EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 13 December 2010 
on authenticity, fitness checking and recirculation of euro banknotes  
(CON/2010/90) 
 Introduction and legal basis
 
On 17 November 2010, the European Central Bank (ECB) received a request from the Central Bank of 
Malta (CBM) for an opinion on a draft CBM Directiv e No. 10 on the Authenticity and Fitness Checking 
and Recirculation of Euro Banknotes issued  under the Central Bank of Malta Act1  (hereinafter the ‘draft 
Directive’). 
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 consul tation of the European Central Bank by national 
authorities regarding draft legislative provisions2, as the draft Directive concerns currency matters, means 
of payment and the Central Bank of Malta. In accord ance with the first sentence of Article 17.5 of the 
Rules of Procedure of the European Central Bank,  the Governing Council has adopted this opinion. 
 1.  Purpose of the draft CBM Directive 
1.1 Under Article 5(3) of the Cent ral Bank of Malta Act, read in c onjunction with Article 5(1)(e), the 
CBM is empowered to issue directives to provide  for the circulation of euro banknotes. The draft 
Directive will be a binding legal act, transpos ing Decision ECB/2010/14 of 16 September 2010 on 
the authenticity and fitness checking and recirculation of euro banknotes
3 and will replace the 
CBM’s current Directive No. 10 on the Banknote Recycling Framework (BRF). 
1.2 The draft Directive lays down measures on the authenticity, fitness checking and recirculation of 
euro banknotes and will enter into force on 1 January 2011. 
 
                                                 
1  Chapter 2014 of the Laws of Malta   
2  OJ L 189, 3.7.1998, p. 42.  
3  OJ L 267, 9.10.2010, p. 1. 
2 2. General observations  
2.1 The common rules and procedures on authenticit y, fitness checking and recirculation of euro 
banknotes laid down in the draft Directive impos e obligations on cash handlers and seek to 
safeguard the integrity of euro banknotes as a means of payment. The ECB welcomes the draft 
Directive and is confident that its provisions will ensure the preservation of euro banknotes in 
circulation and will result in the maintenan ce of public confidence in euro banknotes. 
2.2 Council Decision 98/415 does not contain provis ions under which national authorities are required 
to consult the ECB on implementing measures. Subj ect to the specific observations in Section 3 
below, the ECB notes that the draft Directive ge nerally constitutes a faithful reproduction of the 
provisions of Decision ECB/2010/14 and introduces no new points. Also, as Decision ECB/2010/14 applies to cash handlers by virtue of Article 6(1) of Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down meas ures necessary for the protection of the euro 
against counterfeiting
4, which refers to ECB procedures for checking euro banknotes, there is no 
strict need to implement Decision ECB 2010/14 into Maltese law. It is also acknowledged that the draft Directive may contribute to making cash handlers in Malta comply with the rules and procedures laid down in the Decision ECB/2010/14. 
 3.  Specific observations 3.1 Paragraph 37 of the draft Directive provides th at the draft Directive will enter into force on 
1 January 2011, with the reporting obligation la id down in paragraph 34 to take effect from 
1 January 2012. The reporting obl igations of credit institutions  and professional cash handlers, 
defined as ‘intermediaries’ in the BRF, are, at present, dealt with in paragraph 16 of the BRF. The wording of paragraph 37 of the draft Directive s hould be reconsidered given that it may create 
some ambiguity as it could be inferred that categorie s of cash handlers currently within the scope of 
the BRF would, in future, not be obliged to report to the CBM until 1 January 2012. 
3.2 The ECB also notes that paragraph 11 of the draft Directive entrusts responsibility for the testing of 
banknote handling machines to the CBM, thereby app earing to limit the scope of Article 3(3) of 
Decision ECB/2010/14. Therefore, paragraph 11 of the draft Directive should be amended 
accordingly. 
3.3 Furthermore, paragraph 12 of the draft Directiv e provides that euro banknotes delivered directly to 
a cash handler by the CBM do not require authenticity  and fitness checks prior to recirculation. The 
ECB also notes a discrepancy here with Article 3(4) of Decision ECB/2010/14 which provides that 
authenticity and fitness checks are not required in  the case of euro banknotes that have been 
delivered directly to a cash handler by a national central bank. T he draft provision seems to limit 
                                                 
4  OJ L 181, 4.7.2001, p. 6. 
3 the scope of the equivalent provisions of Decisi on ECB/2010/14 and the ECB is of the opinion that 
the relevant provisions of the draft CBM Directive should be amended accordingly. 
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 13 December 2010. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET