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The significance and role of Eesti Pank
Most of the countries in the world, including Estonia, use the two-tier banking system with the central bank
constituting the first and commercial banks and other credit institutions the second tier. The first tier deals with ensuring price
stability and employs different methods to control the volume of money put into circulation through commercial banks. The second
tier provides banking services (opening accounts, providing loans, replacing damaged banknotes, purchasing/selling currency, etc)
to people and enterprises.
Eesti Pank is the central bank of the Republic of Estonia that operates the Estonian monetary system, i.e.,
conducts the national monetary policy.
The mission of Eesti Pank is to ensure price stability in Estonia. A stable price level is very important.
This gives economic agents (both people and enterprises) the confidence to make long-term saving, consumption and investment plans.
Monetary stability is the basis of a lasting and successful economic and social development.
The main tasks of Eesti Pank in carrying out its mission are as follows:
1) participating in the national economic policy through the implementation of independent monetary policy, consultancy to the
government, and international co-operation;
2) ensuring financial stability in Estonia by creating policies for the financial sector and operating well-functioning
settlement systems;
3) arranging cash circulation in Estonia;
4) making preparations to become one of the policy-makers among other national central banks of the euro area who design the
coordinated economic policy and single monetary policy in Europe.
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