OREANDA-NEWS. January 15, 2014. Eesti Pank's participation in the Eurosystem, which brings together the central banks of the euro area and the European Central Bank, increased from the start of 2014 from 0.2559 percent to 0.2755 percent.

The benefits and costs of conducting the single monetary policy are divided among the central banks of the euro area in proportion to their participation in the Eurosystem.

There are two reasons why Eesti Pank's participation in the Eurosystem has changed. One is that Latvia's entry into the euro area reduced the participation of Eesti Pank in the Eurosystem, but this was more than countered by the increase in Estonia's share in the capital key of the European Central Bank, which is calculated to reflect each country's share of the European Union population and GDP. The capital keys of the European Central Bank are adjusted every five years or whenever a country joins the EU.

The increased participation means that Eesti Pank paid an additional 1.6 million euros in core capital to the European Central Bank and put 8.6 million euros into foreign assets.

The Eurosystem is made up of the central banks of the euro area countries and the European Central Bank. The Eurosystem divides the income and costs of the single monetary policy, so that the income earned from monetary policy loans to euro area banks is divided among the central banks to match their participation in the Eurosystem, and the same is done with risks.

In 2012, Eesti Pank received 51.6 million euros in income from the joint monetary policy and currency issuing of the Eurosystem, up from 20.2 million euros in 2011.

The Eurosystem's monetary policy operations currently fall into two groups, monetary policy loans to commercial banks, which stood at 717 billion euros at the end of 2013, and the Securities Markets Programme, SMP, which stood at 178 billion euros.