the originator of the payment has given a number to the payment order, the same number has to be included in the bank statement.

4.6. The code of the credit institution involved in the transaction
In case of domestic payments, the bank statement has to include the code of the credit institution of the opposite party (called transaction party below) to the owner of the account.

4.7. The name of the transaction party
4.7.1. If the credit institution has the name of the transaction party in its database, the credit institution can use in the bank statement the name of the transaction party by the account number from that database. If this is not possible (for example, if the accounts of the transaction party are kept in different credit institutions or if the credit institutions does not wish it) the credit institution can give the name of the transaction party on the basis of the original document of the transaction.
4.7.2. If a third person is making the payment on behalf of the payer denoted in the invoice, contract, etc., the name of the person making the payment on the basis of the invoice, contract, etc. is given on the bank statement explanation section and the bank statement gives the name of the actual performer of the payment as the name of the paying transaction party.

4.8. The beneficiary's account number on the payer's bank statement
4.8.1. The account number of the beneficiary is given in the payer's bank statement in case of the transaction under the code MK.
4.8.2. If the credit institution has, for some reason, changed the account number of the beneficiary (for example, the owner has closed his old account, opened a new one and has asked all money paid to the old account to be transferred to the new account; the credit institution has replaced the account numbers with new ones, etc.), and the credit institution is responsible for the change, the credit institution can give the new account number of the beneficiary in the bank statement and mark the beneficiary's bank account number with an asterisk (*).
4.8.3. Unless the beneficiary and the beneficiary's credit institution have agreed otherwise, the account number of the payer is not included in the bank statement of the beneficiary.

4.9. The date of the transaction (day of payment) in the paying credit institution on the bank statement of the beneficiary
4.9.1. The day of payment in the payer's credit institution is the day the payer's credit institution had to carry out the payment order.
4.9.2. The day of payment is provided on the bank statement of the beneficiary in case of a transaction with the code MK.
4.9.3. The day of payment allows the beneficiary to check if the payment deadlines have been observed while making the payment.

4.10. Reference number
4.10.1. The reference number is a number combination denoting a concrete claim (invoice, for example) and is composed by the claimant. The reference number links the claim and the payment order based on it.
4.10.2. If the payment order make a note of the reference number, the latter has to be included on the bank statement.
4.10.3. Credit institutions only recognize as reference numbers the number combinations that correspond to the rules set down by the Estonian Banking Association (credit institutions check the check digit of the reference number). The reference numbers that do not conform to the rules are given in the explanatory section of bank statement.

4.11. The sum and sign of the payment
4.11.1. The plus (+) sign after the sum indicates that it has been added to the account (the account's credit turnover in the credit institution).
4.11.2. The minus (-) sign after the sum indicates that it has been deducted from the account (the account's debit turnover in the credit institution).

4.12. The registration number or personal code of the payer on the bank statement of the beneficiary
4.12.1. The payer's personal code is particularly important for the beneficiary who collects state taxes and for whom this code is one way of identifying the tax payer.
4.12.2. If the payer has given his registration number or personal code in the payment instruction, the credit institution has the obligation to show this number on the bank statement issued to the beneficiary on the latter's request.
4.12.3. If the payer is a non-resident, credit institutions will write #MITTERES on the field meant for the payer's registration number.
4.12.4. If the registration number/personal code of the resident payer is unknown, the respective field will be left empty.
4.12.5. In case a third person is making the payment on behalf of a payer who has to make the payment on the basis of an invoice, contract, etc. the third person's registration number/personal code will be given in the section of explanations on the bank statement and the payer's registration number/personal code is shown in the bank statement in the field meant for the payer's registration number/personal code.

4.13. Explanation of the payment
4.13.1. The explanation of a domestic payment can contain a maximum of 70 symbols. The explanation of an international payment can contain a maximum of 140 symbols.
4.13.2. If there is a reference number, the field meant for the explanation of the payment can be left empty.
4.13.3. The explanation of correction or reversing entries (transaction code PR) made in the credit institution under the orders of the owner of the account or his authorized representative is the date and archival registration number of the transaction that is being corrected or reversed.
4.13.4. The credit institution can add its own explanations to the bank statement (the exchange rate used in case of a currency conversion transaction, for example).

5. Banking Day Summaries

Credit institutions make the banking day summaries in the 10-day and monthly bank statements for every banking day separately for each currency.

5.1. Banking day

5.2. The account's credit turnover total during the banking day

5.3. The account's debit turnover total during the banking day

5.4. The balance of the account and its sign by the end of the banking day

6. Period Summaries per Currency

On the bank statement payment transactions are grouped by different currencies. The payment transactions for each separate currency end with a summary on the transactions made in this currency by the end of the period covered by the bank statement.

6.1. The abbreviation of the currency

6.2. The account's credit turnover total during the period covered by the bank statement

6.3. The account's debit turnover total during the period covered by the bank statement

6.4. The date as of the end of the period

6.5. The balance of the account and its sign by the end of the period covered by the bank statement

7. Messages for the Owner of the Account

A credit institution can supply additional information at the end of the bank statement.

8. The Signature and Sign Denoting the End of the Bank Statement

8.1. The bank statement has to be signed by the person authorized by the credit institution.

8.2. An electronic bank statement has to be signed with a digital signature. The digital signature is composed according to a specific algorithm and it consists of the code of the issuer of the bank statement, the contents and cryptographic information. The credit institution and the owner of the account must have concluded a written agreement on mutual recognition of the digital signature.

8.3. At the end of the bank statement on paper there must be the end sign of the statement and the number of pages.

9. The Form of the Bank Statement

9.1. The bank statement can be issued:
9.1.1. on paper;
9.1.2. in an electronic form the printout of which is identical to the bank statement on paper.

9.2. The requirements on the placement of data have been specified in the Appendix of the present document.

10. Issuing of the Bank Statement

10.1. The credit institution has the obligation of issuing a bank statement covering a specific period on the demand of the owner of the bank account or his authorized representative.

10.2. If up to two months have passed since the end of the period for which the owner of the bank account or his authorized representative requested the bank statement to be issued, the credit institution has to issue the required bank statement for the required period on the same day the request is made.

10.3. If more than two months have passed since the end of the period for which the owner of the bank account or his authorized representative requested the bank statement to be issued, the credit institution has to issue the required bank statement for the required period in accordance with the regulations of the credit institution on answering archive queries.

18 FEBRUARY

Decision of the Board of Eesti Pank
On Relieving a Member of the Executive Management of Eesti Pank of His Duties and Appointing the New Members

Pursuant to Article 9, Section 2, Clause 3 of the Law of the Central Bank of the Republic of Estonia, and the motion of the President of Eesti Pank, the Board of Eesti Pank relieved Urmas Kaju, Adviser to the President of the bank, of the duties of the member of the Executive Management of Eesti Pank as of 18 February 1997. From 19 February 1997, Valdur Laid, Head of the Financial Markets Department, and Rein Minka, Head of the Information Technology Department, were appointed as new members of the Executive Management of Eesti Pank.

20 FEBRUARY

Decree of the President of Eesti Pank
On Partial Changes of the Rules on Determining the Estonian Inter-bank Interest Rate on Loans and Deposits

The decree made changes in Clause 3 of the Rules on determining the Tallinn Inter-bank Offered Rate (TALIBOR) and Tallinn Inter-bank Bid Rate (TALIBID) laid down by the Decree of the President of Eesti Pank issued on 9 January 1996 (see Eesti Pank Bulletin No. 1, 1996, pp. 7-8), replacing Põhja-Eesti Pank (North Estonian Bank Ltd.) in the list of quoting banks with Eesti Forekspank (Estonian Forexbank). Thus, the list of quoting banks now includes Hansapank, Eesti Ühispank (Union Bank of Estonia), Eesti Hoiupank (Estonian Savings Bank), Eesti Forekspank and Tallinna Pank.

28 FEBRUARY

Decree of the President of Eesti Pank
On the Reporting Procedures of the Credit Institutions of the Republic of Estonia for the Accounting Year 1996

In connection with the accounting year coming to an end, the decree obliges, under Article 52 of the Law on Credit Institutions, all credit institutions to submit by 15 April 1997, the following documents to the Banking Statistics and Analysis Department of Eesti Pank:
  1. The annual accounting report for 1996 and the required appendices;
  2. the report on the movement of own funds; (4)
  3. the activity report in accordance with the requirements specified in Article 22, Section 2 of the Accounting Law;
  4. the auditors' report together with copies of the decision of the shareholders general meeting on approving the annual report and dividing the profit.

The decree also orders that, under Article 52, Section 7 of the Law on Credit Institutions, all credit institutions have to publish their 1996 balance sheet and profit and loss account before 1 May 1997, in at least one newspaper published in the location the credit institution is situated in.

(4) The forms, principles, instructions and structure of drawing up reports and appendices mentioned in Clauses 1 and 2 have been provided in the Appendix of the present decree. (Editor's note).