Monetary and financial system
Until 2011 the Estonian monetary unit was kroon, which was adopted after the monetary reform of 20 June 1992. The official rate was 1 Deutsche Mark (DEM) = 8 kroons (EEK). The Soviet roubles were exchanged into kroon at a rate of 1 kroon = 10 roubles. When the Deutsche Mark was replaced by euro, the Estonian kroon was pegged to euro at a rate of 1 EUR = 15.6466 EEK. From 1 January 2011 the official currency in Estonia is euro.
The Bank of Estonia founded in 1919 operates as Estonia's central bank. The bank did not exist during the years of the Soviet occupation (1940-41, 1944 - 1989). The Bank of Estonia was restored in 1990. The Bank of Estonia is responsible for maintaining the value of the Estonian kroon and the stability of the financial system. Initially the Bank of Estonia carried out supervision of commercial banks also but now the task belongs to the responsibilities of the Financial Supervision Authority.
The Financial Supervision Authority was established at the Bank of Estonia in 2002 and it carries out supervision of all Estonian financial institutions, i.e. banks, insurance companies, investment and pension funds and the securities market.
Six registered banks, three branches of a foreign bank and 5 representations of foreign banks operate in Estonia. Estonia has 8 insurance companies, 6 leasing companies, 9 savings and loan associations, 7 investment firms and 6 management companies who are also allowed to administer pension funds. The Tallinn Stock Exchange that is linked to the Helsinki Stock Exchange operates in Tallinn. There are 17 investment funds, 15 compulsory pension funds and 7 voluntary pension funds in Estonia.
Financial sector
The Estonian financial sector is quite bank-centred – the majority of insurance, leasing and investment companies and funds belong to banks. Most of the banks in their turn are owned by foreign capital, which is largely of Scandinavian origin (Swedish, Finnish and Danish). Foreign capital dominates also in insurance, either through direct or indirect holdings.
