EXECUTIVE BODIES AND ORGANISATION OF EESTI PANK

In 1998, Eesti Pank continued activities in the field of streamlining the structure (see Figure) and distribution of labour. The target was to adjust the organisation to meeting the long-term objectives, set in the Strategic Development Plan of Eesti Pank. The initial reorganisation of the organisational chart should be completed in 1999.

The year 1998 brought along several changes in the organisational structure, staff of executive bodies as well as in their substantial composition and distribution of functions. The new Chairman and Members of the Board of Eesti Pank, the highest governing body of Eesti Pank, supervising the Bank activities, were appointed for the term of five years.

On 18 June, authorised by Riigikogu(the Parliament) Mart Sõrg became the Chairman of the Board of Eesti Pank. In the first half of the year (after the mandate of the former Chairman of the Board Uno Mereste had expired in December 1997) the oldest member of the Board Ilmar Pärtelpoeg led the work of the Board. On the proposal by the Chairman of the Board of Eesti Pank Riigikogu appointed new members of the Board. Since 13 October 1998 Ants Järvesaar, Vahur Kraft, Kalev Kukk, Mati Meos, Hindrek Meri, Mihkel Pärnoja, Jüri Sepp and Erik Terk have been members of the Board.

Until 23 September 1998 when the extended powers of the Board of Eesti Pank expired, the members of the Board were Ants Erm, Raimund Hagelberg, Ardo Hansson, Vahur Kraft, Heiki Kranich, Kalev Kukk, Ilmar Pärtelpoeg and Mart Sõrg. Minister of Finance Mart Opmann attended the Board meetings as an observer with the right to speak.

The activities of the Bank are managed by the President of Eesti Pank Vahur Kraft. His sole competence involves organising the work of the banking sector proceeding from the general principles of monetary and banking policy determined by the Board, seeing to the observance of the decisions made by the Board and implementing the necessary measures as regards the decisions. Vahur Kraft is also responsible for guiding the public and legal relations of the Bank, co-ordinating the required resources for the organisational development and performance as well as for supervising management mechanisms.

Vice President Peter Lõhmus is responsible for elaborating and implementing the monetary policy. Vice President Heldur Meerits resigned on 31 December 1997. As of 1 June 1998 Vice President Helo Meigas has been responsible for the arrangement of the supervision of credit institutions located in Estonia as well as for the reliable, cost efficient and integrated development of the payment and settlement system of Eesti Pank.

Eesti Pank’s Director of Administration Services was Vello Roosiaas who was responsible for the technical side and security in Eesti Pank. Pilvia Nirgi was responsible for organising supervision over credit institutions heading the Banking Supervision until 13 May. From 13 April to the end of the year Andres Kurgpõld was the acting head of the Banking Supervision.

The Executive Management of Eesti Pank chaired by President Vahur Kraft was composed of the following members: Vice Presidents Peter Lõhmus and Helo Meigas (beginning from 1 June), Head of the Banking Supervision Pilvia Nirgi (until 13 May), Head of the Central Bank Policy Department Aare Järvan (until 1 July), Chief Accountant Andres Penjam, Head of the Financial Markets Department Valdur Laid and Head of the Information Technology Department Rein Minka.

Pursuant to the management scheme and areas of responsibility, the distribution of labour in the Management of the Bank was specified as regards relevant departments, integrating trends and committees.

President Vahur Kraft was the Head of the Development Committee and directed the work in Information, Information Technology, Legal, Central Accounting and Personnel Departments. The Internal Control Department was directly subordinated to President and the Board of Eesti Pank.

Key functions of the Development Committee were: to co-ordinate and solve development issues in the Bank’s organisation, to ensure the continuity and integrity of development processes as well as to co-ordinate development and improvement the Bank’s organisational structure and work procedures, development of management tools and methods and technological systems. The Development Committee is also responsible for the harmonisation of staff motivation systems and the development of the corporate culture.

The most significant topics, handled in the Development Committee in 1998, were the following: issues related to the elaboration and implementation of the pension scheme of Eesti Pank, remuneration policy, risk management principles, problems of the planning, IT security campaigns and their management policy as well as revision of the publication policy of Bank’s publications (see Planning and Development Activities, pp 81-84).

Vice President Peter Lõhmus was responsible for the monetary policy activities. He chaired the Financial Committee and guided the work in Financial Markets, Central Bank Policy, Macroeconomic Research and Statistics Departments.

The main functions of the Financial Committee are to prepare monetary and economic policy action plans, decisions and activities, including monitoring of the monetary policy and drafting related resolutions as well as to prepare estimates on the Estonian economic situation and economic policy and to identify the need to respond.

The Financial Committee focused on development trends in the financial sector and their impact on the general monetary environment. In order to expand Estonia’s economic prospect, Eesti Pank participated as an expert in elaborating the mid-term economic programme for the Government of the Republic. More attention than before was paid to the process of integration with the European Union and the introduction of the euro in Europe. The reorganisation of monetary policy branch, its most significant components being the establishment of the economic research division on the basis of the Macroeconomic Research Department, upgrading of economic forecast compilation procedures and expansion of the statistical base necessary for analytical work and research. The promptness of Eesti Pank’s analyses could be increased by improving the monetary policy monitoring system.

Vice President Helo Meigas was responsible for the financial stability. She chaired the Payment Committee and guided Banking Supervision, Clearing, Cash, Payment and Settlement Systems and Banking Statistics and Analysis Departments. The most important committee under the area of governance by Helo Meigas - the Banking Supervisory Committee - was chaired by President Vahur Kraft.

The key functions of the Banking Supervisory Committee include: the development of integrated supervision and co-operation between the different fields of the financial market, harmonisation of the banking supervision strategy, action plans and accents, analysis of credit institutions’ economic situation, their risk positions, risk-bearing ability and risk management systems as well as credit institutions’ licensing issues and the eligibility of their managers.

The essential issues handled by the Banking Supervisory Committee in 1998 were: issues related to the elaboration and implementation of the prudential ratios, solutions to Eesti Maapank-related problems, implications of the Russian crisis on Estonia’s credit institutions and problems related to meeting the reserve requirement and additional liquidity requirement by credit institutions.

Key functions of the Payment Committee under Vice President Helo Meigas include co-ordination of decisions and activities in the field of the payment and settlement system within the Bank and advising of the Management on these issues, taking of payment and settlement system-related decisions as well as intra-bank co-ordination of the elaboration and implementation of goals and development schemes in the payment and settlement system of the Bank.

The Payment Committee-handled topics in 1998 were: issues related to the establishment of the Real Time Gross Settlement System (RTGS) and a new Designated Time Net Settlement System (DNS), the sustainability and development of the current inter-bank settlement system, the updating of the legal framework for the payment and settlement system, collection of statistics on the use of different payment instruments and payment habits as well as profiling the trends, threats and opportunities underlying new trends in payment intermediation, improvement and implementation of cash and cash handling requirements.

Eesti Pank’s departments and their work underwent both formal and substantial reorganisation in 1998. In the Central Bank Policy Department an Economic Policy Division was set up. Developments in the field of payment and settlement systems brought along changes in related departments. The Currency Issue Department was renamed into Cash Department. The functions and names of units within the department were specified and the following units identified in the department: Treasury Vault (cash settlement and cash reserves), Cash Handling (cash processing) and Money Laboratory (issue-related matters, cash security). The substantial reorganisation of the Clearing Division started already in 1997 was formally completed in 1998 - the Clearing Division was reformed into the Clearing and Settlement Department.

In 1998, some of the plans for significant structural changes to be implemented in 1999 were partially prepared as well.