Ardo Hansson: Working together for the good of the EU and Estonia
Opening speech by Mr Ardo Hansson, Governor of the Bank of Estonia (Eesti Pank), to the
Ragnar Nurkse Lecture for the 95th Anniversary of Eesti Pank, Tallinn, 4 November 2014.
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Professor Balcerowicz, President of the Riigikogu, Chair of the Supervisory Board of Eesti
Pank, Excellencies, Ladies and Gentlemen,
Thank you for being here today to mark the 95th anniversary of Eesti Pank and to honour
Ragnar Nurkse, the world's best-known economist from Estonia to date.
Eesti Pank was founded when the Republic of Estonia was only a year old and Ragnar
Nurkse was a model eleven-year-old pupil at the Tallinn Cathedral School. In the words of
Juhan Kukk, the Minister of Finance of the time, founding Eesti Pank as the issuer of the
national currency and tying the currency to gold showed the same great "bravery and belief
in national and economic independence" as engaging in the War of Independence did.
Ragnar Nurkse started his studies in the University of Tartu, but he soon moved to continue
them in the School of Economics of the University of Edinburgh and later in Vienna. He was
recognised in his home country for his work, as is shown by the worried letter that Jüri
Jaakson, Governor of Eesti Pank at the time, sent him in spring 1938. Nurkse was working in
Geneva at the time for the League of Nations, the forerunner of the United Nations. The letter
says:
"The rise in the cost of living in the past three years has been larger than has
been seen in many other countries that compete with us in foreign markets.
When the cost of living rises, so wages should also rise and consequently so too
production costs, with the result that our competitiveness declines. Do we not
have to fear this?"
Unfortunately we do not know what advice Nurkse gave to Jaakson, and within only a couple
of years the question was no longer of any great relevance for Eesti Pank.
During the second world war, Ragnar Nurkse focused in his work on inflation and exchange
rates. The research that he published on these topics has led many writers to call Nurkse
one of the main architects of the Bretton Woods system. After the war Nurkse taught for
thirteen years in the prestigious Columbia University in New York. There he mainly focused
on development economics, earning a great reputation as an international advisor on the
subject. He died unexpectedly and still relatively young at only 51.
The view of Ragnar Nurkse of the time notes his thorough knowledge of economic theory
and practice, his original ideas, and his clear vision. He was the sort of man who is clearly
needed in the world today.
When Estonia regained its independence it chose the path of reform, with a unique
combination of conservatism, innovation and a recognition of its own limitations. Estonia
chose once again the road to Europe. Eesti Pank concentrated on stabilising the economy
and on earning and maintaining confidence in the Estonian currency.
Today the European Union and its member states are Estonia's main partners both
economically and politically. Working together with the European System of Central Banks
has become a matter of course for Eesti Pank, be it in monetary policy, financial stability or
economic analysis. We are in an unprecedented position to engage in defining the economic
world around us, and our input is listened to.
Evidently there are limits on how much a small country can contribute in the functioning of
the European Union, because smaller countries have fewer resources. But we can widen
those limits by making the best use of our resources, by learning from our own experience
and that of our partners, and by working well together.
Working together is particularly important right now, at a time of geopolitical tensions in and
around Estonia and of deepening insecurity. It is right now that we need to find the ideals, the
ideas, and the goals that can bring us together, and we must work together to achieve them.
I wish us strength and good luck in all of this.
Thank you again.