View Full Version : Estonia, a land of hopes and fears

06-18-2010, 10:40 PM
Estonia, a land of hopes and fears (http://balticbusinessnews.com/article/2010/06/18/Estonia_a_land_of_hopes_and_fears)

When Estonia introduces the euro in January 2011 it will become only the second country (after Portugal) that allows people to withdraw five-euro banknotes from ATMs in Estonia. The largest banks in the country, SEB, Swedbank, Nordea Eesti and Sampo, made the announcement after the EU summit had decided to endorse Estonia as a new euro country, writes Helsingin Sanomat.

The availability of fivers at bank ATMs can be seen as the result of public pressure. On the Internet, more than 3,000 members quickly joined the Facebook group “I want to withdraw five euros from a bank machine”. The press also lent its voice to the demands. At present, the smallest denomination that can be taken out of an Estonian ATM is a 25-kroon banknote, which is worth EUR 1.6. The largest denomination is 500 kroon, worth 32 euros.

Estonians expect that the euro will bring greater demand for coin purses. One reason for this is that the minimum wage in Estonia is among the smallest in the EU - EUR 278 a month. Average monthly gross earnings are EUR 787. In Tallinn, and in Narva on the Russian border, the euro is already unofficially in use, especially in tourist centres, even though the kroon is still Estonia’s only legal tender for cash transactions.

About a third of tourists are offering euros as payment, estimates Geete Heikkinen, who works at a restaurant in Tallinn’s Old Town.

Finnish tourists gathered spontaneously in the Old Town of Tallinn on Thursday to discuss the implications of the emergence of the euro in Estonia. The greatest concern involved the effect on prices.

“All small purchases between 10 and 20 euros will become more expensive”, predicted Veijo Kiviniemi.

“I don’t think that they can afford very large price increases”, countered Pirjo Ziprus from Valkeakoski.

The Estonian government hopes to prevent price gouging by requiring that prices be rounded down when the euro is introduced.

Estonia does not have a mint of its own. The country’s euro coins will be minted in Finland.

A final decision on accepting Estonia into the euro zone, and the rate at which the present Estonian currency, the kroon, will be exchanged for the euro, will be decided on July 13th by Ecofin, the meeting of EU ministers of finance.

The kroon was introduced soon after Estonian independence in 1992.