Following a green light by the European Commission in May, the ministers approved the move at the Economic and Financial Affairs Council on Tuesday (13 July). The Council also determined the conversion rate between the two currencies: 15.6466 Estonian crowns to one euro.
Estonia, which has a population of just 1.4 million, has just under six months to prepare for the switchover.
Of the ten member states that joined the EU in 2004, Slovenia, Cyprus, Malta and Slovakia have already entered the euro zone having fulfilled the bloc’s convergence criteria, which cover price stability, public deficit, debt and exchange rate stability, and long-term interest rates.
Slovakia became the sixteenth member in January 2009, as the euro celebrated its ten-year anniversary.
Against the backdrop of Greece's debt crisis and ensuing tensions within the euro zone, Estonia will now become the seventeenth member of the single currency. Larger hopefuls such as the Czech Republic, Hungary and Poland are unlikely to join in the next few years.
In April 2010, as the economic crisis led to increased budget deficits across the EU, Bulgaria and Romania – who both joined the EU in 2007 – delayed their euro ambitions to beyond 2013 and 2015 respectively (EurActiv 16/04/10).
Estonia will enter the euro zone despite the concerns of the European Central Bank (ECB), which questioned the country's readiness to join the single currency in a recent report.
The report said there were mixed signals regarding Estonia's ability to hold down inflation and maintain its convergence within the euro area. The low level inflation in the country since mid-2009 has largely been the result of temporary factors, it stated (EurActiv 12/05/10).
However, EU heads of state and government recognised Estonia's compliance with the convergence criteria at the European Council on 17 June and the finance ministers' approval soon followed.
Estonian euro banknotes and coins will come into circulation on 1 January 2011. The national side of the coins will display a map of Estonia, accompanied by the word 'Eesti' – the name of the country in its native language.