EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 29 December 2006  
at the request of the Portuguese Ministry of Finance and Public Administration  
on a draft decree-law on the recycling, the detection of counterfeits and the fitness sorting of euro 
banknotes 
(CON/2006/62) 
 
Introduction and legal basis  
On 16 October 2006 the European Central Bank (ECB) received a request from the Portuguese Ministry 
of Finance and Public Administration for an opinion on a draft decree-law on the detection of counterfeits 
and the fitness sorting of euro banknotes (hereinafter the ‘draft decree-law’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the second and third 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 decree-law relates to means of payment and the Banco de Portugal. In 
accordance 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 decree law 
The purpose of the draft decree-law is to establish a le gal framework at national level that is consistent 
with the ECB’s Framework for the detection of coun terfeits and fitness sorting by credit institutions and 
other professional cash handlers (hereinafter the ‘Banknote Recycling Framework’)
2. More specifically, 
the proposed draft decree-law (i) regulates the det ection of counterfeits and fitness sorting of euro 
banknotes carried out outside the Banco de Portugal; (ii) establishes requirements to ensure that the 
relevant operators duly withdraw from circulatio n worn or defective banknotes that are unfit for 
circulation, or banknotes that are, or are suspected to  be counterfeit or forged; and (iii) grants the Banco 
de Portugal rights to issue additional regulations in th is field, to inspect banknote sorting machines and to 
impose fines for breaches of the duties imposed by the draft decree-law. 
 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  Available on the ECB’s website at www.ecb.int. 
 
2 2. General observations  
2.1 The Banknote Recycling Framework aims to, inte r alia: (i) implement a common policy regarding 
banknote recycling by credit institutions and other professional cash handlers (hereinafter collectively referred to as ‘professional cash handlers’); and (ii) recommend that professional cash handlers meet certain due diligence standards con cerning the handling of euro banknotes, so as to 
contribute to maintaining the quality and authenticit y of euro banknotes in circulation. As issuing 
authorities, it is of the utmost importance to the ECB and the national central banks of the Member 
States that have adopted the euro (hereinafter ‘participating NCBs’) that euro banknotes in circulation are in good physical condition so th at the general public, as well as professional cash 
handlers, can check their authenticity in a re liable and proper manner and separate authentic 
banknotes from counterfeits or suspected counterfeits.  
2.2 The ECB welcomes this legislative initiative to implement the Banknote Recycling Framework in 
Portugal, which will enable the Banco de Port ugal better to perform its statutory tasks of 
maintaining the integrity and quality of euro bankn otes in circulation, by ensuring compliance with 
the Eurosystem’s common policy and standards c oncerning authenticity and quality checks of euro 
banknotes. 
2.3 The draft decree-law establishes a regime wh ich is broadly compatible with Community law 
concerning the protection of the euro against count erfeiting, in particular Council Regulation (EC) 
No 1338/2001 of 28 June 2001 laying down measur es necessary for the protection of the euro 
against counterfeiting
3. Assuming that it is fully implemented and that the Banco de Portugal issues 
the envisaged follow-up regulations, the new regime  will contribute to the process of reinforcing 
public trust in the euro. 
 3. Specific observations 3.1 As the maintenance of the integrity of euro banknotes in circulation forms part of the duties 
deriving from a participating NCB’s role as an issuing authority, the consulting authority may wish to consider stressing this aspect in the draft decree-law.  
3.2 The ECB notes that the wording of Article 2(2) of the draft decree-law is fairly broad. As the draft 
decree-law imposes sanctions on the addressees for non-compliance with the duties imposed by the 
draft decree-law, in any event the ECB would also  invite the consulting authority to consider 
whether the scope of the addressees is sufficiently cl ear to fulfil the requirement of legal certainty 
under Portuguese law on administrative sanctions. 
3.3 For the sake of legal clarity, it is recommended that Article 12(3) of the draft decree-law should 
specify the procedural rules which apply to the san ctions referred to in Article (1) and (2) of the 
draft-decree-law. 
                                                 
3  OJ L 181, 4.7.2001, p. 6. 
 
3 3.4 In order to ensure consistency, the title of Artic le 9 and the main body of both Article 11(2) and (3) 
and Article 12(2)(a) and (c) should expressly refer to ‘euro banknotes’, given that only Article 3 
and Article 12(1) deal with foreign notes. 
3.5 Finally, given that the draft decree-law deals exclusively with the recy cling regime of banknotes 
and that a separate decree-law is being prepared  covering coins, the ECB recommends that the 
references to coins in Article 3 and Article 12(1) of the present draft law are deleted. 
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 29 December 2006. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET