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1992–1995: monetary reform and first years of restoration of independence

The time that preceded and followed the monetary reform of 1992 was complicated for both the Estonian economy and the financial system. The amount of foreign currency reserves of the central bank was only around 2.5 billion kroons, from which the excess reserve above the currency board totalled around 590 million kroons. The average monthly salary was little over one thousand kroons and inflation increased to 1077% in 1992. It was necessary to regulate the banking sector under these circumstances and create a legal framework functioning in the conditions of a market economy.

During the early years after monetary reform, the undeveloped legal environment was a major problem for Estonian banking supervision. Until the end of 1994, there was no Accounting Act or Commercial Code corresponding to the current requirements in Estonia. The backwardness of the general legal environment considerably limited the legal possibilities of banking supervision to require that banks operate in accordance with the modern risk approach. In January 1995 the first modern Credit Institutions Act entered into force.

Exchange of money in Tallinn Secondary Science School on 20 June 1992.
Source: Erik Prozes 

20 June 1992

The first and most radical monetary reform of the former states of the rouble zone is carried out in Estonia. This date marks the actual restoration of the economic independence of Estonia. The Estonian kroon is declared the sole legal tender and Eesti Pank the only regulator of monetary relations in Estonia. The official exchange rate of the Estonian kroon against the German mark is fixed at DEM 1 = EEK 8.

Starting from the monetary reform, a monetary system based on strict rules of the currency board is applied in Estonia, which successfully lasts until Estonia joins the euro area at the beginning of 2011.

1 April 1992 – 1 October 1992

Banks using computer connections are gradually switched into the uniform communications network. To accelerate settlements, the requirement to make domestic settlements within 48 hours is established. By way of comparison: In the 1990s, before the monetary reform, payment documents were delivered to Eesti Pank on paper, data were then entered on punch cards or tape and only then were they inserted in the computer. Account statements were transferred to banks the next day. It took days to make settlements involving branches further afield.

September 1992

Eesti Pank publishes the first balance of payments of the state following restoration of independence, dealing with the first half of 1992.

October 1992

A net settlement system of Eesti Pank (EPNAS) is launched where any payment information is communicated via a modem.

21 December 1992

Uno Mereste is appointed as the Chairman of the Supervisory Board of Eesti Pank.

Uno Mereste. Source: Eesti Pank Museum

January 1993

Eesti Pank launches a short-term money market project meaning that banks can offer available funds to other banks and request short-term loans from other banks on the market.

To strengthen the trust between banks, Eesti Pank starts issuing loan certificates with a nominal value of EEK 100,000. The certificates contribute to interbank money market development and the creation of mutual trust.


Information about the banknotes of the Republic of Estonia is sent to foreign banks.

1 January 1993

A new reporting procedure of Estonian banks is established, replacing the reporting forms of the State Bank of the Soviet Union which have remained effective to this point.

11 May 1993

Stricter requirements for the minimum amount of the share capital of banks are established.

18 June 1993

The Eesti Pank Act enters into force.

1 July 1993

Instead of the current economic legislation of the State Bank of the Soviet Union, stricter rules are enforced by a regulation of Eesti Pank.

October 1993

The first ATM starts operating in Tallinn.

March 1994

The Riigikogu revokes the Foreign Currency Act. Thereby, the last formal restrictions on foreign exchange transactions are removed and resident individuals are also allowed to open foreign currency accounts. In summer 1994, Estonia joins the obligation not to impose foreign currency restrictions. Estonia is one of the first transition countries in Central and Eastern Europe to remove barriers to the free movement of capital.

4 April 1994

Eesti Pank commences the sales of swap and futures contracts of the Eesti kroon and German mark with a term of up to seven years. This means that banks can buy a certain quantity of kroons or marks with a fixed rate for seven years, which are bought back by Eesti Pank at the same exchange rate. The aim is to decrease speculation related to the possible devaluation of the kroon. Entry into transactions is terminated in March 1995 when the necessity for such funds disappears.

September 1994

By a resolution of the Supervisory Board of Eesti Pank, the terms of achieving minimum amounts of funds of banks are established: 1 January 1996 – 50 million kroons; 1 January 1997 – 60 million kroons; 1 January 1998 – 75 million kroons. This is done for the purpose of strengthening the capital base of banks and enabling them to fulfil their role as financial intermediaries more effectively.

December 1994

The Riigikogu adopts the Credit Institutions Act, which enters into force in January 1995.