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Development of the banking system under the Estonian currency board

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  • Mart Sõrg
  • Vello Vensel

Abstract

The choice of a suitable exchange rate regime is the subject of numerous discussions in economic literature. Estonia has been successful in achieving economic stabilization and growth and steadily declining inflation. It has one of the highest per capita foreign direct investments in central and eastern Europe. Estonia also has one of the most liberalized economies among all transition countries. An essential element of the success of Estonian economic development is strict exchange rate control. Estonia has adopted a currency board that serves as a signal of commitment to prudent monetary policy and as a guarantee of sound money during the transition period. This paper discusses the experience of operating the currency board, some future prospects of the currency board arrangement, and the development of the banking system in Estonia. Copyright International Atlantic Economic Society 2002

Suggested Citation

  • Mart Sõrg & Vello Vensel, 2002. "Development of the banking system under the Estonian currency board," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 8(1), pages 35-48, February.
    • Handle: RePEc:kap:iaecre:v:8:y:2002:i:1:p:35-48:10.1007/bf02295561
    DOI: 10.1007/BF02295561
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    References listed on IDEAS

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    1. Iikka Korhonen, 2000. "Currency Boards in the Baltic Countries: What Have We Learned?," Post-Communist Economies, Taylor & Francis Journals, vol. 12(1), pages 25-46.
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    6. Eric van Wincoop & Philippe Bacchetta, 2000. "Does Exchange-Rate Stability Increase Trade and Welfare?," American Economic Review, American Economic Association, vol. 90(5), pages 1093-1109, December.
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    8. Mr. Paul R Masson, 1999. "Monetary and Exchange Rate Policy of Transition Economies of Central and Eastern Europe after the Launch of EMU," IMF Policy Discussion Papers 1999/005, International Monetary Fund.
    9. Carmen M. Reinhart, 2000. "The Mirage of Floating Exchange Rates," Annual Proceedings, The Association for the Study of the Cuban Economy, vol. 10.
    10. International Monetary Fund, 1996. "Does the Exchange Regime Matter for inflation and Growth?," IMF Economic Issues 1996/002, International Monetary Fund.
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    Cited by:

    1. Sõrg, Mart, 2004. "Estonian Monetary System: Reconstruction, Performance, and Future Prospects," Wirtschaftswissenschaftliche Diskussionspapiere 11/2004, University of Greifswald, Faculty of Law and Economics.
    2. Nikola Fabris & Gojko Rodić, 2013. "The Efficiency of the Currency Board Arrangement," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 2(1), pages 157-176.
    3. repec:cbk:journl:v:1:y:2013:i:3:p:157-176 is not listed on IDEAS

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