EN ECB -PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 17 December 2013   
on the processing and distribution of banknotes , and their protection against counterfeiting in 
Hungary  
(CON/2013 /89) 
 
Introduction and legal basis  
On 25 November  2013 , the European Central Bank (EC B) received a request from the Magyar Nemzeti 
Bank (MNB) fo r an opinion on a draft decree  amending the MNB decree regulating the processing and 
distribution of banknotes and on the technical tasks relating to the protection of banknotes against 
counterfeit ing (hereinafter referred to as the ‘draft decree’ ). 
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 second  indent of Article  2(1) of Council Decision 98/415/E C 
of 29  June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions1, as the draft decree  relates to means of payment . In accordance with the first 
sentence of Article  17.5 of the Rules of Proce dure of the European Central Bank, the Governing Council 
has adopted this opinion.  
 
1. Purpose of the draft decree  
1.1 The MNB has reviewed the operational risk of the Hungarian automated teller machine ( ATM ) 
network with regard to the methods ensuring bus iness continuity in case of a cash-in-transit 
company’s  failure. The review focused on ATMs located in credit institutions and the offices of the 
postal services , as in a critical situation the continued operation of the off-site ATMs is highly 
unlikely.  Pursuant  to the explanatory memorandum attached to the draft decree, t he review carried 
out by the MNB found that credit institutions have outsourced their tasks related to the refilling of 
ATMs to cash-in-transit companies to such an extent that this outso urcing carries a system ic risk. 
The mitigati on of  this risk  therefore  requires intervention by the MNB as the competent authority 
adopting legislation on this subject matter .  
1.2 The Hungarian Financial Supervisory Authority was dissolved and its function s and responsibilities 
were transferred to the MNB o n 1 October 2013. This change in the institutional setup required the 
adoption of a new Law on the M agyar Nemzeti Bank2, which, inter alia , regulates the MNB’s 
competence in issuing banknotes and coins, a s well as its competence in providing for protection of 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  Law CXXXIX of 2013 on the Magyar Nemzeti Bank.  
ECB -PUBLIC  
2 the Hungarian currency a nd currency denominated in euro against counterfeiting.  An amend ment 
to the MNB decree regulating the processing and distribution of banknotes and protection  of 
banknotes  again st counterfeiting3 (hereinafter referred to as  ‘the MNB Decree’ ) therefore became  
necessary  to updat e the references to and implement the Articles of the new Law on the Magyar 
Nemzeti Bank , on the one hand , and to reflect the relevant Union legislation in this field , on the 
other hand . 
1.3 Apart from  providing updated references to  the Law on the Magyar Nemzeti Bank in this field, the 
draft decree also provides new requirements that credit institutions and postal services have to 
adhere to in order to ensur e that the ATMs continue to operate if  critical events occur that expose  
ATMs to risk . With a view to improv ing business continuity, the draft decree , inter alia , requires 
the entities  affected by the draft decree  to set up a business contingency plan.  
 
2. General observations   
2.1 Since  Hungary is a Member State with a derogation  pursuant to Article 139 of the Treaty , the 
ECB ’s requirements regarding the recirculation of euro banknotes  in Member States that have 
adopted the euro do not apply to the MNB4. These requirements will appl y once Hungary  adopts 
the euro and the MNB  becomes a fully integrated member of the Eurosystem.  
2.2 The ECB welcomes that the draft decree  impos es requirements on credit institutions and postal 
services to develop a business cont ingency plan in relation to cash distribution  disruptions and 
acknowledges that such a provision  would address specific issues , as well as  mitigat e relevant risks 
to the national cash distribution cycle for the purpose of ensuring its continuity . 
2.3 Furth ermore, based on correspondence with  the Hungarian authorities , the ECB understands that a n 
amendment to the Law on the Magyar Nemzeti Bank  is expected in the near future . In this respect, 
the ECB reiterates its earlier observations as regards the  MNB’s  currency -issuing operations5, most 
of which  were not taken into conside ration when  the draft Law on the Magyar Nemzeti Bank  was 
finalised , and urges the Hungarian legislator  to consider those  observations with regard to any  
forthcoming amendment s to the Law on the Magyar Nemzeti Bank . It is also important that any 
future amendments to the Law on the Magyar Nemzeti Bank are comprehensive and address all 
outstanding points with regard to the MNB  identified by the ECB in past opinions and its 
Convergence Report6, with a view to avoid ing frequent changes to Hungarian  legisla tion on the 
MNB7. 
 
                                                 
3 MNB Decree 11/2011 (IX. 26.) . 
4 See Opinions CON/2008 /90 and CON/2011/59 . All ECB opinions are published on the ECB’s website at 
www.ecb.europa.eu.  
5 See paragraph  3.2.5 of Opinion CON/2013/56 . 
6 See Opinions CON/2013/56 and CON/2013/71, as well as the ECB’s Convergence Report of May 2012, p. 243 -248. 
7 See, for example, Opinions CON/2007/14, CON2008/83, CON/2010/91, CON/2011/104, CON/2012/43  and 
CON/2013/56.  
ECB -PUBLIC  
3 3. Specific observations  
3.1 The draft  decree amends the provision on the scope of the MNB Decree8. While recognising the 
technical character of this amendment, the ECB  highl ights that the amended provision sets out  the 
instances where specific provisions of the  MNB  Decree applies to the processing and distribution 
of foreign banknotes, including  euro banknotes . In this respect, Decision ECB/2010/149 
specifically regulate s any issue relating to cash handlers automatically or manually processing euro 
banknotes and putting those banknotes into circulation . Since  Decision ECB/2010/14 applies to 
cash handlers by virtue of Article 6(1) of Council Regulation (EC) No  1338/200110, which  refers to 
procedures defined by the ECB for checking euro banknotes , there is no strict need to implement 
Decision ECB/2010/14 into Hungarian law11. In general , the ECB considers it essential for the draft 
decree  and the MNB Decree to only  deviate from Dec ision ECB/2010/14 where the Decision has 
expressly allowed such deviations. To ensure consistency, the ECB recommends incl uding direct 
references in the MNB Decree  to the relevant provisions of Decision  ECB/2010/14, including its 
technical annexes12. In thi s respect, the ECB understands that Annex 2 to the MNB Decree defines 
banknote handling machine types for processing forint banknotes without prejudice to the 
application in Hungary of the technical annexes to Decision  ECB/2010/14 regulating similar 
aspect s in the context of handling euro banknotes.  
3.2 The ECB understands that  the new definition of fit euro banknotes in the draft decree  recognise s 
the requirement  for the m to be checked for  authenticity in accordance with Decision ECB/2010/14 
based on the p rovision of Article 3(4)  and 7(1)  of the MNB Decree . However , the definition of 
unfit euro banknotes set out in the draft decree  would benefit from  align ing with the corresponding  
definition laid down in Decision  ECB/2010/14 , thereby ensuring the consisten cy of this definition  
with the implementation approach recommended under paragraph 3.1 above . 
                                                 
8 See Article 4(1) of the draft decree  amending Article 1(b) of the MNB D ecree on the on processing and distribution of 
banknotes and on the technical t asks relating to the protection of banknotes against counterfeiting . 
9 Decision ECB/2010/14 of 16 December 2010 on the authenticity and fitness checking and recirculation of euro banknotes 
(OJ L 267, 9.10.2010, p. 1 ). 
10 Council Regulation (EC) No  1338/2001  of 28 June 2001 laying down measures necessary for the protection of the euro 
against counterfeiting ( OJ L 181, 4.7.2001, p. 6 ). The effects of this Regulation, in particular of the second subparagraph 
of Article 6(1) thereof, have been extended to Member  States that have not adopted the euro as their single currency by 
way of Council Regulation (EC) No  1339/2001 of 28 June 2001 extending the effects of Regulation (EC) No 1338/2001 
laying down measures necessary for the protection of the euro against count erfeiting to those Member States which have 
not adopted the euro as their single currency  (OJ L 181, 4.7.2001, p. 11 ). 
11 See paragraph  2.1 of Opinion CON/2011/19.  
12 See paragraph 3.1 of Opinion CON/2011/78 . 
ECB -PUBLIC  
4 3.3 Finally, the ECB draws the attention of the Hungarian authorities to a recent amendment to 
Decision  ECB/2010/1413, which has abolished  the transitional period referred to in Article 13(2) 
thereof. T o this end , the ECB recommends amending  Article 7( 3) of the  MNB  Decree in its 
upcoming recast , which was announced by the MNB in the explanatory memorandum attached to 
the consultation request . 
 
This opinion will be p ublished on the ECB’s website.  
 
 
Done at Frankfurt am Main, 17 December 2013.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                 
13 Decision ECB/2012/19 amending Decision ECB/2010 /14 on the authenticity and fitness checking and recirculation of 
euro banknotes  (OJ L 253, 20.9.2012,  p. 19).