SETTLEMENTS

On 10 March 1992 the Board of Eesti Pank approved the procedures for interbank settlement within Estonia that have been used from that time on. A payment transaction must not take more than 48 hours according to the rules. While Eesti Pank Clearing Centre had the leading role in adopting the new procedure two years ago, by now the "48-hour rule" causes no problems in direct settlement between banks either.

According to Estonian banking directives every commercial bank must hold a correspondent account with Eesti Pank. The correspondent accounts served as a risk-free (but also non-interest-earning) means for depositing the banks' funds immediately after the monetary reform. The subsequent normalising of the banking environment was accompanied by a clear decrease of the amounts held on the correspondent accounts - the amounts fell from 266 million kroons to 176 million during 1994. That shows the banks have started to make more effective use of the possibilities offered by the clearing and settelement system.

From 20 July 1994 new procedures for interbank settlement have been adopted by the Eesti Pank Clearing Centre:
1) 8.00 - 14.00 getting the settlement data from the banks;
2) 14.00 - 15.00 the first interbank settlement of accounts, and forwarding the balance of their correspondent accounts and various other information to the banks;
3) 15.00 - 17.00 money market operations;
4) 17.00 - 19.00 the final interbank settlement of accounts.

There was a significant growth in settlements within Estonia during 1994. 2,32 million interbank payment orders having been processed in 1993, the figure was 3,93 million for 1994 (a 69% increase). The sums involved amounted to 49,3 billion kroons in 1993 and 105,9 billion kroons in 1994 (a 115% increase).

S.W.I.F.T. is increasingly used in international settlements by Estonian commercial banks. S.W.I.F.T. was used by 9 Estonian commercial banks by the end of 1994. The customers of Estonian commercial banks ordered an estimated 215 571 international payment transactions (for 39,916 billion kroon) in 1994. The turnovers have been increasing from month to month. While there were 12416 transactions (2,38 billion kroons) in January, there were 23 363 (4,67 billion kroons) in December.

The Eesti Pank Clearing Centre has a significant role in offering settlement services with Latvia, Lithuania and the CIS countries (both in kroon and the national currencies of the countries involved).

Clearing up the orders for international and interbank settlements remaining uncompleted from the 1990-1992 payment crisis was continued. In 1990 all Estonian (as well as Latvian and Lithuanian) settlement transactions with other regions of the Soviet Union were collected to one single correspondent account in what was then Gosbank (central bank of the former Soviet Union). As nobody was prepared for this step, a settlement crisis that is being solved even now was the result. Comparing the payment documents with Latvian, Kasakh and Turkmenian counterparts has been finished, final stages have been reached with Lithuania, Kyrgyzstan and Moldavia.