My Baltic region back-ground

In 1991 I joined the EU Commission PHARE Programme as so-called national (= German) expert. One year leater, from February 1992 on (until mid-1993), the Commission (because of my commercial banking and monetary affairs professional back-ground and on the basis of an un-specified Estonian help request) commissioned me to advise the Central Bank of Estonia (Eesti Pank).

My official EU mandate (= creating an EU type bank association and EU models following banking training) found no interest.

But Mr. Siim Kallas, who had just been installed as President of Eesti Pank, asked me to volunteer as helper for generating and introducing a national Estonian currency.

I recommended to adopt – by copying, word for word – the Western German monetary reform of 1948, especially by converting the full set of the German monetary reform rules into Estonian law. So it happened. Thus the economic reform changes could start.

I also suggested to convert small private (Hoiupank) savings into the new money. The beneficiaries of this were, above all, poor individuals who honoured this consideration by not withdrawing their deposits, expressing with their attitude the backing of the reform.

My job did not conduce to friendship with the Estonian authorities. On the contrary, I fell in disgrace and they tried to get rid of me because I witnessed some rather strange events.

Nevertheless, since those early days of Estonia’s re-birth, the country has become my second home.

I now try to help the three Baltic countries to find back to their pre-WW II economic self-help culture (see: or of the responsible for this web-site in Estonia on February 1st, 1992, as advisor for the, shortly ago, re-activated Estonian Central Bank (Eesti Pank). The following day, an introductory visit to the President of the Central Bank who had taken office just days ago, took place.

He had not been informed and learned about my task from the papers which the author had brought with him. He also saw his professional c.v. for the first time. Lucky enough that he understood English, at that time a rare exception in the ex-Soviet Republic of Estonia.

The formal job description found little interest. But attention was paid to the qualification in monetary affairs, mentioned in the the c.v.. At that time, the head of the Central Bank was still lacking experience in monetary matters, as he himself admitted.

The President posed the unexpected question which has been chosen as title of this section.

He declared that no more bank note shipments arrived from Russia since his country had become an independent. Therefore, an own national money was a pressing need.

After a moment of reflection, Juergen Lewerenz, proposed to choose the 1948 West German monetary reform as example and guidacne and to copy, word by word, its currency introduction modalities.

The advice was accepted. The full set of the Western German monetary reform laws - 1948 still under the governance of the Second World War Allies - was transformed into Estonian law.

Already against the middle of the same year, the money exchange took place. It was a successful and enabled all further economic reforms.

Two details merit to be highlighted. One has to do with the timing and the other with the conversion of small ruble savings.

The timing: The authorities - and also the advisor - were not sure if the new money would be a success. In the case of failure, a famine had to be prevented. Therefore, the new money had to pop up "together with the sprouts of the potato seedlings", as an observer - rightfully - remarked. In spite of the failure, the citizens could be fed with the potato crop. In case of success, the income from the sale of the crop would generate confidence in the money and, thus, its stability.

The ruble savings: Ahead of the money reform, all who could approached the counters of the Estonian subsidiary of the Russian Savings Bank to withdraw their ruble deposits. The Bank, very soon, went short of bank notes and preferred to attend persons who offered a tip. Old and ill - most of them holders of small savings - were unable to queue for long time and, additionally, could not pay the expected reward. With this in mind, it was decided to decree a modest conversion amount. From this, the poor and the discriminated by the old system, benfited. As an expression of confidence in the new money they kept their new currency savings what also contributed to the success of the reform.

Of course, tokens of esteem were given to the head of the Central Bank, not to anonymous advisor who had acted without authorisation from his principal.

Since those days, the author is involved in re-habilitating the civic attitudes and institutions which have died in the Baltic region during the war, especially the economic self-help bodies, ruled by civic society.

Such a task will produce tangible results, only after years and after many attempts, in spite of the urgent need for a counter-weight against the omnipotence of the individual enrichment economy and its possible safety gains, not only for the small new EU countries at the Eastern rim of the Baltic Sea, but also for the benefit all EU members, new and old.