: entry of nordic banks of course this high degree of integration has been achieved over time. in the baltic countries, today's level of economic and financial development was a distant dream as recently as 10 years ago. the fall in gdp bottomed out in mid - 1990s. the following years have brought rapid output growth. in estonia, for example, the level of real gdp has more than doubled. ( a side remark : output growth in the nordic countries has also been robust in the past 10 to 15 years. swedish gdp, for example, has doubled. such pace of development is likely to have contributed to the growth in the baltic countries. ) coming back to the baltics, 1997 and 1998 were the years of the asian and russian crises. in the baltic states, these crises led to the collapse of the stock markets, bankruptcies of many companies, including banks, and a surge in interest rates and unemployment. thus it was a good time to make cheap acquisitions in many industries, including baltic banks. that said, strategic entry of nordic banks was at the time of critical importance to restore market confidence. seb and swedbank acquired minority shares in two largest estonian banks, and started to increase their control. in the year 2000, sampo bank followed. indeed, the presence of foreign banks in emerging markets has generally been found to increase stability, efficiency, and governance. combined with improved regulation, strong nordic banks have brought a qualitative change in the baltic financial sector. as a result, we can proudly say that the estonian financial system stands out in the eu for integration, e - banking, and credit conditions, to name a few. nordic investment in estonian banking sector has proven profitable : roe has been around 20 percent. furthermore, local know - how helped the nordic parent banks to enter the latvian and lithuanian as well as the russian markets. effects of eu accession the eu accession has led to even better market access for local producers and has given estonia as well as the other new member states a kind of " seal of quality " as an investment destination. already the prospect of the eu accession enhanced these countries'credibility in the eyes of investors. but since the accession, the inflow of funds has been especially strong, as economic situation in the euro area was combined with higher global liquidity. furthermore, the geography of investors has broadened. the prospect of adopting the euro in a relatively near future has lowered interest margins in several of the new member states including estonia and has given

as a long - term conservative investor. eesti pank has reacted to changes in the operating environment and has spread its risks by adding further asset classes to the investment portfolio and investing money in the sovereign bond markets of more countries than before. • eesti pank ’ s return on its investment was several times higher in 2014 than the target set at the start of the year, and reached 22. 8 million euros. falling interest rates throughout the year made investments in bonds profitable and the increasing share portfolio of eesti pank meant that we earned significant income from investments in shares. as well as earning income, eesti pank is careful to keep control over its spending and to use its money efficiently. for this reason we have put the maardu manor site up for sale, as we do not need it in carrying out the main functions of a central bank. we would have done this earlier, but first it was necessary to complete the process of registering the manor house and the land it stands on. it is worth noting under cost efficiencies that eesti pank has added technical support for the fiscal council to its list of responsibilities together with the macroprudential supervision and increased requirements for compiling financial statistics. despite this, the number of people employed at the bank is roughly the same as a year ago, and eesti pank remains the smallest central bank by staff size in the european union. eesti pank ’ s operating expenses fell last year to 17 million euros from the 17. 4 million of a year before. although the central bank ’ s duty is to keep inflation low and not to chase every possible source of higher revenues, it is good to be able to note that we ended last year comfortably in profit. bis central bankers ’ speeches conclusion in conclusion i would like to emphasise again that it is important for stable development in estonia and for improved public well - being that we remain ready to adapt to a changing economic climate, to react rationally to changes, and yet to maintain the conservative stance on monetary issues that has served us well so far. thank you for your attention. bis central bankers ’ speeches