Businesses need to be ready for the new 50-euro banknotes

  • Fifty-euro notes account for 36% of the total number of euro banknotes in circulation
  • The main security features of the new fifty-euro note are the transparent portrait window, the portrait watermark, the emerald green number and the raised lines
  • The new note will enter into circulation in the whole of the euro area on 4 April
  • Businesses will need to update their cash handling systems
  • Seminars will be held across Estonia so businesses can see the new security features

At the start of April, Eesti Pank and the other central banks of the euro area will release a new €50 banknote into circulation with a new design and new security features. So that the new note can enter smoothly into circulation, it is important for companies to update their cash handling equipment in good time, and to know about the new features of the notes.

The most eye-catching change to the fifty-euro notes of the new series is the same as on the new twenty-euro notes, the transparent portrait window on the right of the note on the hologrammic strip. The portrait window is transparent, and looking at the note against the light reveals a portrait of Europa in the window. The other security features – the watermark portrait of Europa and hologrammic strip, the emerald green number, and the short raised lines on the edge of the note – are like those on the five and ten and twenty-euro notes of the new series.

“All traders have to accept currency that is legal tender, and those who haven’t made preparations are nearly at the last moment for doing so”, said Rait Roosve, Head of the Cash and Infrastructure Department at Eesti Pank. “The new notes must be accepted even if the technical upgrades have not been made or there is no cash authenticating equipment. The authenticity of all the banknotes can be checked by hand, and not just by professional cash handlers but by anyone”, he emphasised.

The new fifty-euro note will enter into circulation on 4 April. Paying with the new banknotes will be simple and straightforward as long as merchants update their cash-handling equipment and authentication devices. To do this they will need to contact their equipment suppliers.

To check the security features of notes of both the old and the new series, look at the banknote against the light, tilting it back and forth, and feel its surface. Further details on the security features of the banknotes can be found on the new-euro website.

Further information

  • Eesti Pank is organising thorough training courses for cash handlers in February and March on the new banknote in Tallinn, Tartu, Jõgeva, Võru, Pärnu, Haapsalu, Narva and Rakvere. More information about the training sessions and related publications can be found in Estonian on the Eesti Pank website. Anyone interested in these courses may contact Eesti Pank about them directly.
  • In addition to this, the European Central Bank will send all cash handlers in Estonia a booklet on the new €50 banknote. The booklet is free and can also be ordered from Eesti Pank (, 6680 719).
  • The first series of fifty-euro notes, which are currently in circulation, will continue to be valid. This means they do not need to be exchanged as they can be used in the future for paying in shops and elsewhere. The same was true when the new five, ten and twenty notes were introduced.
  • When the new fifty-euro notes are introduced into circulation from 4 April, it will be done gradually. This means that the earlier banknotes of the first series will be in use at the same time as the new second-series notes. The same happened with the five, ten and twenty-euro notes, which are in use in banks, shops, cash machines and elsewhere with both the new and old designs.
  • All the banknotes of the first series will keep their value indefinitely, though at some point it will no longer be possible to use them for paying in shops. When this point has been decided on, it will be announced and publicised well in advance. After this point, it will only be possible to exchange the old notes for new ones at Eesti Pank and other central banks of the euro area, and there will be no limit on how long this can be done for.
  • Anyone can learn how to identify the new fifty-euro notes using the simple method of feel, look and tilt. It is always best to check multiple security features on a note, not just look at only one.
  • The fifty-euro notes of the second series have new and additional security features that are like those on the five, ten and twenty-euro notes. All of the designs have a series of short raised lines on the edges of the note, a portrait watermark, a portrait hologram, and an emerald green number. The twenty and fifty-euro notes of the second series also have a portrait window. The window is a transparent part of the note, but the front and reverse sides of the window are slightly different. The window in the hologram seen from the front shows a portrait of Europa, and when the note is tilted, the value of the note appears in the window and rainbow-coloured lines appear around it. On the back of the banknote, rainbow-coloured value numerals appear in the window.
  • Pictures and videos of the new €50 note can be found at
  • The European Central Bank has published a list of devices that can authenticate banknotes of the new series on its website and has added a list of those that can authenticate the €50 note (


Source: Bank of Estonia

New low-value coins enter circulation

In 2017 Eesti Pank is extending its stock of circulating coins and has minted additional 1, 2, 5 and 20-cent coins. The new coins will enter circulation on 7 March.

Eesti Pank has had 9 million one-cent coins minted, 4 million two-cent coins, 4.55 million five-cent coins, and 3.25 million twenty-cent coins. The total value of the new coins is 1,047,500 euros.

The design of the new Estonian euro cent coins is the same as that of other coins in circulation, except for the year marked on the coin as 2017. The coins were minted in the Mint of Finland.

The coins with the current year on them will enter into circulation from 7 March through banks and in response to demand. Uncirculated new coins are also available from the Eesti Pank museum shop and the online store.

Eesti Pank is issuing a new two-euro commemorative coin in the second half of the year, dedicated to the events leading up to Estonia’s independence 100 years ago. It is planned that 1.5 million of the commemorative coins will be issued in Estonia.

On 4 April, Eesti Pank and the other central banks of the euro area will release a new €50 banknote into circulation with a new design and new security features.

Source: Bank of Estonia

Rapid growth in loans and leases to companies continued in October

  • The portfolio of loans and leases to companies was up by 8.4% over the year in October with support from long-term loans
  • Growth in housing loans has picked up since the second quarter of this year, and was 4.9% in October
  • The volume of new housing loans was one tenth larger in October than a year earlier

The loan and lease portfolio of Estonian companies and households grew in October at a similarly fast rate to that of the preceding months. The stock of loans and leases was 6.9% bigger last month than a year before and at the end of the month it totalled 17 billion euros.

There was an increase of 8.4% over the year in the portfolio of loans and leases taken by companies from banks operating in Estonia. Growth in the domestic bank loans and leases of companies has been faster this year than last, mainly because of growth in long-term loans. There was a reduction in borrowing from abroad by companies in the first half of the year though, and so the total corporate debt has not changed in size substantially. The volume of domestic bank loans and leases to companies was affected significantly in October by individual large transactions.

Growth in housing loans has picked up since the second quarter of this year. The housing loan portfolio was 4.9% larger in October than a year earlier. The 95 million euros of new housing loans issued during the month was one tenth more than was issued a year previously. However, the number of new loan contracts signed in recent months is not notably more than a year ago, and the amount issued in new loans has mainly increased because the average value of transactions has risen. This indicates that the share of transactions with new apartments has increased. Other loans to households increased mostly because of car leases, like in previous months, and there was growth of 16% over the year in such leases.

The average interest rate for long-term loans issued to companies in October was 2.1%. The average interest rate on long-term loans to companies can fluctuate depending on the different projects that have been granted loans in each month, but the average for the year has remained close to the average for last year.

The share of loans overdue in the loan portfolio remained small. The value of loans overdue by more than 60 days at the end of October was 181 million euros. The share of long-term overdue loans was reduced a little by growth in the portfolio to stand at 1.2%.

The total deposits of companies and households continued to grow strongly in October. Total deposits increased by 163 million euros during the month to 11.4 billion euros. The volume of corporate deposits grew slightly faster, increasing by 9.5% over the year, while household deposits increased by 7.5%.

Source: Bank of Estonia

Author: Mari Tamm, economist at Bank of Estonia

Erkki Raasuke to head merged DNB-Nordea bank

Erkki Raasuke, who announced on Nov.24, 2016 that he was leaving listed Estonian banking group LHV Group, is set to head the merged Baltic operation of Nordea and DNB.

“I am very pleased to accept the role of director of the future combined bank,” Raasuke said in a press release. “The way I see it, this is not just a merger but the emergence of a new, more focused and faster growing bank. I am looking forward to meeting all the employees and the opportunity to start working towards creating a clearly locally-focused bank that will bring us even closer to clients.”

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Finances of Estonian families have imrpoved

  • Three quarters of families are able to save if they need to, and the number of households with savings has risen
  • Loans have been taken by 41% of families, which is the same as two years ago, and half of the loan liabilities are related to real estate
  • Around one fifth of families are planning to take a loan in the next year, and most of them already have some loan liabilities

Around 70% of families consider the trajectory of their family to be good and three quarters believe they can make savings if they needed to. The share of families able to save was about the same before the economic crisis, but it had fallen to 65% by 2012. In the immediate aftermath of the economic crisis it was mainly families with higher incomes that saw growth in the ability to save, but in recent years families with average and lower incomes have found that their capacity for saving has improved.

The share of families with savings has increased from year to year together with incomes and the capacity to save. Data from August 2016 show that 66% of families had financial savings in cash or in a bank. In 2014, 59% of families had such savings and in 2012 only 53% did. The share of families with savings increased mainly through families with average incomes, but also to a small extent through families with lower incomes. Even so, less than half of families in the bottom third of the income distribution, with net incomes of up to 350 euros per family member) saved. The savings of Estonian families are quite small and only around half of the families who said how much they had in savings in August 2016 had more than 1000 euros.

Savings are mostly held for a rainy day to provide some safety margin above income, but there was an increase in saving for leisure activities, health, and costs of residential property. The preference was to hold savings on a bank account or at home in cash. Around 6% of families own exchange-traded securities or units in investment funds, which is a little less than 10 years ago.

In August close to 245,000 families in Estonia, or 41% of all households, had loans. These numbers have been relatively stable throughout the past six years, and loans are mostly taken for buying, building or repairing homes. However, there has again been growth in in car leases and in the use of instalment payments from shops. Higher incomes have slightly reduced the principal and interest payments of loans as a percentage of income, and that figure is below 20% for more than half of families with loans. The households with the greatest difficulties are those whose monthly loan repayments exceed 40% of their income, and 8% of the families with loans were in that category.

In the past year, 9% of families in Estonia have wanted to take a loan to buy or renovate a property. A little over half of them had their loan applications granted, which is about the same as in 2014. About as many families are planning to take a loan in the next year as did so in 2014, and 70% of them already have some loan liabilities

The survey by TNS Kantar was conducted in August this year and covered 984 families, with respondents aged between 18 and 74. The survey was commissioned by Eesti Pank.

TNS Kantar has been conducting the F-monitoring survey since 1998. The survey maps changes in how Estonian residents use money and in the options and desires behind their financial behaviour.

Source: Bank of Estonia

The risks to the financial sector in Estonia are small

  • Faster loan growth could increase the risks to banks from real estate
  • Although corporate profits were down, the ability of companies and households to repay their loans remains good
  • The rate of growth of bank loans should be in line with nominal GDP growth in the years ahead
  • The banks operating in Estonia are well capitalised
  • The risks coming to the Estonian economy and commercial banks from Sweden remain at the same level as in spring
  • The impact of Brexit on Estonian financial stability will be small, and the effect will be felt indirectly and over a long time
  • Rapid growth in the deposits and assets of savings and loan associations reduces the control that depositors have over their own investment and their understanding of the possible risks

Most of the risks to the operation of the financial sector in Estonia are low. Although the uncertainty coming from the external environment increased and risks caused by imbalance in the labour market remain, the risks to the functioning of the financial sector are reduced by the financial buffers of companies, the relatively good finances of households, and the high levels of capitalisation in the banking sector.

The economy was 0.8% bigger in the second quarter than a year earlier, which is below its long-term growth potential. Value added grew in most economic sectors however, and the main obstacle to achieving potential growth was the decline in value added in energy and mining. Uncertainty about the recovery of external demand was increased by the referendum in the United Kingdom in June in which the British voted to leave the European Union. The direct impact of this on the Estonian economy and Estonian companies will be quite modest.

The ability of Estonian companies and households to repay their loans remains good. Labour costs continued to grow fast, with the consequence that corporate profits continued to shrink, though at a slower rate than previously. The contraction of profits has not yet seriously affected the ability of companies to pay, as their loan service costs are low and they have built up financial buffers, which have been kept high because investment volumes have been small. At the same time, rapid wage growth and high employment supported credit demand from households and their ability to loan servicing.

Growth in the loan and lease portfolio of the banking sector accelerated in August to 6% over the year. Loans to real estate companies and loans for buying residential property have contributed the most to the increase in the loan stock. The share of such loans in the total loan portfolio is relatively high at 55%, though this has not changed during recent years. Rising incomes and low interest rates create the risk that Estonian real estate prices and housing loans and lending to companies in real estate may start to grow faster. This would make the banks more vulnerable to risks coming from real estate. To guard against excessive growth in the risks from housing loans, Eesti Pank has introduced requirements for the issuance of housing loans by banks, and can tighten those requirements if the risks in the credit or real estate markets should increase.

Although credit growth has sped up a little, Eesti Pank is maintaining the countercyclical buffer requirement for the banks at 0% as the debt to income of the non-financial sector has not increased. Eesti Pank forecasts that the rate of growth of bank loans should be similar to the nominal rate of GDP growth in the coming years, and no developments or trends in bank behaviour are in view that would amplify lending activity. Eesti Pank continually monitors whether risks are building up and if necessary it can set additional capital buffer requirements for the banks.

The capitalisation of the banks operating in Estonia has remained strong, and this is further underpinned by the capital buffer requirements introduced by Eesti Pank. From August this year, all the banks operating in Estonia have to hold a systemic risk buffer of 1% to mitigate the risks of a sudden fall in the economy, which arise from Estonia having a small and open economy. The two systemically important banks, Swedbank AS and AS SEB Pank, have to hold a further buffer of 2% to hedge against the risks that come from the concentration of the banking sector.

In recent years the rapid development of alternative financial intermediaries has been eye-catching in the bank-centred financial sector. Attention has been drawn to the growth in the savings and loan associations, and the activities of creditors and credit intermediaries. The relatively rapid development in the real estate market has been accompanied by quick growth in real estate funds. The risks to financial stability from all these financial intermediaries are reduced by their small size in the financial system as a whole, and their weak links with the rest of the financial sector. The risks from creditors and credit intermediaries were reduced by them being brought under financial supervision. Savings and loan associations do not come under financial supervision and the rapid growth in their membership and the spread of their activities across Estonia could overshadow the original cooperative principle behind their operation and reduce the control that depositors have over their own investment and their understanding of the possible risks.

The risks to the Estonian financial sector coming from the Swedish economy remained at a similar level to that of spring 2016. With economic growth relatively fast in Sweden, real estate prices and household indebtedness continued to increase. Swedish bank groups are made vulnerable to a deterioration in credit conditions by the large share of market-based financing in their total funding. If international investors were to reassess the risks from rapidly increasing real estate prices and loans upwards, the financing conditions for the banks could worsen. Funds received from parent banks account for around one fifth of the funding of banks operating in Estonia, meaning they have an important role in the functioning of the Estonian loan market. The conditions of market-based funding have so far remained favourable for the Swedish banking groups. The parent banks of the biggest banks operating in Estonia are subject to high capital requirements at the group level in Sweden, and that has a positive effect on the financial strength of the banks in Estonia.

Source: Bank of Estonia

Estonia stands out for its use of cashless payments

  • Like those in the Nordic countries, payments in Estonia are mainly cashless
  • The largest share of cashless payments around the world are card payments
  • Cashless payments initiated in the USA and the euro area account for half of the cashless payments made around the world

Statistics from the European Central Bank on cashless payments show 220 cashless payments were made per person in the European Union in 2015. This is more than twice as many as in 2000, when 98 cashless payments were made per person. The fastest growth was in the number of card payments, which has approximately quadrupled in 15 years, as an average of 104 card payments are made per person in the European Union.

The differences between the payment habits of residents of different European Union countries are quite marked, and the Nordic countries stand out for their large number of cashless payments. Estonia is also one of those countries where residents make more than 300 cashless payments a year. Although the payment habits of residents of Estonia are already quite set, there were still 6% more cashless payments made in the third quarter of 2016 than in the third quarter of 2015. The average Estonian resident makes 331 cashless payments a year, of which 223, or 66%, are card payments.

In countries where cashless payments are used more, it is typical that card payments are a large share of the payments. More than 60% of cashless payments in Sweden, Finland, the United Kingdom and Estonia are made by bank card, while in Denmark 81% of cashless payments are card payments. Card payments accounted for an average of 47% of all cashless payments in the European Union in 2015, while 26% were credit transfers and 21% were direct debits1. As some large countries like France, Italy and Portugal still use cheques, payments by cheque account for 2.9% of all cashless payments. In 2000 cheques were still used for an average of 18.7% of all cashless payments in the European Union countries.

Paying in cash is so established in many countries in central and Eastern Europe that cashless payments are made only a fraction as often as in the northern countries. In general the changes in payments around the world have been the same as in Europe, and the number of cashless payments is increasing constantly. Within this, the number of card payments is rising and the share of cheques is shrinking. In 2014, 387 billion cashless payments were made around the globe, which was 9% more than a year previously2. The largest share of such payments were made in the USA, followed by the euro area, Brazil, China and the United Kingdom. The number of cashless payment made in China shot up during that year and China overtook the United Kingdom, though payments per resident are still lower in China at 17 per year than in the countries in Europe with the lowest figures.

The countries with the most cashless payments per resident in 2014 were the USA, Finland, the Netherlands, South Korea and Australia. More than half of all cashless payments around the world are made by card, and other areas of the world use cards even more than Europeans. In North America for example, 71% of cashless payments were card payments in 2014, and in the developing countries of Asia, like China, India and Hong Kong, 84% were.

1 Direct debits within Estonia were replaced by e-invoice standing orders in February 2014.

2 Comparable data on all countries are from 2014: This is why the comparison of countries uses 2014 data.

Statistics for Eesti Pank’s payment and settlement systems

Source: Bank of Estonia (see better graphs here)

Author: Tiina Soosalu, Payment and Settlement Systems Department