Circular Letter C2.10-0917 — Adoption of the euro by Estonia. Statistical Reporting.

2, boulevard Royal L-2983 Luxembourg Fax (+352) 4774-4920 E-mail: reporting.banques@bcl.lu Ref.: C2.10-0917 Luxembourg, July 28, 2010

Circular Letter
To all credit institutions
Subject: Adoption of the euro by Estonia

Dear Sirs,

At the European Council meeting held in Brussels on June 17, 2010, the Heads of State and Government of the European Union decided that, effective January 1, 2011, Estonia will adopt the single currency, the euro.

The objective of this circular letter is to describe the impact of Estonia's adoption of the euro on the preparation of monthly and quarterly statistical reports.

1. Impact on BCL statistical collection

Estonia's accession to the euro area from January 1, 2011 will have an impact not only on the preparation of monthly and quarterly statistical reports but also on the calculation of mandatory reserves to which credit institutions are subject.

2, boulevard Royal L-2983 Luxembourg Fax (+352) 4774-4920 E-mail: reporting.banques@bcl.lu

1.1 Impact on monthly statistical collection

The monthly statistical reports S 1.1 "Monthly Balance Sheet of Credit Institutions", S 1.4 "Information on valuation effects on the balance sheet of credit institutions", S 1.5 "Information on interest rates in EUR" and S 1.8 "Information on securitization transactions carried out by credit institutions" require a breakdown of amounts according to the country of residence or registered office of the counterparty, i.e., the country in which the center of economic interests of the counterparty in question is located, distinguishing the following breakdowns:

• All countries: this class groups all operations regardless of the country of residence or registered office of the counterparty
• Luxembourg (LU)
• Other EMU Member States: i.e., other Member States of the Monetary Union
• Rest of the world: i.e., countries that do not fall into the "Luxembourg" and "Other EMU Member States" categories

From January 1, 2011, the category "Other Member States of the Monetary Union" (Other EMUM) will also include Estonia, which currently, until December 31, 2010 inclusive, falls under the category "Rest of the world".

Furthermore, credit institutions are reminded that the inclusion of Estonia under the category "Other Member States of the Monetary Union" implies a more detailed sectoral breakdown of assets and liabilities towards counterparties residing in Estonia. The details of this sectoral breakdown can be consulted in the instructions for reports S 1.1 "Monthly Balance Sheet of Credit Institutions", S 1.4 "Information on valuation effects on the balance sheet of credit institutions", S 1.5 "Information on interest rates in EUR" as well as S 1.8 "Information on securitization transactions carried out by credit institutions".

Credit institutions are therefore invited to modify their reporting systems to include assets and liabilities towards a counterparty residing in Estonia under the category "Other Member States of the Monetary Union" while ensuring appropriate sectoral breakdown.

2, boulevard Royal L-2983 Luxembourg Fax (+352) 4774-4920 E-mail: reporting.banques@bcl.lu

1.2 Impact on quarterly statistical collection

The quarterly statistical report S 2.5 "Quarterly Balance Sheet of Credit Institutions" requires a breakdown of amounts according to the country of residence or registered office of the counterparty, identifying the country in question by a two-character ISO code.

Since the sectoral breakdown is identical for all countries, Estonia's accession to the euro area has no impact on report S 2.5 "Quarterly Balance Sheet of Credit Institutions".

2. Impact on the calculation of mandatory reserves

Since obligations towards the European Central Bank, national central banks (NCBs) members of the Eurosystem and credit institutions (CIs) that are subject to the Eurosystem's mandatory reserve system are excluded from the reserve base, it is necessary to reduce the volume of obligations included in the reserve base from obligations towards Estonian credit institutions that are subject to the Eurosystem's mandatory reserve system from the reference period of January 2011.

For the maintenance periods from December 2010 to January 2011, from January to February 2011 and from February to March 2011 (the exact start and end dates of maintenance periods during 2011 will be published on the BCL website), obligations towards Estonian credit institutions subject to the Eurosystem's mandatory reserve system may already be deducted from the reserve base of credit institutions.

Luxembourg credit institutions wishing to take advantage of this possibility must report the table in the annex to the Central Bank of Luxembourg for the months of October 2010, November 2010 and December 2010, considering Estonian credit institutions as already subject to the Eurosystem reserve system. In this case, the amount of the mandatory reserve reported based on statistical report S 1.1 "Monthly Balance Sheet of Credit Institutions" will be amended taking into account the information provided based on the aforementioned annex.

Reporting credit institutions are reminded that monthly statistical reports S 1.1, S 1.4, S 1.5, S 1.8 and S 2.5 must obviously be filled out in such a way as to consider Estonia as not included in the monetary union until December 31, 2010 inclusive.

2, boulevard Royal L-2983 Luxembourg Fax (+352) 4774-4920 E-mail: reporting.banques@bcl.lu

3. Quality of transmitted data

The concerned institutions are reminded to carefully ensure the correct identification of their counterparties and to use for this purpose, inter alia, the official list of credit institutions published by the Commission de Surveillance du Secteur Financier as well as the official list of monetary financial institutions made available to reporting institutions on the Internet site of the European Central Bank.

We therefore deem it necessary to once again emphasize the importance of the quality of data transmitted to the BCL and the need to submit data before transmission to the detailed verification rules set out in the technical documentation. Only rigorous control performed at the time of data production will allow meeting both quality requirements and imposed deadlines. This point is all the more important since the data collected in this manner will be checked by the ECB services before being aggregated with data from other member states. Any significant error or negligence will have detrimental repercussions on the reputation of the entire national financial community.

2, boulevard Royal L-2983 Luxembourg Fax (+352) 4774-4920 E-mail: reporting.banques@bcl.lu

4. Entry into force of new provisions

The new classification of assets and liabilities towards residents of Estonia is to be carried out for the first time when preparing monthly statistical reports relating to the period of January 2011.
The attached table relating to the calculation of mandatory reserves relates to the periods of October 2010, November 2010 and December 2010.

Please accept, Sirs, the assurance of our perfect consideration.

CENTRAL BANK OF LUXEMBOURG
Germain Stammet Roland Nockels
Head of Section External Statistics Head of Statistics Department

Annex: 1

2, boulevard Royal L-2983 Luxembourg Fax (+352) 4774-4920 E-mail: reporting.banques@bcl.lu

Annex. Information to be provided to the Central Bank of Luxembourg for the reduction of the reserve base for the periods of October 2010, November 2010 and December 2010

Item	Currency	Country	Economic Sector	Initial Maturity
Demand Liabilities	EUR	Estonia	NCB + CIs subject to reserve system	<= 2 years > 2 years Not allocated
	Other currencies	Estonia	NCB + CIs subject to reserve system
Time Deposits	EUR	Estonia	NCB + CIs subject to reserve system
	Other currencies	Estonia	NCB + CIs subject to reserve system
Notice Deposits	EUR	Estonia	NCB + CIs subject to reserve system
	Other currencies	Estonia	NCB + CIs subject to reserve system
Firm Repurchase Transactions	EUR	Estonia	NCB + CIs subject to reserve system
	Other currencies	Estonia	NCB + CIs subject to reserve system
Issued Debt Securities	EUR	Estonia	NCB + CIs subject to reserve system
	Other currencies	Estonia	NCB + CIs subject to reserve system

NCB + CIs subject to reserve system: National Central Bank of Estonia and credit institutions subject to the Eurosystem's mandatory reserve system

The wording of the rows and columns of this table corresponds to those used for report S 1.1 to be submitted monthly to the Central Bank of Luxembourg. The credit institutions concerned can therefore rely on the definitions of the Collection of Instructions to Banks to establish this table.