| |
Answer:
Estonian monetary system is based on fixed exchange rate regime against the euro with currency board arrangement. Due to currency board arrangement the Bank of Estonia can not (and does not) implement independent monetary policy- the money supply in Estonia is endogenously determined by money demand, central bank does not implement open market operation and does not influence money supply by selling bonds or by setting interest rates. Under the currency board arrangement the monetary stability is achieved by anchoring role of exchange rate and by providing credible and transparent monetary system for real economy. More information on Estonian monetary policy can be find at: http://www.eestipank.info/pub/en/majandus/rahasysteem/yldalused/
|