EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 25 January  2016  
on safeguarding the redemption of coins by the Austrian Mint  
(CON/ 2016/4) 
 
Introduction and legal basis  
On 23 December 2015 the European Central Bank (ECB) received a request from the Austrian Ministr y of 
Finance for an opinion on a draft law amending the Federal  Act of 1988 on coinage and the Federal Act 
on the upper limit of the State guarantee (hereinafter the ‘draft law’ ). 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 on the first, second and third indents  of Article 2(1) of Council Decision 98/415/EC1, as the draft law 
relates to currency matters, means of payment and a national central bank  (NCB) . In acc ordance 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 law  
1.1 Under  the Act  on coinage, only the Austrian Mint is entitled to mint a nd issue euro and cent coins in 
Austria. The Mint was established as a wholly -owned subsidiary of the Oesterreichische 
Nationalbank (OeNB)  in 1989. The Mint emerged from the conversion by the State of the former  
Austrian Principal Mint Authority , which for med part of the State, into the Mint against payment of 
ATS (Austrian schilling) 8 billion by the OeNB. This structure was chosen to put the entire monetary 
policy, including the mint policy, in the OeNB’s hands.  
1.2 The Mint is obliged to take back coins,  convert them into banknotes , withdraw them  if required by 
the Council  pursuant to Article 128(2) of the Treaty , and replace damaged coins with new ones  
(hereinafter  ‘redemption obligations’ , based on Sections  8(4), 10, 11 and 14 of the Act  on coinage) . 
To date, the Mint has established  revenue reserves  of approximately EUR  437 million to be able to 
fulfil these redemption obligations.  
1.3 An amendment  to the Act on coinage in 2014,  on which the ECB was not consulted,  extended an 
existing prohibition on  the Mint establishing provisions regarding its redemption obligations. It also 
limited the Mint’s ability  to establish revenue reserves to 30% of the value of coins in circulation. 
It furthermore required the Mint to distribute 90 % of its profits to its sole shareholder, the OeNB.  
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national author i-
ties regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).  
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2 The ECB notes that due to this amendment  the Mint was only allowed to account for  revenue  
reserves of EUR 417 .2 million , instead of EUR 510. 6 million , for the financial year 2014, which 
would have been the appropriate reserves accor ding to an expert opinion. Hence, there was an 
underfunding in the euro coin sector of the Mint amounting to EUR 93. 4 million as at 
31 December  20142. 
1.4 The draft law adds a prohibition on  establishing  provisions regarding the obligations pursuant to 
Section 14 of the Act on coinage.  It also prohibits the Mint  from establishing revenue reserves  to 
meet its redemption obligations. Furthermore, i t requires the liquidation of the existing revenue 
reserves . Thus , it is expected that the Mint’s existing revenu e reserves  will be dissolved and 
distributed to the OeNB. According to the explanatory memorandum  to the draft  law, this approach 
of prohib iting and liquidat ing revenue reserves for redemption obligations is aimed at  avoiding 
excessive committed funds and associated investment risks  within the Mint . The ECB understands 
that after the Mint has  distributed these funds to the OeNB, the latter will include them in its own 
annual accounts  and distribute any  profit in accordance with the National Bank Act 1984  
(hereinafter the ‘NBG’) . In accordance with Section 69 of the NBG , after deducting certain earnings 
and allocating  up to 10%  of the remaining annual profit to the pension reserve until it is adequately 
funded, the State  shall receive 90%  of the OeNB’s remain ing profit . The rest may  be partly paid out 
as a dividend and partly  as decided by the General Meeting  of the OeNB . The ECB understands 
that, in connection with producing its annual accounts , the OeNB needs to take into account 
potential financial risks , in particular its obligation to exchange banknotes against fractional coins, 
fractional coins against other fractional coins and fractional coins against banknotes (see 
Section 62(3) of the NBG ). 
1.5 To safeguard the satisfaction of redemption obligations  in the future , the State will indemnify the 
Mint for relevant  payments made by it provided they cannot be covered from the Mint’s revenues  
relating to the issuance of coins , taking into account the minting expenses and the proceeds from 
melting down the coi ns. According to the draft Section 3a( 1) of the Act on coinage, t he State will 
indemnify the Mint for redeeming all kinds  of euro coins, whether issued by the M int or another 
Member State.  In this respect , the draft law limits the amount of indemnification to the value of the 
amount of coins in circulation that were minted by the Mint. The ECB understands that the Mint will 
request indemnification once a year after the end of the previous calendar year . For this purpose,  
the draft law requires the Mint and the Minister of Finance to conclude an  agreement within three 
months after the publication of the adopted  law in the Official Gazette.  
1.6 The draft law also authorises the Minister of Finance to make payments to the Mint up to a total 
amount of 30%  of the value of coins in circulation  during the year, if redemptions would otherwise 
demonstrably endanger the Mint’s  existence . This provision only authorises the Minister o f Finance 
to make such payments, but does not oblige the Minister to do so. Furthermore, this possibility is 
subject to the necessary  authorisation of the Minister o f Finance in the Act on Federal financing.  To 
incorporate this new S tate guarantee into the State’s liability framework, the draft law increases the 
                                                 
2  See the A nnual Report 2014 of the Mint, p.  76. 
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3 State’s overall liability amo unt by EUR 2 billion in the Act on the upper limit of the State g uarantee.  
 
2. General observations  
2.1 According to Article 128(2) of  the Treaty, the right to issue euro coins rests with the Member 
States . Therefore, it is up to each euro area Member State to specif y the legal issuer of the euro 
coins. In most euro area Member States issuance of euro coins is undertaken by the State . In five 
of those States the NCBs act as agents for their treasuries with regard to minting euro coins and 
putting them into circulation3. In five euro area Member States4 coin issuance is a competence of 
the NCB .  
2.2 The Austrian situation is unique  insofar as the issuing authority for coins is the Mint , a wholly 
owned subsidiary of the OeNB . In this respect, the concept of c entral bank independence, in 
particular financial independence,  and the prohibition on  monetary financing,  as appli cable  to the 
OeNB , are also relevant as far as the Mint  is concerned. Therefore, it has to be assessed whether  
any third party is able to exercise direct or indirect influence not only over an NCB’s tasks but also 
over its ability to fulfil its mandate in terms of having appropriate financial resources5. In this 
respect , the ECB understands that  the draft law’s indemnification scheme aims at  ensur ing that the 
Mint is adequately protected against the risk arising from the Mint’s redemption obligations.   
2.3 In connection with the prohibition o n the Mint establishing provisions relating to the obligations 
pursuant to Sections  8(4), 10, 11 and 14 of the Act  on coinage, t he ECB  notes  that, according to 
generally accepted accounting principles , an entity is required to establish provisions in respect of 
obligations of uncertain timing or amount . 
2.4 The ECB understands that the OeNB needs to conduct a valuation of its participating interest in the 
Mint following the liquidation of the Mint’s revenue reserves and the transfer of its  profit to the 
OeNB.  
2.5 Furthermore, the ECB notes that the retroactive application of the draft law as of 31 December  2015 would have considerable implications for both the Mint’s and the OeNB’s 
annual accounts.  
 
3. Central bank independence and the prohibition on monetary financing  
3.1  Central bank independence  
3.1.1  Article 130 of the Treaty lays down that financial in dependence is a key aspect of the principle of 
central bank independence for the members of the European System of Central Banks. The ECB 
emphasises that any task undertaken by the OeNB, including by the Mint as the OeNB’s wholly -
                                                 
3 Greece, Finland, Ireland, Luxembourg and Malta.  In the Member S tates where the NCBs act as agents for their 
treasuries, the NCBs are reimbursed in full for the cost of minting and/or putting eu ro coins into circulation.  
4 Cyprus, Estonia, Latvia, Lithuania and Slovakia.  
5 See the ECB’s 2014 Convergence Report, p. 26, available on the ECB’s website at www.ecb.europa.eu.  
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4 owned subsidiary, must  be compatible with the OeNB’s institutional and financial independence, to 
safeguard the proper performance of its tasks under the Treaty and the Statute of the European 
System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’) , 
as well as its national tasks. The principle of central bank independence also requires, inter alia, 
that Member States do not put their NCBs , including their subsidiaries,  in a position where they 
have insufficient financial resources and inadequate net equity to carry out their tasks6. 
3.1.2  While th e draft law prohibits the Mint from establishing  provisions and revenue reserves to meet its 
redemption obligations and requires the liquidation of the existing revenue reserve s, the ECB 
understands t hat the transfer of the liquidat ed revenue  reserve via the OeNB to the State as part of 
the OeNB’s profit distribution will be subject to the rules on profit allocation laid down in the NBG . 
The ECB also understands that the above -mentioned prohibitions  are without prejudice to the 
OeNB ’s ability  to independently create and build up adequate financial buffers commensurate with 
the level of risks arising from its activities, including those performed through a  wholly -owned 
subsidiary.  
3.1.3 While the draft law provides that the State will indemnify the Mint for relevant  payments made by it , 
provided they cannot be covered by the Mint’s revenues  relating to the issuance of coins , and 
taking into account the minting expenses and the proceeds from melting down the coins , the ECB 
emphasi ses that any indemnification scheme has to ensure that the OeNB’s financial 
independence is not compromised. The OeNB must have at all  times sufficient means to fulfil its 
tasks  and, hence, a ny limitation of the indemnification must not lead to a situation in which the 
OeNB does not have sufficient means to fulfil its obligations . In this respect , the ECB understands 
that the draft law’s indemnification scheme aims at   ensur ing that the Mint is adequately protected 
against the risk  arising from the Mint’s redemption obligations  by extending the amount of 
indemnification to the value of the amount of coins brought into circulation that were minted by the 
Mint.  
3.1.4 While – additionally and without prejudice to the Minster of Financ e’s obligation to indemnify the 
Mint – the draft law enables the Min ister of Finance to make immediate payments  (up to a limited 
amount)  to the Mint if redemption payments would otherwise endanger the Mint’s existence, it does 
not require the Minister to m ake such payments, which also depend on the necessary  authorisation 
of the Minister in the Act on Federal financing. Accordingly, it is uncertain whether the Mint will 
receive the necessary financial support from the State if needed.  Also in this context, the OeNB’s 
financial independence has to be preserved. In this respect , the ECB acknowledges that the 
indemnification arrangements under the draft law , including the increase in the State’s overall 
liability amount by EUR 2 billion, aim at  support ing the financial position of the Mint and , thereby, 
the OeNB .  
 
                                                 
6  See Opinion CON/2014/56. All ECB opinions are available on the ECB ’s website at www.ecb.europa.eu.  
ECB -PUBLIC  
5 3.2 Prohibition on monetary financing  
3.2.1  The monetary financing prohibition is laid down in Article 123(1) of the Treaty  and replicated in 
Article 21.1 of the Statute of the ESCB, and prohibits overdraft facilities or any other type of credit 
facility with the ECB or the NCBs in favour of Union institutions, bodies, offices or agencies, central 
governments, regional, local or other public authorities, other bodies governed by public law, or 
public u ndertakings of Member States. The precise scope of application of the monetary financing 
prohibition is further clarified by Council Regulation (EC) No 3603/937.  
3.2.2  Against the specific historic background of the Mint , the issuance of euro coins by it has to be 
considered a S tate task  for the purpose of assessing compliance with the monetary financing 
prohibition.  The OeNB must be fully covered against any potential losses arising from the 
discharge of such a task. The ECB welcomes the fact that the Mint is entitled to keep the revenues 
related to the issuance of coins. However, the ECB understands that there is a risk of a loss by  the 
Mint connected to its redemption obligations  regarding all euro coins and not only those issued by 
the Mint. In view of the understanding that the Mint will request indemnification once a year , the 
agreement to be concluded between the Mint and the Minist ry of Finance should provide for the 
indemnification to be paid in a timely manner and promptly after the establishment o f a loss to 
ensure compliance with the monetary financing prohibition . The ECB understands that the possible 
immediate payments by the Government  in cases wh ere the Mint’s existence would otherwise be 
endangered aim at avoiding that any central bank money is used to cover any losses arising from 
the redemption obligations.  
 
This opinion will be published on the ECB’s website.  
  
Done at Frankfurt am Main, 25 January  2016 . 
 [signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                 
7  Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of the 
prohibitions referred to in Articles 104 and 104b (1) of the Treaty (OJ L 332, 31.12.1993, p. 1). See also Opinion 
CON/2014/56.