EN ECB-Public 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 20 July 2011 
on cash recycling and the protection of national  and foreign legal tender against counterfeiting 
(CON/2011/59) 
 Introduction and legal basis
 
On 3 June 2011, the European Central Bank (ECB) received a request from the Magyar Nemzeti Bank 
(MNB) for an opinion on two MNB Governor draft decrees: (i) on the processing and distribution of 
banknotes and on technical tasks relating to the protec tion of banknotes against counterfeiting (the ‘draft 
banknote decree’), and (ii) on the processing and distri bution of coins, and on technical tasks relating to 
the protection of coins against counterfeiting (the ‘d raft coin decree’; the draft banknote decree and the 
draft coin decree are hereinafter jointl y referred to as the ‘draft decrees’) . 
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 and second indents of Article 2(1) of Council Decision 
98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions1, as the draft decrees relate to currency matters and means of 
payment. In accordance with the firs t sentence of Article 17.5 of the Ru les of Procedure of the European 
Central Bank, the Governing Council has adopted this opinion. 
 1.  Purpose of the draft decrees 
According to the explanatory memorandum, the draft decrees are justified by the increasing risk of 
counterfeit forint banknotes, the MNB’s practical experi ence with the application of the decrees currently 
in force
2, the need for a legal framework to assess and mana ge the operational risks of cash distribution, 
and the obligation to harmonise national legislation w ith the Union regulations on the protection of euro 
banknotes and euro coins against counterfeiting. 
To that end, the draft decrees, inter alia , provide:  
- from 1 January 2012, only the banknote handling m achines tested by the MNB meeting the relevant 
requirements may be operated, 
                                                 
1 OJ L 189, 3.7.1998, p. 42. 
2  Decree No 2/2009 (I. 23.) of the Governor of the MNB on the processing and distribution of banknotes, and on technical 
tasks relating to the protection of banknotes against counterfei ting and Decree No 3/2009. (I. 23.) of the Governor of the 
MNB on the processing and distribution of coins, and on t echnical tasks relating to the protection of coins against 
counterfeiting. 
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2 - from 1 January 2012, the annual ratio of check ed forint banknotes conducted by cash processing 
providers with banknote handling machines success fully tested by the MNB will increase from 
80% to 90%, 
- banknotes rejected by staff-operated banknote hand ling machines, which may sometimes provide a 
lower level of security, that prove to be genuine  during the subsequent manual authenticity check 
may not be re-circulated, but will be delivered as unfit banknotes to the MNB, 
- from 1 January 2013, branches of credit instituti ons and the postal service may only recirculate 
forint banknotes received as supplies if the authen ticity and fitness check of the annual ratio of the 
received forint banknotes is carried out with a banknote handling machine successfully tested by 
the MNB, the ratio of the checked forint ba nknotes by a successfully tested banknote handling 
machine has increased year by year until it r eaches 90% in 2017 and only forint banknotes 
deposited in the specific branch and re-circula ted over the counter may be checked manually, 
- the credit institutions and the postal service shall accept small amounts of unfit forint banknotes and 
coins for denomination exchange in return for a limited fee. 
 2. General comments 2.1  As already stated in ECB Opinion CON/2008/90
3, since Hungary is a Member State with a 
derogation pursuant to Article 139 of the Tr eaty, the ECB’s requirements regarding the 
recirculation of euro banknotes in Member States th at have adopted the euro do not apply to the 
MNB. These requirements will apply to the MN B once Hungary adopts the euro and the MNB 
becomes a fully integrated member of the Eu rosystem. However, in this respect, the ECB 
welcomes the MNB’s alignment of Decree No 2/2009 with Decision ECB/2010/14 of 16 September 2010 on the authen ticity and fitness checking and re circulation of euro banknotes
4.  
2.2 Under Article 128 of the Treaty, the ECB has the exclusive right to authorise the issue of banknotes 
within the Union, whereas coin s are issued by euro area Memb er States subject to the ECB’s 
approval of their volume. Consequently, th e ECB’s regulatory competence concerns only 
banknotes.  
 3. Specific observations Pursuant to Article 21(1) of the draft banknote d ecree, credit institutions and the postal service may 
charge a fee for the exchange of fit or unfit forint  banknotes to different denominations of fit forint 
banknotes or coins. As regards the euro currency, the ECB considers that the replacement of euro 
banknotes, whether fit or unfit for circulation, should , as a general rule, be free from any handling fees.  
 
                                                 
3  Available on the ECB’s we bsite at www.ecb.europa.eu. 
4  OJ L 267, 9.10.2010, p. 1. 
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3 This opinion will be published on the ECB’s website.  
  Done at Frankfurt am Main, 20 July 2011. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET