Farewell, then, Estonian kroon. Born: Jun. 20, 1992. Passed away: Dec. 31, 2010.

With the new year, Estonia becomes the 17th country to adopt the euro. An inauspicious move, some including Paul Krugman and Nouriel Roubini say. This point of view, some argue, has been reinforced by the turmoil in the euro zone over the past year. Such critics say that far from joining the euro, the country should devalue.

For its entire life, the kroon has been pegged in a currency board-type arrangement first to the German mark and then to the euro. (In its earlier incarnation, from 1928 until the Soviet invasion in 1940, it was linked first to gold and then to the British pound.)

In 1992, the year the kroon was (re)introduced and the ruble abandoned, inflation was 1,076.5%. (The central bank in Moscow was printing money to fund the government.) The currency peg helped subdue inflation though it later helped to foster a bubble and financial crisis.

What now for Estonia? Here in his obituary for the currency, Fredrik Erixon of the Brussels-based European Centre for International Political Economy argues it’s mostly good. Read More »