Whereas Eesti Pank is guided by its mission, primary
goals and Estonia's desire to join the European Economic
and Monetary Union;
whereas the susceptibility to macroeconomic
instability and external shocks characteristic to
economies in transition underline the importance of
institutional development;
whereas Eesti Pank considers it prudent to continue to
conduct a monetary policy based on a fixed exchange rate
and currency board arrangement,
Eesti Pank is guided by the following:
1. The credibility and stability of the kroon is
safeguarded by maintaining a monetary policy based on a
fixed exchange rate and currency board arrangement.
2. In managing the foreign currency reserves backing
the kroon Eesti Pank proceeds from the principles of
their preservation, liquidity and maximum profitability,
within the risk limits determined by the legislation.
3. The main tools of Eesti Pank in securing the
efficiency of the transition mechanism of the rule-based
monetary policy in the conditions of rapid economic and
financial development are the relevant structure of the
operational framework of monetary policy and improved
access, first of all, to the information on short-term
capital flows and the debt burden of the economy.
4. Without compromising the currency board
arrangement, Eesti Pank is ready to use additional
instruments of monetary policy in order to minimise the
macroeconomic and institutional risk characteristic to
economies in transition.
5. Eesti Pank develops monetary policy scenarios in
connection with the launch of Stage 3 of the European
Economic and Monetary Union (EMU) as well as Estonia's
future possible accession to EMU.
6. In order to improve the activities of the public
sector, Eesti Pank co-operates actively with the
Government of the Republic of Estonia and governmental
institutions. Proceeding from the Central Bank Act, Eesti
Pank advises the Government on monetary and banking
policy issues. In view of the limited resources, Eesti
Pank can advise the government also in other fields when
needed.
7. In designing and implementing monetary and banking
policy, Eesti Pank aims at harmony with the corresponding
European Union legislation, allowing only temporary
inconsistencies caused by specific features clearly
attributed to the transition period.
8. To safeguard the effectiveness of monetary policy
and banking supervision, Eesti Pank also pays greater
attention to non-bank financial intermediaries in
planning and implementing its policies.
9. In view of the growing integration of the financial markets, Eesti Pank supports the establishment of
politically unbiased integrated supervision of financial
institutions in Estonia, at the same time keeping in mind
that the merger of different supervision bodies should
not be allowed to damage the quality of supervision even
temporarily.
10. Eesti Pank aims at harmonising Estonian
supervision standards and practice with the best of
international practice and reacts promptly to changes in
the environment, enforcing prudential ratios and other
regulations stricter than required by international
standards but which correspond to higher macro- and
microeconomic risks characterising Estonia as an economy
in transition and which strengthen the international
competitiveness of the financial sector.
11. In safeguarding the stability of the financial
sector and dividing responsibility between the private
and the public sector, Eesti Pank emphasises
self-regulation and strengthening of general management,
good banking practices, as well as transparency of
activities and assumed risks.
12. Eesti Pank aims at minimising its ownership in the banking sector. In divesting of shareholdings Eesti Pank
proceeds from the need to safeguard the stability of the
financial system and to maintain a reliable and
transparent ownership structure in banking which can be
achieved by involving strong strategic investors.
13. In the event of a banking crisis, Eesti Pank
strives to prevent the crisis from becoming systemic. In
order to safeguard the continuity and trustworthiness of
the financial system, Eesti Pank deems it necessary to
define a safety net of the financial sector, at the same
time paying greater attention to improving market
discipline through the responsibility of owners and
openness of the financial sector, thus guaranteeing
transparent and the cheapest solution of the problems
that may arise and minimising the possibility of moral
hazard.
14. In view of the globalisation of the financial
markets, Estonia's openness to external risks and
integration into the international financial markets,
Eesti Pank deems important to pay greater attention to
international co-operation with the central banks and
supervisory bodies of other countries in order to
safeguard financial stability in Estonia.
15. In view of the need to make transactions in
Estonian kroon more secure, faster and efficient, and to
fulfil the requirements and regulations of the European
Union, Eesti Pank implements the Real Time Gross
Settlement System and improves the Designated Time Net
Settlement System.
16. Eesti Pank supports private initiative and a
pro-active approach to developing the infrastructure of
financial markets. Regarding multilateral netting
settlement systems operated outside of the central bank,
Eesti Pank supports their greater transparency and a
smaller openness to risks.
17. In the light of financial market globalisation and potential comparative advantages of Estonia, Eesti Pank
deems important the openness and international
competitiveness of the financial sector, with an emphasis
on the readiness of the financial sector for possible
future membership in the European Economic and Monetary
Union.
18. For the purpose of mutually beneficial
international co-operation, Eesti Pank is increasingly
active in international financial organisations and
redoubles the efforts to introduce Estonian experiences
in international forums.
19. In compilation, analysis and distribution of
statistics, Eesti Pank strives to improve the
dissemination of information to economic agents and the
conformability of the statistics to the international
standards.
20. Eesti Pank introduces additional quality and
security measures for cash and its handling in Eesti
Pank, credit institutions and cash holding centres. Cash
management will be conducted according to the ISO 9000
standard.
21. Eesti Pank follows international practice and
takes measures, including regular publications, to
improve the transparency of the organisation and make its
activities more comprehensible to the general public.
22. To guarantee more sparing and efficient use of
resources Eesti Pank improves the methods of strategic
planning and budgeting. When possible, Eesti Pank uses
quantitative methods and pricing of services in order to
achieve better results in operational and support
activities and compare its costs with the costs of other
central banks. Self-education, in-service training and
efficiency of activity are the main methods of improving
the core competence and professionalism of Eesti Pank
employees.
