Estonia joined the eurozone as its newest member, becoming the first former Soviet state to adopt the euro.

The small Baltic state of 1.3 million people became the 17th eurozone country at midnight, beginning a switch from the kroon. Prime Minister Andrus Ansip was the first to take euro notes out of a specially installed cash machine outside a theatre, where a ball had been held to celebrate the switchover and the new year.

‘It is a small step for the eurozone and a big step for Estonia,’ he said, holding the notes.

‘We are proud to be a eurozone member state.’

Estonia sees changing to the euro as marking the end of its struggles since a 2009 recession lopped 14% off its output.

It hopes to entice investors by removing any fears of devaluation and make borrowing more secure for its people, many of whose mortgages are already in euro.

It also caps a drive for integration with the West, away from the influence of Russia, which began with the collapse of the Soviet Union in 1991.

With a similar history, neighbours Latvia and Lithuania hope to adopt the euro in 2014.

The kroon will be converted at the rate of 15.6466. They will circulate together as legal tender for two weeks.

An anti-euro campaign kept up its rhetoric, saying in a statement Estonia was ‘getting the last ticket for the Titanic’.

Nobel laureate economist Paul Krugman said in a blog that the switch was a symbol of Estonia's transformation from a Soviet province to a good European citizen, but that the cost had been high for the economy.

‘So, congratulations to Estonia - but condolences too. This wasn't the glittering euro entrance you were promised,’ he wrote.