Annual Report 1997. Cash

ISSUE OF BANKNOTES AND COINS AND THEIR STRUCTURE

By 31 December 1997, there were a total of EEK 5,438.54 million in circulation, of which EEK 848.73 million or 15.6% were in the vaults of Estonian credit institutions and EEK 4,589.81 million or 84.4% in circulation outside the banks.

As a positive development, the increase of the issue of cash into circulation continued to slow down in 1997. While in 1995 an additional EEK 824.8 million were put into circulation and in 1996 another EEK 649.64 million, then in 1997 just EEK 451.76 million were issued which amounts to 69.5% of the sum put into circulation in 1996. In 1997, the share of 1-, 2-, 5-, 25- and 500-kroon banknotes in circulation increased, the share of 10-, 50- and 100-kroon banknotes decreased (see Table 5.1 Structure of cash additionally issued into circulation, between 1995 and 1997).

The structure of cash in circulation has stabilized. In terms of volume, cash in circulation is dominated by 1- and 100-kroon banknotes, the number of 50-kroon banknotes in circulation is the smallest. Of coins, the bulk is made up of 10-, 5- and 20-sents; the minting of 5-sent coins was stopped at the end of 1996. As before, demand for 50-sent and 5-kroon coins is low (see Tables 5.2 Banknotes and coins in circulation, between 1995 and 1997; and 5.3 Structure of banknotes and coins in circulation, between 1995 and 1997).

As the number of 500-kroon notes in circulation increased in 1997, the average value of a banknote in circulation increased by 6.17 kroons and amounted to 93.14 kroons on 31 December.

CASH MOVEMENT

The movement of cash within the system of credit institutions and between the credit institutions and the economy is characterized by Table 5.4 (Cash circulation, between 1995 and 1997). As we can see, the amount of cash issued to the economy by the banks in 1997 was 9.6 times and the amount of money received by the banks from the economy was 10.4 times larger than the corresponding turnover between Eesti Pank and the credit institutions.

In 1997, Eesti Pank issued EEK 5,861.37 million worth of cash. Over the same period EEK 5,409.61 million was returned to Eesti Pank which is 108.0% of the total cash in circulation at the beginning of the year. The ratio of returned cash to cash in circulation has been constantly increasing (82.1% in 1993, 102.0% in 1996).

WITHDRAWAL OF WORN-OUT BANKNOTES

Since the monetary reform until the end of 1997, a total of 100.36 million worn-out banknotes returned to Eesti Pank have been withdrawn from circulation, with total worth of EEK 3,430.16 million (see Table 5.5 Worn-out banknotes withdrawn from circulation, between 1992 and 1997). Of these, 55.7% or EEK 1,911.14 million were withdrawn from circulation in 1997. The destruction of withdrawn banknotes was started in June 1995. By the end of 1997, EEK 3,056.4 million worth of banknotes had been destroyed.

ACTIVITIES OF THE MONEY LABORATORY

In 1997, the Money Laboratory worked on the pre-issue testing of Estonian banknotes and coins, examination of banknotes, pre-destruction testing of banknotes and measures aimed at preventing the forging of the Estonian kroon and improving the technology of the laboratory.

The Money Laboratory conducted 197 examinations on a total of 1,229 worn-out or damaged 1-, 2-, 5-, 10-, 25-, 50-, 100- and 500-kroon banknotes, and thirty seven 500-kroon, ten 100-kroon, two 25-kroon, two 10-kroon and one 1-kroon forged banknotes. Before destruction, a total of 8.2 million withdrawn 100- and 500-kroon banknotes were identified.

At the request of credit institutions, 533 expert opinions were issued on the banknotes of the USA, Sweden, Great Britain, Germany, Italy, Norway, Spain, Belgium, Finland, Canada and Russia. Out of the 619 foreign currency banknotes examined, 172 corresponded to the standard, while 447 were counterfeit. The credit institutions and the public were promptly informed of the instances of discovering forged banknotes.