Eesti Pank EEsti Pank annual RepoRt 2010 2011 the inserts of Eesti Pank’s annual report 2010 for the year preceding the changeover depict the Estonian kroon banknotes that were in circulation in the years 1992–2010. as well as the circulating banknotes, the insert also includes the only Estonian kroon collector banknote, which was issued in 2008. the explanatory texts by each banknote briefly describe the people and motifs depicted on the banknote. the 1- and 2-kroon banknotes were designed by Rihet-urmas Ploomipuu and printed by the unites states Banknote Company (the later 2-kroon series were printed at the Giesecke Devrient GmbH print house). the 5-, 10-, 25-, 100- and 500-kroon banknotes were designed by Vladimir taiger. the first series of these notes were printed by thomas De la Rue and Company ltd; the later series were printed at the print houses of De la Rue Currency, Giesecke Devrient GmbH and Bundesdruckerei GmbH. the designers of the 10-kroon collector banknote were Günther Reindorff and Vladimir taiger. the front of the banknote is an exact copy of the 10-kroon banknote designed by Günther Reindorff before World War II, while the reverse is from the 10-kroon banknote of the re-established Republic of Estonia and was designed by Vladimir taiger. the collector banknotes were printed by the De la Rue Currency print house. 2 CONTENTS MAIN FEATURES AND FUNCTIONS OF EESTI PANK................................................................. 9 Foreword by ThE GOvernor of Eesti Pank.................................................................. 12 Central bank accountabIlity ......................................................................................... 17 ThE strategic Objectives of Eesti Pank in 2010 ......................................................... 21 ChANGEOvER TO ThE EURO ................................................................................................... 24 PREPaRATIONS FoR JOINING tHE EuRo aREa .......................................................................... 24 General framework .................................................................................................................... 24 Euro changeover criteria ............................................................................................................ 24 Preparations by Eesti Pank and credit institutions for the euro .................................................... 25 Provision of information ............................................................................................................. 27 CHANGEs IN EESTI PANK’s oPERATION FRaMEWoRk IN 2011 IN CONNECTION WITH tHE EuRo aREa ..................................................................................... 28 tasks of the Eurosystem ............................................................................................................ 29 the central bank’s assets and liabilities after the changeover .................................................... 32 TASKS AND AChIEvEMENTS OF EESTI PANK IN 2010 ........................................................... 35 MONETARY POLICY ..................................................................................................................... 36 Monitoring ................................................................................................................................. 37 Economic reviews ..................................................................................................................... 37 Economic forecasts ................................................................................................................... 37 Economic research.................................................................................................................... 38 REsERVE MANAGEMENT ............................................................................................................. 40 Reserve management in 2010 ................................................................................................... 40 the structure of foreign exchange reserves ................................................................................ 40 the investment process ............................................................................................................ 40 Results and determinants of investment in 2010 ........................................................................ 41 Changes in the benchmark portfolio in 2010 .............................................................................. 41 asset management services provided to the public sector ......................................................... 41 Preparations for the euro and changes in reserve management.................................................. 41 ENSURING FINANCIAL STABILITY ................................................................................................ 43 Financial sector analysis and financial stability assessment ........................................................ 43 Financial sector policy and regulation ......................................................................................... 44 DEVELOPMENTS IN STATISTICs .................................................................................................. 47 Preparations in statistics for EMu accession ............................................................................. 47 Banking and other financial statistics ......................................................................................... 47 Balance of payments statistics .................................................................................................. 48 General economic statistics ...................................................................................................... 50 3 Eesti Pank annual Report 2010 PaYMENT AND sETTLEMENT sYSTEMs ...................................................................................... 51 Development of payment and settlement systems ..................................................................... 51 Payments in the payment and settlement systems managed by Eesti Pank ................................ 53 the oversight of payment and settlement systems ..................................................................... 54 MEETING tHE CASH DEMAND ..................................................................................................... 57 Banknotes and coins in circulation and their structure ................................................................ 57 Expert analysis and handling of cash ........................................................................................ 57 the preparation of new banknotes and coins ............................................................................. 58 the preparations for the euro changeover and changes in the structure of cash ......................... 59 INTERNATIONAL PaRTNERsHiP .................................................................................................. 63 Cooperation with European union institutions ........................................................................... 63 Cooperation with the international Monetary Fund .................................................................... 65 Cooperation with the Bank for international settlements ........................................................... 67 Cooperation with rating agencies............................................................................................... 67 PuBLIC RELATIONS ...................................................................................................................... 68 Media communication and public appearances ......................................................................... 69 the distribution of information about the changeover ................................................................. 69 Results of the euro information work .......................................................................................... 71 GoVERNANCE, oRGANISATION AND HuMAN RESOURCEs POLICY .......................................... 73 the governing and decision-making bodies of Eesti Pank .......................................................... 73 the development of the management system and work organisation of Eesti Pank in 2010 ....... 75 the human resources policy ...................................................................................................... 77 Annual accounts of Eesti Pank for ThE financial year ended 31 December 2010 ....................................................... 82 ANNEXES .................................................................................................................................. 105 GLOBAL ECONOMY IN 2010 ...................................................................................................... 106 united states and Japan ......................................................................................................... 107 Euro area ................................................................................................................................ 107 ESTONIAN ECONOMY IN 2010 ................................................................................................... 109 tHE NON-FINANCIAL sECTOR ................................................................................................... 109 the monetary policy environment ...........................................................................................