With cries of “Tere Euro!”or “Hello Euro”, Estonia was given a hearty wecome into the European single currency club on 1 January 2011. With this move, Estonia became the seventeenth member country of the euro area. And so, the euro is now used by more than 330 million Europeans. It replaces the Estonian kroon that had been introduced in 1992, after Estonia became the first former Soviet state to leave the ruble zone. For that matter, it was also the first Baltic state to meet the Maastricht criteria. The introduction of the euro is not the only spectacular thing happening there this year. Tallinn is, together with the Finnish city Turku, the European Capital of Culture 2011.
Estonia lies on the banks of the Baltic Sea, at the crossroads of the routes from East and West Europe, and has traditionally been regarded as an important area. From 1285, the capital city Tallinn (in those days called Revall) also belonged to the Hanseatic League, the trading alliance of cities around the Baltic and North Seas that stretched from London to Novgorod in Russia. Today’s Estonia has alternated between (partially) Danish, Swedish, Polish and Russian territory and it was also long seen by the Germans as a natural region for trade and colonisation. Under Peter the Great, a period of Slavonic rule began. Nationalism only started to develop in the Baltic states from the nineteenth century.
But this nationalist trend did not lead to stable independence. Under the influence of various external factors, including the demise of Tsarist Russia and the fall of the German Empire, and armed with the backing of the Allies and with Trotsky’s declaration of the right to national self-determination, Estonia attempted to declare independence. However, there followed a period of instability and through the Molotov-Ribbentrop Pact (1939), a non-aggression treaty between Hitler and Stalin under which they divided up the territories they both laid claim to amongst themselves, the Baltic states came under Soviet control. Apart from a short period of German occupation between 1941 and 1944, Estonia was in fact a Soviet protectorate until the beginning of the 1990s. It only gained independence in 1991.
For more than 50 years, the economies of Estonia and the other Baltic states were controlled by Moscow. Their main exports were commodities such as wood and fish. After the break-up of the Soviet Union in 1991, Estonia increasingly strengthened ties with Europe. There was a massive inflow of mainly Scandinavian capital and the country concentrated largely on the ICT sector. Among others, the software for Skype (telephone over the internet), Hotmail (free web-based e-mail service) and Kazaa (computer program enabling users to exchange files amongst themselves) were all developed in Estonia. So, in English, the country also has the nickname of “E-stonia”.
Thanks to Estonia’s turbulent history, the country’s citizens handled five different currency units in the space of less than a century. At the beginning of the 20th century, the mark, modelled on the German mark, was adopted as legal tender. The end of the 1920s saw the unstable mark swapped for the first Estonian kroon, which was initially pegged to the Swedish currency. The kroon was a stable currency and, after it came off the Gold Standard, it was pegged to the pound Sterling. From 1940, the Soviet currency came into use. The ruble stayed in circulation until 1991. The prospect of an independent Estonian state meant that people began to think about their own currency. It was the Estonian kroon that was chosen once again. In 1987, a competition was held to select the design of the new banknotes. In the end, a conventional theme was chosen with famous Estonians adorning the front side, while on the back there were well-known monuments, buildings and animals. The first coins featured the cornflower, the national flower of Estonia. Later on, it was replaced by Estonia’s coat of arms and three lions portrayed one on top of the other.
But, on 1 January 2011, the Estonians had to say goodbye to their kroon. The euro was brought in under the “big-bang” scenario, which means that euro banknotes and coins were put into circulation the moment that the euro became Estonia’s official currency unit. After 1 January, the Estonians of course still had a chance to convert their kroons. There was a two-week period of dual circulation when the kroon and the euro were used alongside each other. Up until 30 June 2011, all prices will be given in both kroon and euro. For the time being, there is no deadline for exchanging banknotes. All conversions are at an official exchange rate of 15.6466 kroons to the euro.
In June 2004, a competition was held to choose the design for the national side of the euro coins. 134 designs were presented to an expert jury. Ten entries were selected and Estonian citizens could then vote for their favourite design via televoting which remained open for a week. Eventually, Hara 2 by Lembit Lõhmus was picked. As many as 12,482 Estonians chose the design featuring the outline of their homeland and ‘Eesti’, the word for Estonia in their language. The Estonian coins were minted in Finland.
Before Estonia was able to join the Eurosystem, the country had to meet the so-called Maastricht criteria (Treaty of Maastricht, 1992): a stable exchange rate, low and stable long-term interest rates (no more than 2 percentage points higher than the long-term rates of the three best performing Member States), a high degree of price stability (an average rate of inflation over the last year before the entry test of not more than 1.5% above the inflation rates of the three best performing Member States in terms of price stability) and sound public finances (a government debt-to-GDP ratio of no more than 60% and a budget deficit not exceeding 3% of GDP).
The Estonian euro coins have been on display in room 4 of the Museum since 1 January.
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- Van Den Heuvel M., David versus Goliath – Het vrijheidsstreven van Estland, Letland en Litouwen, s.l., s.d.