Establishing a central bank that would not bend to the financial needs of the private or public sector but that would pursue a stability-oriented monetary policy was crucial. The Estonian strategy relied on three pillars: a balanced budget, a credibly fixed exchange rate, and a currency board rule for the issuance of money.
[14] Estonia moved quickly in terms of establishing hard budget constraints for banks and preventing monetary financing of commercial banks through the central bank. [15] Close financial integration with other Baltic countries has also been a hallmark of Estonia’s financial sector policies. [16] As regards the monetary system, Estonia took a bold decision by introducing a currency board.