QE plan positive for Estonia, despite no bond issue, says expert
The European Central Bank quantitative easy drive, which began on Monday, will still give a boost to Estonia, despite the nation's part in the program, a total of three billion euros, flowing abroad, says Bank of Estonia Deputy Governor Ülo Kaasik.
Kaasik said each bond purchased by Estonia will help the nation as the international finance system is integrated and lower interest rates in other European nations will lead to lower interest rates in Estonia.
On Monday the Bank of Estonia purchased its first bonds as part of the drive, and will have to buy around 100 million euros worth of bonds each month until September 2016.
“If there are no bonds in Estonia, which Estonia can buy, then the purchase of Europe-wide institution bonds will commence. Estonia will not buy state bonds of other nations,” Kaasik said.
“If the general interest rate is lowered as the result of the program and interest in bonds increases, then if these (Estonian state-owned) companies should want to issue bonds, […] then they can do it far cheaper,” Estonian Business School academic Andres Vesilind said.
Two state-owned companies which could benefit from the project are Elering and Eesti Energia. Elering has said they are not looking at new bond issues, nor will they win from refinancing.