According to a deputy governor of Eesti Pank, Ülo Kaasik, the central bank was also impacted by the unexpected hike in interest rates.

"Last year was truly a once-in-a-century occurrence in which both bond and equity investors suffered significant losses," Kaasik told ERR.

This is why, Kaasik said, the Bank of Estonia has three bulwarks: earlier year unrealized income comes first, followed by risk provisions set aside from earlier gains, and ultimately equity.

"This year, we focused on the first and second lines of defense; we did not have a pressing need to invest in the stock. We utilized reserves set aside by the bank during successful times to cover losses during a recession," he said.

The reserve has decreased by €100 million, but still exceeds €500 million, allowing the bank to cover losses for several years. This year, however, Kaasik anticipates a return to profitability.

The goal of monetary policy is to maintain low prices, not to generate a profit. Profits are either stored or paid to the government.

Since 1992, the Bank of Estonia has paid out to the state a total of €177 million in revenue. The state received €0.9 million last year.

Eesti Pank's investment losses have no effect on public finances, despite the fact that the state did not receive this revenue this year, Raoul Lattemae, director of the Ministry of Finance's department of fiscal policy said.

The stability reserve was valued €423 million euros at the conclusion of the year. The reserve is only used in extraordinary circumstances, according to a Riigikogu decision.

The Riigikogu allowed the use of the reserve in 2009 to reduce the consequences of the economic crisis, and it authorized the use of the reserve in 2020 and 2021 to mitigate the effects of the pandemic.

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