CASH

ISSUE OF BANKNOTES AND COINS AND THEIR STRUCTURE

By 31 December 1998 there was a total of 5,390.7 million kroons in circulation, of which 850.9 million kroons or 15.8% was in the vaults of Estonian credit institutions and 4,539.8 million kroons or 84.2% in circulation outside the banks.

For the first time since the monetary reform the total amount of cash in circulation decreased. For example, in 1996 an additional 649.6 million kroons was put into circulation and in 1997 another 451.8 million kroons, while in 1998 the amount of cash in circulation decreased by 47.9 million kroons (see Table 7.1).

In 1998, the number of 500- and 2kroon banknotes in circulation increased while the number of other denominations decreased. Of coins in circulation, the number of 10-, 20- and 50sent coins increased. The number of 5sent coins, the minting of which has been stopped, decreased, as well as the number of one-kroon coins, the sharp decrease of which can be attributed to the replacement of earlier issued coins by the coins of a new alloy (see Table 7.2).

Of the total amount of cash in circulation banknotes accounted for 99.2%, coins for 0.7% and commemorative coins for 0.1%. 500kroon banknotes made up nearly three fourths of the total number of banknotes and their share is constantly increasing. A slight increase was also noticed in the share of 2kroons banknotes. The share of other banknotes was unchanged or decreased (see Table 7.3).

The number of one-kroon and 100kroon banknotes is the largest among cash in circulation while the number of 50kroon banknotes is the smallest. As the issue of one-kroon banknotes has been stopped their number will start decreasing in the future.

Of coins, the bulk is made up of 10-, 20- and 5sent coins; the number of 5kroon coins in circulation has been relatively small and stable.

In 1998, Eesti Pank issued new nickel steel silver-grey 20sent and yellow one-kroon (Cu89Al5Zn5Sn1) coins.

With the increase of the 500kroon banknotes in circulation, the average value of a banknote in circulation increased by 3.4 kroons and amounted to 96.5 kroons on 31 December.

CASH MOVEMENT

The movement of cash between Eesti Pank and credit institutions is characterised by Table 7.4. As we can see, in 1998 Eesti Pank issued 6,258.4 million kroons and received 6,314.0 million kroons. The sum of cash returned to Eesti Pank amounted to 116.1% of the total sum of cash in circulation at the beginning of the year. The ratio of returned cash to cash in circulation has been constantly increasing (82.1% in 1993, 108.0% in 1997). The increase can be attributed to the faster circulation of 500kroon notes, which account for a large share of cash in circulation while the rate of circulation of all other banknotes has slowed down.

In terms of numbers, Eesti Pank issued 60 million banknotes and 19.8 million coins in 1998 and was returned 62.2 million banknotes and 3.9 million coins. Thus, considerably less coins were returned to Eesti Pank than issued. The volume of issued and returned banknotes and coins has decreased in recent years, with the exception of 500kroon notes the issue and return of which has increased. However, since the share of 500kroon notes in the total number of banknotes in circulation is relatively small, the increase in their numbers fails to compensate for the decrease in the number of other banknotes.

The sorting unit of Eesti Pank's cash department separates worn-out banknotes and coins from the money returned to the bank.

WITHDRAWAL OF WORN-OUT BANKNOTES AND COINS

In 1998, 37.7 million worn-out banknotes were withdrawn from circulation, with the total worth of 2,199.0 million kroons (see Table 7.5). Worn-out banknotes were destroyed.

On 2 March 1998, Eesti Pank stopped issuing one-kroon coins with the years of issue of 1992, 1993 and 1995. Instead, one-kroon coins made of a new alloy were issued. Until 31 May older coins were accepted as legal tender alongside the new coins. From 1 June 1998 the old coins were declared invalid. In 1998, a total of 5.9 million one-kroon coins with the year of issue of 1992, 1993 and 1995 were returned to Eesti Pank. Currently, the old coins are exchanged for new coins and banknotes only at Eesti Pank.

COMMEMORATIVE COINS

In 1998, Eesti Pank issued 10-, 100- and 500kroon commemorative coins dedicated to the 80th anniversary of the Republic of Estonia. The coins were designed by Margus Kadarik who drew on elements of Kristjan Raud's prints on the Estonian mythical hero Kalevipoeg.

10- and 100kroon coins were made of silver (Ag 925); the 500kroon coin was the first Estonian gold coin (Au 900). The coins were minted in Finland, at Suomen Rahapaja OY, which has been selling them outside Estonia. Maximum 15,000 10kroon coins, 12,000 100kroon coins and 3,000 500kroon coins are minted. In Estonia the commemorative coins are sold separately and as a set of three coins.

Since 1992 Eesti Pank has issued seven commemorative coins.

ACTIVITIES OF THE MONEY LABORATORY

In 1998, the Money Laboratory worked out the technical specification of the new 100kroon banknote of the Republic of Estonia, prepared the tender for finding the lowest bidder for printing the banknotes and took part in organising the bidding.

The Laboratory tested the samples of commemorative and regular coins issued in 1998, including tests on the commemorative coins dedicated to the 80th anniversary of the Republic of Estonia, the 10sent coin, the 1997 20sent coin and the new one-kroon coin.

170 examinations were conducted on 1,257 worn-out and damaged Estonian banknotes to determine the causes of damage and changes in the parameters of the banknotes. Also examinations were carried out on 445 forged Estonian banknotes. Pre-destruction identification reports were written on 5.49 million Estonian banknotes withdrawn from circulation. Examinations on US and Swedish banknotes with signs of forgery were carried out and the correspondence to the standard of banknotes from France, Great Britain, Germany, Italy, Lithuania, Denmark, the Netherlands, Norway, Spain, Austria, Finland and Russia was checked.

The Money Laboratory organised two training seminars on identifying forged US banknotes. 17 memoranda were circulated to Estonian banks on the Eesti Pank quoted new banknotes issued and old ones withdrawn by central banks of foreign countries. The public and banks in Estonia were informed through the media of the appearance of forged banknotes into circulation.