EN ECB-P UBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 9 December 2011 
on the authentication of euro coins and handlin g of euro coins unfit for circulation and the 
imposition of administrative measures and penalties 
(CON/2011/105) 
 Introduction and legal basis
 
On 16 November 2011, the European Central Bank (ECB) received a request from the Central Bank of 
Malta (CBM) for an opinion on its draft Directive No  11 on the authentication of euro coins and the 
handling of euro coins unfit for circulation (hereinaft er the ‘draft Coins Directive’) and Directive No 12 
on the administrative measures and penalties for offe nces and infringements under the Central Bank of 
Malta Act1 (hereinafter the ‘draft Administrative Penalti es Directive’; the draft Coins Directive and the 
draft Administrative Penalties Directive are herein after collectively referred to as the ‘draft CBM 
directives’). 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the first, second and third indents of Article 2(1) of Council 
Decision 98/415/EC of 29 June 1998  on the consultation of the E CB by national authorities regarding 
draft legislative provisions2 as the draft amendments concern currenc y matters, means of payment and the 
CBM. In accordance with the first sen tence of Article 17.5 of the Rules of Procedure of the ECB, the 
Governing Council has adopted this opinion. 
 1.  Purpose of the draft CBM directives 
1.1 Article 5(3) of the Central Bank of Malta Act (hereinafter the ‘CBM Act) empowers the CBM to 
issue directives to implement the CBM Act. The dr aft CBM directives will be published before the 
end of 2011 and are expected to enter into force on 1 January 2012. 
1.2 The draft Coins Directive aligns national law with Regulation (EU) No 1210/2010 of the European 
Parliament and of the Council of 15 December 2010 concerning authentication of euro coins and 
handling of euro coins unfit for circulation
3. It introduces specific obligations for the CBM with 
regard to the authentication procedures and contro ls. Furthermore, it contains provisions on the 
                                                 
1  Cap. 204 of the Laws of Malta. 
2  OJ L 189, 3.7.1998, p. 42.  
3  OJ L 339, 22.12.2010, p. 1. 
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2 handling of coins which are unfit for circulation as a result of use, accident or damage. The new 
procedures relating to euro coins are compleme ntary to those in CBM Directive No 10 on the 
authenticity, fitness checking and recirculation of euro banknotes4. 
1.3 The draft Administrative Penalties Directive in troduces specific penalties for breaches of the CBM 
Act, the draft CBM directives and Regulation (EC) No 924/2009 on cross-border payments5.   
Annex I sets out the administrative penalties which may be imposed by the CBM without recourse to a court hearing. Annex II lays down the admi nistrative measures and penalties for failure to 
comply with CBM Directive No 10. Administrative measures and penalties applicable for failure to 
comply with the draft Coins Directive are listed separately in Annex III.  
 2. General observations 2.1 The draft Coins Directive establishes obliga tions on cash handlers and seeks to safeguard the 
integrity of euro coins as a means of paymen t. The ECB generally welcomes the draft Coins 
Directive and is confident that its provisions will ensure the preservation of euro coins in 
circulation and will therefore maintain the general public’s confidence in euro coins. 
2.2 The ECB considers it essential that any draft le gislation should clarify the primacy and direct 
application of Union law on the authentication of eu ro coins and the handling of euro coins unfit for 
circulation. For consistency reasons, the ECB fa vours the use of direct references to Regulation 
(EU) No 1210/2010 or, alternatively, reproduction of its provisions without any alterations or 
additions.   
2.3 With regard to the draft Administrative Penalties Directive, the ECB notes that most of the offences 
provided for are already set out in Subsidiary Legislation 204.05
6.  
2.4 In addition, although national authorities are not formally obliged to consult the ECB on the 
implementation of the Member States’ obligation to take the necessary me asures to ensure that 
breaches of Article 6(1) of Regulation (EC) No 13 38/2001 are subject to ef fective, proportionate 
and deterrent sanctions, the ECB believes it is be neficial to harmonise throughout the Union the 
national measures implementing the abovementioned obligation to the extent possible, subject to 
national peculiarities7.  
 
                                                 
4  CBM Directive No 10 was the subject of  CON/2010/90.  All opinions are available on the ECB’s website at 
www.ecb.europa.eu. 
5  Regulation (EC) No 924/2009 of the European Parliame nt and of the Council of 16 September 2009 on cross-border 
payments in the Community and repealing Regula tion (EC) No 2560/2001 (OJ L 266, 9.10.2009, p. 11). 
6 Central Bank of Malta (P enalties for Offenc es and Infringements) Regulati ons, Legal Notice 75 of 2003. 
7   Paragraph 1.1 of Opinion CON/2010/87. 
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3 3. The draft Coins Directive 
3.1 The definition of ‘euro coins unfit for circulati on’ in paragraph 3 of the draft Coins Directive 
should be amended to reflect the definition in Re gulation (EU) No 1210/2010 which refers to euro 
coins that have been rejected during the authen tication process or euro coins the appearance of 
which has been significantly altered. The de finition should cover both euro coins unfit for 
circulation on the basis of their visual appear ance and those unfit for circulation on the basis of 
their technical appearance.  
3.2 With regard to the delivery to the CBM of counterfeits following detection, the ECB notes that 
paragraph 4 of the draft Coins Directive only requires immediate delivery to the CBM (as the designated national authority) in the case of count erfeits, thereby appearing to limit the scope of 
Article 3(2) of Regulation (EU) No 1210/2010, whic h also refers to suspected counterfeit coins and 
euro coins unfit for circulation. Paragr aph 4 should be amended accordingly.  
3.3  When dealing with the withdrawal and reimburse ment of euro coins unfit for circulation, the draft 
Coins Directive does not include a provision ensuri ng that after withdrawal euro coins unfit for 
circulation are destroyed by physical and permanen t deformation, thereby reflecting the obligation 
set out in Article 8(3) of Regulation (EU) No 1210/2010. A paragraph to this effect should be 
included in the draft Coins Directive. 
3.4 The ECB notes that paragraph 5 of the draft Coins Di rective is not fully consistent with Article 6(3) 
of Regulation (EU) No 1210/2010. In particular , it should provide that the number of coin-
processing machines checked on an annual basis, repr esent, in terms of the volume of euro coins 
processed by those machines during a particular year, at least 25% of the total cumulated net volume of coins issued by Malta from the introduction of euro coins in 2008 until the end of the previous year. The current wording of paragraph 5 limits that period to the end of 2010, thereby 
excluding any developments in the euro coin i ssuance volume of Malta after 2010. Therefore, the 
ECB recommends aligning paragraph 5 of the draft Coins Directive with Article 6(3) of Regulation 
(EU) No 1210/2010. 
3.5 As regards the composition of the standardised ba gs or boxes for the packing of euro coins unfit for 
circulation, the ECB notes that paragraph 18(a) of the draft Coins Directive is not consistent with 
Article 10(1)(a) of Regulation (EU) No 1210/2010 for any denominations except EUR 2 and 0,01. 
The draft Coins Directive should be aligned accordingly.  
3.6 The CBM is the competent authority to supe rvise compliance with Regulation (EC) No 1210/2010 
and to take decisions regarding offences under the dr aft Coins Directive. In view of the human and 
financial resources required for the performance of  these tasks, the ECB h as consistently expressed 
its concern that, when allocating additional tasks to  national central banks, it must be ensured that 
they have sufficient human and financial resources, both in terms of quantit y and quality, for all of 
their tasks, and in particular that their capacity to perform their European System of Central Banks 
or Eurosystem-related tasks is not affected. 
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4 4  The draft Administrative Penalties Directive 
4.1 By virtue of recent amendments to Article 56 of the CBM Act, the power to issue regulations 
providing for administrative penalties, formerly v ested in the Minister for Finance, has been 
transferred to the CBM. Furthermore, the CBM has been empowered8 to issue directives in order to 
impose administrative measures for breach of the rules on the authenticity, fitness checking and 
recirculation of euro banknotes and coins. 
4.2 The ECB reiterates the importa nce of effective, proportionate a nd deterrent sanctions. To ensure 
the deterrent effect of administrative fines, the maximum amount should allow setting the fine at an 
amount which effectively deters cash handlers fro m breaching their obligations. While defining the 
particular amounts of the administrative fines is  a national competence, the national legislator 
should aim at achieving a certain degree of harm onisation across the Member States to contribute 
to the establishment of a level playing field among cash handlers within the euro area without 
prejudice to: (a) the particularities of the cash cy cle and the organisation of cash handlers at a 
national level; and (b) the consistenc y of the levels of financial sa nctions available in their legal 
orders9.In this context, the ECB welcomes the introduction of the separate draft Administrative 
Penalties Directive dealing specifically with administrative measures and penalties in a structured manner. 
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 9 December 2011. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI 
                                                 
8  By virtue of Article 50A of the CBM Act. 
9   Paragraph 3.4 of Opinion CON/2010/87.