EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 18 June 2009  
on the circulation of banknotes and coins 
(CON/2009/52) 
 
Introduction and legal basis  
On 27 March 2009 the European Central Bank (ECB) received a request from Česká národní banka 
(CNB) for an opinion on a draft law on the circula tion of banknotes and coins and on the amendment of 
Law No 6/1993 Coll. on Česká národní banka (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the first and second indents of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the draft law relates to currency matt ers and means of payment. In accordance 
with the first sentence of Article 17.5 of the Rule s of Procedure of the European Central Bank, the 
Governing Council has adopted this opinion. 
 1.  Purpose of the draft law 
The draft law regulates legal relationships in the area of the circulation of banknotes and coins and their 
protection against counterfeiting and also implements certain directly  applicable regulations of the 
European Communities. While the main  focus of the draft law is to regulate the circulation of national 
banknotes and coins, some of its provisions apply irrespective of the currency involved
2. It lays down 
rules relating, inter alia , to the acceptance, exchange, processing, recycling and reproduction of 
banknotes and coins. CNB’s powers are explicitly stipulated3, including in relation to the registration and 
supervision of entities involved in the processing of  national tender. The draft law also provides for 
sanctions on credit institutions and other entities for br eaches of obligations imposed by the draft law or 
by a directly applicable Council regulation. CNB is empowered to regulate certain issues by means of decrees, which will be of a technical nature. It is envisaged that once it has been adopted, and subject to 
certain amendments, the draft law will continue to  apply after the Czech Republic adopts the euro.  
 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  See, for example, Articles 7, 16 and 19 of the draft law. 
3  Under Article 3(6) of the draft law, CNB will perform func tions of the national counterfeit centre, the national analysis 
centre (NAC) and the coin national analysis centre (CNAC). Functions identical to those of the NAC and CNAC have 
historically been carried out by CNB based on its responsibilities in the area of  banknotes and coins despite the absence 
of specific legislative provisions to this end.  
2 2. General observations  
2.1 While the Czech Republic is a Member State with  a derogation within the meaning of Article 122 
of the Treaty and the ECB requirements regarding the organisation of cash cycles in Member States that have adopted the euro currently do not apply to CNB, these requirements will become 
applicable to CNB once the Czech Republic adopt s the euro and CNB becomes a fully integrated 
member of the Eurosystem.  
2.2 Under Article 106 of the Treaty, the Governi ng Council of the ECB has the exclusive right to 
authorise the issue of banknotes within the Co mmunity, whereas the coin s are issued by the 
Member States subject to the ECB’s approval of the volume. Consequently, the Eurosystem’s regulatory competence only concerns banknotes. He nce, with a view to national central banks 
(NCBs) joining the Eurosystem, the ECB consisten tly supports a clear separation between national 
rules relating to banknotes and rules relating to coins
4. The ECB considers that the draft law would 
benefit from introducing such consistent internal sep aration. Should this not be feasible at the level 
of the draft law, the consulting authority should co nsider providing for such internal separation in 
the decrees to be issued by CNB pursuant to Artic le 21 of the draft law. This would facilitate the 
legal convergence of the Czech legislative frame work, which is necessary for the Czech Republic 
to participate fully in econom ic and monetary union.  
2.3 As a general comment, some of the draft law’s provisions contain terminology and/or provide for 
concepts, such as ‘anonymous and non-anonymous e quipment’ in Articles 11 and 12, which differ 
from those established within the Eurosystem. For reasons of clarity and legal certainty, 
particularly in view of the Czech Republic’s futu re adoption of the euro, the ECB would invite the 
consulting authority to consider aligning such terminology and concepts with the approaches 
applied in the Eurosystem5. Furthermore the concept of ‘tender damaged in a non-standard way’ in 
Article 6(2) is not used by the Eurosystem. It should be noted in this context that unfit banknotes 
(e.g. those with holes or those that have been wr itten on) and banknotes that have been stained by 
anti-theft devices are addressed together, which may lead to confusion. 
 3. Specific observations 3.1 Scope of application of the obligation to  withdraw suspicious banknotes and coins  
Article 7(1) of the draft law specifies entities obliged to seize suspicious banknotes and coins. 
These include CNB, credit institutions performi ng cash operations, processors of national tender
6, 
other legal entities, money exchangers and natu ral persons engaged in  operating non-anonymous 
equipment. The ECB understands that Article 7 of the draft law also applies to euro banknotes and 
                                                 
4  See, for example, Opinions CON/2008/90, CON/2008/47,  CON/2008/36 and CON/2007/28. All Opinions are available 
on the ECB’s website at www.ecb.europa.eu. 
5  See also paragraph 3.1 below.  
6  Pursuant to Article 2(1)(g) of the draft law, a processor of national tender means a lega l entity that processes national 
tender for other parties, registered by CNB. 
3 coins7. In this context, the ECB points out that Article 6(1) of Council Regulation (EC) 
No 1338/2001 laying down measu res necessary for the protec tion of the euro against 
counterfeiting8 imposes an obligation on a number of en tities to withdraw euro banknotes and coins 
from circulation where there is a sufficient reason to believe that they are counterfeit. By virtue of 
Regulation (EC) No 1339/20019, these rules also apply in Member States that have not yet adopted 
the euro, but are modified by Article 6(1a ) of Council Regulation (EC) No 1338/2001. These 
entities include credit institutions, other payment service providers, and any other institutions 
engaged in the processing and distribution to the public of banknotes and coins, including: (i) establishments whose activity consists in  exchanging banknotes and coins of different 
currencies, such as bureaux de change; (ii) transpor ters of funds; and (iii) other economic agents 
such as traders and casinos engaged on a secondary  basis in the processing and distribution to the 
public of banknotes via automated teller machines. The ECB notes that insofar as Article 7(1) of 
the draft law also applies to euro banknotes and co ins, it would be advisable for legal certainty 
reasons to fully align its wording with that of Article 6(1) and (1a) of Regulation (EC) 
No 1338/2001. 
3.2 Hidden charge for the acceptance of cash  
The ECB notes that under Article 9(4) of the draf t law, ‘CNB and credit institutions performing 
cash operations are entitled to require that a pa yer, when paying in cash or when depositing 
national tender onto an account, presen ts national tender sorted by nominal value or, depending on 
the quantity, packaged in the way stipulated by d ecree’ and that they are ‘entitled to charge a fee 
stipulated in advance if the payer presents na tional tender unsorted or unpackaged in the way 
stipulated by decree’.  
The ECB understands the notion of legal tender to  include the elements of mandatory acceptance at 
full value for the discharge of monetary debts. This is also laid down in Article 4 of the draft law, 
which stipulates that ‘ Česká národní banka and credit instit utions performing cash operation shall 
accept national tender without restriction’. To the extent, however, the payer referred to in the 
above provision is required to pay a fee for enjoying the right of discharging his obligations in cash 
(especially if such payer is a consumer without the means to sort or p ackage banknotes or coins), 
there is a hidden charge for the use of legal tende r, which prejudices the use of cash vis-à-vis other 
payment instruments. In the context of cash  services not necessarily involving discharge of 
monetary debts, attention is a dditionally drawn to the common Eu rosystem fee policy for the cash 
transactions of professional clients at NCB counters
10 implemented from 1 March 2002, which 
defines different levels of services: 
                                                 
7  According to the explanatory memorandum to the draft law, the definition of ‘suspicious tender’ includes, in addition to 
Czech banknotes and coins, banknotes and coins in other currencies, including the euro.  
8  OJ L 181, 4.7.2001, p. 6. Regulati on (EC) No 1338/2001 was recently amended by Council Regulation (EC) No 44/2009 
(OJ L 17, 22.1.2009, p. 1).    
9  OJ L 181, 4.7.2001, p. 11. Regul ation (EC) No 1339/2001 was recently am ended by Regulation (EC) No 45/2009 
(OJ L 17, 22.1.2009, p. 4). 
10  ECB Annual Report 2002, p. 134. Available on the ECB’s website at www.ecb.europa.eu. 
4 • free-of-charge : these are the basic services provided by all NCBs, taking into account their 
unique role in providing th e economy with cash; and 
• fee-based : these are additional services that NCBs may provide. A fee must be paid for these 
optional services, taking into account the fact th at they may also be provided by commercial 
third parties. 
In view of the future adoption by the Czech Repub lic of the euro, it is advisable to ensure that 
Czech legislation is compatible with the main pr inciple of basic, free-of-charge cash services. 
3.3 The NAC’s obligation to transmit new types of suspected counterfeit banknotes under Article 4(2) 
of Regulation (EC) No 1338/2001   
The ECB understands that functions of the NAC will be carried out by CNB (Article 3(6) of the 
draft law). In this context, the ECB would like to  point out that Article 4(3) of Council Regulation 
(EC) No 1338/2001 and Article 1 of Regulation (EC)  No 1339/2001 authorise the NAC to transmit 
as necessary to the ECB for examination or testing at  least part of a batch of suspected counterfeit 
banknotes or coins being used or retain ed as evidence in criminal proceedings11. 
3.4 Specific references to rel evant Eurosystem rules  
3.4.1 Article 16 of the draft law provides that re productions of national and foreign banknotes and coins 
or items similar to them may only be made under th e conditions stipulated by decree or a directly 
applicable regulation of the European Communities.  In this regard, CNB is invited to consider 
including a reference in the draft law or, as the case may be, in the implementing decree to be 
issued pursuant to Article 21(f) of the draft law to Decision ECB/2003/4 of 20 March 2003 on the denominations, specifications, reproduction, ex change and withdrawal of euro banknotes
12. The 
ECB notes that there is such a reference in the currently applicable CNB Decree No 553/2006 Coll. 
of 30 November 2006 on the terms and conditions  under which it is possible to reproduce 
banknotes, coins, cheques, securities and paymen t cards and to produce objects imitating them13. 
3.4.2 Under Article 9(1) of the draft law, CNB,  credit institutions performing cash operations and 
processors of national tender are required to pro cess national tender accepted from circulation in 
accordance with the standards for the processing of national tender stipulated by decree14 before 
they recycle it. According to the explanatory memo randum to the draft law, it is envisaged that the 
above processing standards will be stipulated in a way similar to the standards laid down by the 
ECB in the ‘Framework for the detection of coun terfeits and fitness sorting by credit institutions 
and other professional cash handlers’ (herei nafter the ‘Banknote Recycling Framework’)15. The 
ECB invites the consulting authority to consider  including a reference to the Banknote Recycling 
                                                 
11  See also Recommendation ECB/2006/13 of 6 October 2006 on the adoption of certain measures to protect euro banknotes 
more effectively against counterfeiting (OJ C 257, 25.10.2006, p. 16). 
12  OJ L 78, 25.3.2003, p. 16. The ECB unde rstands from the explanatory memorandum to the draft law that conditions for 
reproducing euro banknotes laid down in Decision ECB/2003/ 4 will be implemented through a CNB decree issued under 
Article 21(f) of the draft law.  
13  Available on CNB’s website at www.cnb.cz. 
14  See Article 21(e) of the draft law.  
15  Document available on the ECB’s website. 
5 Framework in the draft law or, as the case may be , in the implementing decree to be issued 
pursuant to Article 21(e) of the draft law.  
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 18 June 2009. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET