Constitutionality and the central bank system
The writer recalls the strong opposition that developed between financial experts and the Ministry of Justice in the early 1990s, when the central bank was in the process of drafting a new draft legislative act on Eesti Pank, the central bank.
Ministry officials would rather have modelled Estonia’s new monetary and banking system as a more or less exact copy of the Soviet monetary and banking system, with the only difference being that it was controlled from Toompea, not Moscow. At the same time, monetary experts knew from international experience that a state bank system would not always be capable of ensuring stability of the currency, because this could be achieved only by a monetary system, where the treasury – the central bank – is completely independent of the government and not subordinate to its orders. Thanks to extensive lobbying efforts by monetary scholars, the bill they drafted was passed in the Riigikogu on 18 May 1993 with an overwhelming majority, 89 votes in favour. This law ensured that Eesti Pank had a completely legitimate basis to operate as a central bank along with the powers enjoyed by other such state institutions in the present day. An experts group from the Ministry of Justice did submit to the Chancellor of Justice a petition for declaring the new Eesti Pank Act unconstitutional, since the act allegedly gave the central bank executive powers, but the Chancellor of Justice found that the principles embodied in the act were not in conflict with the constitution. The decision was not challenged.