Useful facts

1.
Will the tasks of Eesti Pank change after the changeover to the euro?
2.
Why adopt the euro?


Answers

Will the tasks of Eesti Pank change after the changeover to the euro?
Answer:
After the adoption of the euro, representatives of Eesti Pank will start to participate in the formation of euro-area monetary policy. Eesti Pank will also continue performing the regular functions of a national central bank. This means that apart from introduction of the monetary policy decisions of the European Central Bank, preparation of economic analyses and forecasts and administration of foreign currency reserves, the bank carries on with the tasks related to issuing cash, operating payment systems and collecting statistical data. One of the tasks of Eesti Pank is to maintain financial stability and regulate the banking sector, which is done in close cooperation with the Financial Supervision Authority.
Why adopt the euro?
Answer:
1. The adoption of the euro will ensure the reliability of the currency circulating in Estonia also in the future. The euro will provide price stability (that is, the price level changes very little) and stronger purchasing power for Estonian residents.

2. Joining the euro area will improve welfare and economic growth in Estonia, because the euro will increase the credibility of the Estonian economy, attracting more investment to Estonia. This, in turn, contributes to the creation of jobs.

3. The accession to the euro area will keep the interest rates of bank loans at a reasonable level also in the future. With low and stable inflation, also the interest rates will be steadier and Estonia’s banks will be able to lend money at lower rates.

4. The adoption of the euro will contribute to stronger economic growth, deliver participation in making important economic decisions, and make it possible for Estonia’s banks to borrow from the European Central Bank. This will significantly boost Estonia’s general economic security.

5. Joining the euro area is the next logical step in Estonia’s policies to date – for 18 years, the fixed exchange rate of the kroon has been the most important pillar of the Estonian economy.

6. The advantages of joining the euro area depend on whether we are able to maintain the course of our economic policies, i.e. spend reasonably at both the state and the individual level.