Country Details

The NASDAQ OMX Tallinn Stock Exchange is a stock exchange operating in Tallinn, Estonia. NASDAQ OMX Tallinn is the only regulated secondary securities market in Estonia. The major stock market index is OMX Tallinn, formerly known as TALSE. The foundation of Estonian Central Securities Depository in 1994 created the basis for the development of the secondary market based on electronic trading system. This was realized with the founding of the Tallinn Stock Exchange in April 1995 by 10 commercial banks, 9 brokerage firms and state players (Hüvitusfond, Bank of Estonia and Ministry of Finance), equal holding of each of them. Licensed by the Ministry of Finance, Tallinn Stock Exchange opened for trading on May 31, 1996 with 11 securities listed.

Estonia has had a quick recovery from the recent recession and its economy is in better shape than before the crisis. It is now much cleaner and significantly more capable of handling international shocks. After a sharp contraction, in which GDP contracted by over 14 percent in 2009, GDP growth rebounded quickly, growing at a rate of 3.1 percent in 2010 and 8.3 percent in 2011.  Labour productivity has grown faster than real wages, which has increased the competitiveness of Estonian firms in the world markets. Estonian exports grew 22 percent in 2010 and 25 percent in 2011. This is a result of the rapid increase of high value-added exports by the manufacturing sector, which has also been the main job creator since the crisis. Indeed, export growth has been the main driver of the Estonian economic recovery. 

Paul Krugman (2012) has pointed out that Estonia has not reached its pre-recession level of GDP, but that is because Estonia was hit particularly hard by the financial crisis in 2008 and 2009. Significant export markets disappeared and the domestic housing bubble deflated. GDP shrank by 3.7 percent in 2008 and 14.3 per- cent in 2009, making it the third-deepest recession in the European Union. This contraction was a result of two main factors: the fact that Estonia is a small open economy, and the previous rapid credit expansion that had significantly boosted domestic consumption. Another metric showing the extent to which Estonia was hit by the recession is the unemployment rate, which climbed to 17 percent in 2010. However, just as with economic growth, Estonia has recovered quickly from the nadir of 2009; there has already been a rapid decline in the unemployment rate to 12.5 percent in 2011, and it is expected to fall further to 10.5 percent in 2012.

Estonia decided to delegate its monetary policy because a small and open economy like Estonia cannot have exchange rate stability, capital mobility, and an independent monetary policy at the same time. The goal has been to ensure trust in the currency and be open to international capital flows. The downside of the peg to the euro was the inability to control inflation. As a consequence, Estonia missed the inflation criteria set forth in the Maastricht Treaty, forcing the nation to give up its hopes of adopting the euro in 2007. Estonia was then able to join the Eurozone a few years later, in 2011.  This delegation of monetary policy meant that instead of external devaluation by changing the exchange rate of the Estonian kroon to the euro, the government kept the peg and opted for internal devaluation, resulting instead in a cut in nominal wages. Because of the currency board arrangement, the currency devaluation was essentially not even an option— it would have needed a parliamentary decision, which would have taken too long to obtain. As wages went down, companies were forced to focus on increasing efficiency and Estonia actually achieved a solid increase in productivity.

Estonia is often described as one of the weirdest countries in Europe. After winning the Estonian War of Independence against the Soviet Russia and later the German Freikorps and Baltische Landeswehr volunteers, who had earlier fought alongside Estonia, the Tartu Peace Treaty was signed on 2 February 1920. The Republic of Estonia was recognised (de jure) by Finland on 7 July 1920, Poland on 31 December 1920, and Argentina on 12 January 1921, by the Western Allies on 26 January 1921 and by India on 22 September 1921. Estonia maintained its independence for twenty-two years. Initially a parliamentary democracy, the parliament (Riigikogu) was disbanded in 1934, following political unrest caused by the global economic crisis. Subsequently, the country was ruled by decree by Konstantin Päts, who became president in 1938, the year parliamentary elections resumed.

Famous People

The kroon (EEK) was the official currency of Estonia for two periods in history: 1928–1940 and 1992–2011. Between 1 January and 14 January 2011, the kroon circulated together with the euro, after which the euro became the sole legal tender in Estonia. The kroon was subdivided into 100 cents. The word kroon is related to that of the other Nordic currencies (such as the Swedish krona and the Danish and Norwegian krone) and derived from the Latin word corona ("crown"). The kroon succeeded the mark in 1928 and was in use until the Soviet invasion in 1940 and Estonia's subsequent incorporation into the Soviet Union when the Soviet ruble replaced it. After Estonia regained its independence, the kroon was reintroduced in 1992.

The kroon was reintroduced as Estonia's currency on 20 June 1992, replacing the Soviet ruble at a rate of 1 kroon = 10 rubles. (Each person was able to change a maximum of 1500 rubles to 150 kroons.) Initially, the Estonian kroon was pegged to the Deutsche Mark at a rate of 8 krooni = 1 Deutsche Mark. After the introduction of the euro, the fixed exchange rate of 1.95583 DEM to EUR led to an exchange rate of 15.64664 krooni to the euro. On 28 June 2004, as Estonia joined the ERM II-system, the central parity of the Estonian kroon was revalued (by less than 0.001%) to 15.6466 krooni per euro. On 1 January 2011, the euro replaced the kroon as the official currency of Estonia. The kroon circulated alongside the euro until 15 January 2011 at which point it ceased to be legal tender. However, the Eesti Pank will indefinitely exchange kroon banknotes and coins in any amount into euro. In 1924, the kroon was pegged to the Swedish krona at par, with a gold standard of 2480 kroon = 1 kilogram of pure gold. The standard received real coverage with the reserves backing the kroon. The issue of treasury notes and exchange notes was terminated. In order to secure the credibility of the kroon, the Bank of Estonia exchanged kroon for foreign currency. All these measures restored confidence in the domestic banking and monetary sector, contributing to the economic reinvigoration of the country and to the improvement of the reputation of the Estonian state in the international arena.

In 1928, the first coins of this currency were issued, nickel-bronze 25 senti pieces. These were followed by bronze 1 sent in 1929, silver 2 krooni in 1930, bronze 5 senti and nickel-bronze 10 senti in 1931, silver 1 kroon in 1933, bronze 2 senti and aluminium-bronze 1 kroon in 1934, nickel-bronze 20 senti in 1935, nickel-bronze 50 senti in 1936. In 1992, coins were introduced (some dated 1991) in denominations of 5, 10, 20 & 50 senti, as well as 1 kroon. The 1 kroon was struck in cupronickel, the others in aluminum-bronze. However, in 1997, nickel-plated steel 20 senti were introduced, followed by aluminum-bronze 1 kroon in 1998. 5 senti coins were not issued after 1994 but were still legal tender. The cupronickel 1 kroon coins from 1992, 1993 and 1995 were demonetized on 31 May 1998.[9] The 5 krooni coins were commemorative pieces and were rarely seen in circulation. On 25 July 1940, 4 days after the founding of the Estonian SSR, the last Estonian pre-WW II coin, the new 1 sent (date 1939), was issued. In 1927, before the kroon was officially introduced, 100 marka banknotes circulated with an "ÜKS KROON" (1 kroon) overprint. Eesti Pank introduced 10 krooni notes in 1928, followed by 5 and 50 krooni in 1929, 20 krooni in 1932 and 100 krooni in 1935.