The Pärnoja amendment and the threat to the stability of the kroon
Even though it seemed, after the Eesti Pank Act was adopted in 1993, that the central bank was guaranteed for all time the ability to follow an independent monetary policy free of the government, this sense of security proved premature.
Already at the end of the same year, the Riigikogu embarked on an attempt to strip Eesti Pank of its functional capacity in ensuring the stability of the kroon. Namely, the chairman of the Moderates faction, Mihkel Pärnoja, proposed at a meeting of the finance committee – then known as the budget and taxation committee – to merge the Eesti Pank budget with the state budget. This would effectively have meant that the central bank would fall under the jurisdiction of the Ministry of Finance, which would perform oversight over its revenue and expenditures. The Pärnoja amendment was a big disappointment to many members of the Riigikogu who had invested a personal stake in laying the groundwork for Estonia’s economic development through a stable monetary system. This bitterness of course dissipated as soon as the Pärnoja amendment was defeated by a solid majority. Despite this – yet another attempt to strip the central bank’s independence of its substance – the Riigikogu was able to stand up in its defence, demonstrating expertise and balance in its monetary policy, as it had on many previous occasions as well.