EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 25 September 2007 
at the request of the President of Narodowy Bank Polski  
on a draft ordinance on the method and procedur e for counting, sorting, packaging and labelling 
packaging units of banknotes and coins, and in conducting activities related to the supply of 
banknotes and coins to banks 
(CON/2007/28) 
 Introduction and legal basis
 
On 24 July 2007 the European Central Bank (ECB) received a request from the President of Narodowy 
Bank Polski (NBP) for an opinion on a draft ordinance of the NBP’s President on the method and procedure for counting, sorting, packaging and labe lling packaging units of banknotes and coins, and in 
conducting activities related to the supply of banknotes and coins to banks (hereinafter the ‘draft 
ordinance’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the first, second and third indents of Article 2(1) of Council 
Decision 98/415/EC of 29 June 1998 on the consu ltation of the European Central Bank by national 
authorities regarding draft legislative provisions
1, as the draft ordinance relates to currency matters, 
means of payment and to the NBP. In accordance with  the first sentence of Article 17.5 of the Rules of 
Procedure of the European Central Bank, th e Governing Council has adopted this opinion. 
 1. Purpose of the draft ordinance The draft ordinance is intended to replace the current NBP rules concerning commercial banks’ 
obligations with respect to counting, sorting and packaging of banknotes and coins
2. Particularly in view 
of the need to adjust the existing legal requireme nts to the increased automation of cash handling 
procedures3, the draft ordinance introduces the following ke y modifications: (i) streamlining regulatory 
                                                 
1 OJ L 189, 3.7.1998, p. 42.  
2  Ordinance No 8/2001 of NBP’s President of 27 June 2001 on th e method and procedure for counting, sorting, packaging 
and labelling packaging units of banknotes and coins, and in  conducting activities related to the supply of banknotes and 
coins to banks (Dz.Urz. NBP of 17 July 2001 No 10, Item 22,  as amended). The statutory basis for the adoption of the 
draft ordinance is contained in Article 68(2) of the La w of 29 August 1997 on banking (c onsolidated text: Dz.U. of 
13 May 2002 No 72, Item 665 , as amended; hereinafter: ‘Law on banking’). 
3  See the first paragraph of the explanatory memorandum accompanying the draft ordinance, and the second paragraph of 
the letter from NBP’s President of 18 July 2007 requesting the ECB’s opinion. 
2 obligations as regards the manual counting and sorting of banknotes4; (ii) modifying relevant technical 
standards, such as those related to packaging banknotes in packets (100 pieces), half-bundles (500 pieces) 
and bundles (1000 pieces)5; and (iii) facilitating a decrease in st ocks of banknotes held by commercial 
banks, inter alia  by allowing packaged banknotes of certain denominations to be lodged with NBP’s 
regional branches in half-bundles6.  
 2. General observations 2.1 While Poland is a Member State with a de rogation and the ECB requirements regarding the 
organisation of national cash cycles in Member St ates that have adopted the euro currently do not 
apply to NBP, these requirements will become app licable to NBP once Poland adopts the euro and 
NBP becomes a fully integrated part of the Euro system. As a general comment, the ECB notes that 
the NBP’s provisions on the handling of banknotes di ffer to some extent from Eurosystem practices 
and that these provisions will have to be aligned with the Eurosystem standards before Poland 
adopts the euro. The ECB understands that the main in tention of the draft ordinance is to adapt the 
NBP’s legislation to the growing automisation of the cash handling operations. The ECB assumes 
that the draft ordinance may be an adequate legisl ative instrument to achieve this specific purpose. 
However, the ECB would have welcomed at the same  time a more consistent approach to achieve a 
high level of harmonisation with the Eurosystem standards. The ECB also considers that the 
explanatory memorandum to the draft NBP ordinance could include an appropriate reference to the 
necessary further evolution of NBP’s regulatory frame work in view of the future adoption of euro. 
2.2 The ECB furthermore notes that the draft ordina nce forms part of a wider body of the regulatory 
framework containing also NBP’s legislative in struments covering: (i) rules on withdrawal from 
circulation of worn or damaged banknotes and coins
7; and (ii) rules on seizure of suspected 
counterfeits8. Legal certainty and clarity could be enha nced by consolidating all such Polish cash 
handling rules, in a single administrative instrume nt. The ECB notes that this is currently difficult 
to achieve due to the existence of separate statut ory bases for the regulation of the various elements 
of NBP’s cash handling regulation. While greater legal coherence may currently be achieved by 
way of introducing clear cross-references between the various existing provisions, a uniform cash 
                                                 
4  Paragraph 2(3) and paragraphs 6 to 9 of the draft ordinance. 
5  Paragraphs 10 to 16 of the draft ordinance. 
6  Paragraph 29(3) of the draft ordinance. 
7  Ordinance No 1/2003 of NBP’s President of 15 January 2003 laying down the detailed rules of exchange of currency 
items that due to their use or damage ha ve ceased to be legal tender on the territ ory of the Republic of Poland (Dz.Urz. 
NBP of 17 January 2003 No 1, Item 1, as amended). The statutor y basis for the adoption of this ordinance is contained in 
Article 34(2) of the Law on Narodowy Bank Polski of 29 August 1997 (consolidated text: Dz.U. of 1 April 2005 No 1, 
Item 2, as amended; hereinafter, the ‘NBP Statute’). 
8  Ordinance of NBP’s President of 31 August 1989 on the seiz ure of counterfeit currency (M.P. of 27 September 1989 
No 32, Item 255, as amended) . The statutory basis for the adoption of th is ordinance is currently contained in 
Article 35(3) of the NBP Statute. Cf. resolution No 19/ 2004 of the NBP Management Board of 22 April 2004 amending 
the resolution on the introduction of the Organisational By-l aws of Narodowy Bank Polski (as regards creation of the 
National Analysis Centre, the Coin Nati onal Analysis Centre and the National Counterfeit Centre within NBP’s Head 
Office. The penal sanctions for currenc y counterfeiting are contained in the Chapter XXXVII of the Penal Code of 
6 June 1997 (Dz.U. of 2 August 1997 No 88, Item 553, as amended). 
3 handling regulation should be introduced in view of  the future adoption of euro, on the basis of a 
single statutory delegation. Moreover, as regard s the euro banknotes and coins such framework 
needs to comply with the directly applicable  provisions of Council Regulation (EC) No 1339/2001 
of 28 June 2001 extending the effects of Re gulation (EC) No 1338/2001 laying down measures 
necessary for the protection of th e euro against counterfeiting to those Member States which have 
not adopted the euro as their single currency (t his ECB opinion does not assess such compliance)9. 
2.3 Under Article 106 of the EC Treaty, the ECB has the exclusive right to authorise the issue of 
banknotes within the Community, whereas the coins are issued by the Member States subject to 
approval by the ECB of the volume of the issu e. Consequently, as a general principle, the 
Eurosystem’s regulatory competence concerns only banknotes. Hence, in view of the accession of national central banks (NCBs) to the Eurosyst em, the ECB supports a clear and consistent 
separation between national rules re lating to banknotes and rules rela ting to coins. Also the draft 
ordinance, and more generally the NBP’s ove rall cash handling framework, would benefit from 
introducing such consistent internal separati on between rules concerning banknotes and coins, 
respectively
10. This would in time facilitate the lega l convergence of the Polish legislative 
framework, necessary to become a full par ticipant in economic and monetary union. 
 3. Alignment with the Eurosystem ’s Banknote Recycling Framework  
3.1 The draft ordinance regulates, among others, the detection of counterfeits and fitness sorting of 
banknotes ensuring that worn or defective banknotes that are unfit for circulation, and banknotes where there is sufficient reason to believe that  they are counterfeit, are duly withdrawn from 
circulation
11. In the view of Poland’s future adoption of  euro and the related general obligation to 
align Polish law with the law of the Eurosystem12, the ECB would welcome already establishing in 
the draft ordinance a legal framework at the nati onal level that is consistent with the ECB’s 
‘Framework for the detection of counterfeits a nd fitness sorting by credit institutions and other 
professional cash handlers’ (hereinafter the ‘Banknote Recycling Framework’ or the ‘Framework’)
13.  
3.2 The Banknote Recycling Framework aims to implement a common policy for the recycling of 
banknotes by credit institutions and other professiona l cash handlers, so as to contribute to 
                                                 
9  OJ L 181, 4.7.2001, p. 11. The provisions of Regulati on (EC) No 1339/2001 are currently reflected in the Polish law 
provisions specified in footnote 8 above. 
10  Currently the draft ordinance separates banknote and coin rule s only to a certain extent. As an example, in Section II 
(‘Polish currency’) of the draft ordinance separate chapters  cover packaging and labelli ng in relation to banknotes 
(Chapters 2-3) and in relation to coins (Chapters 4-5), while th e provisions relating to counting and sorting, as well as to 
cash lodging and cash discrepancies cover, for the most part, both banknotes and coins (see Chapter 1 and 6 to 7). 
11  Paragraphs 2, 6 to 9 and 35 to 39 of the draft ordinance. The draft ordinance provides in the case of detecting a banknote 
in relation to which there is sufficient reason to believe that  it is counterfeit that the re levant organisational unit of a 
commercial bank is obliged to act in acco rdance with the principles set in the dr aft ordinance and in separate provisions, 
i.e. the Ordinance on the seizure of c ounterfeit currency (see footnote 8 above). 
12  See Article 121(1) of the Treaty. 
13  Document available on the ECB’s website. The equivalent rules for euro coins are contained in the Commission’s 
Recommendation of 27 May 2005 concerning authentication of euro  coins and handling of euro coins unfit for circulation 
(C(2005)1540 final). 
4 maintaining the quality and authenticity of euro banknotes in circulation. As issuing authorities, the 
ECB and the NCBs of the Member States that have adopted the euro consider it to be of utmost 
importance for euro banknotes in circulation to be  in good physical condition so that the general 
public, as well as professional cash handlers, can check  their authenticity in a reliable and proper 
manner and separate authentic banknotes from counterfeits or suspected counterfeits. 
3.3 Under the Banknote Recycling Framework14, credit institutions and other professional cash 
handlers may re-issue euro banknotes to customers only if these banknotes are duly checked for authenticity and fitness. As a general rule, the au thenticity and fitness checks of the banknotes to be 
recycled can be performed either by banknote ha ndling machines successfully tested by NCBs, or 
by trained staff members. However, the banknotes may only be returned to circulation via automated teller machines (ATM) or other customer-o perated devices if they have been checked for 
both authenticity and fitness by  banknote handling machines successfully tested by an NCB. 
Banknotes which have been checked for authenticity by trained staff members of a cash handler 
without the use of successfully tested banknote handling equipment, e.g. manually, may not be returned to circulation via ATMs or other cust omer-operated devices, but may only be re-issued 
over the counter after being checked for fitness. 
3.4 Under the draft ordinance the definition of ‘c ounting of banknotes’ includes verification of their 
authenticity, and ‘sorting of ba nknotes’ consists in separating banknotes fit for circulation from 
those unfit for circulation due to wear or tear damage
15. Both counting and sorting of banknotes can 
be effected manually or with the use of sorting machines16. The draft ordinance does not, however, 
include any provisions corresponding to the Framew ork’s requirements that would provide that 
only the banknotes checked by banknote handling machines for both authenticity and fitness may 
be returned to circulation via ATMs  or other customer-operated devices. 
3.5 Moreover, the ECB notes that the draft ordinance contains a definition of ‘banknotes unfit for 
circulation’, which covers, among ot hers, banknotes which are tattered, torn partially or entirely, 
backed with an adhesive, excessively soile d, stained or damaged in any other way17. The above 
description does not correspond with the Eurosystem’s minimum standards for manual and automated fitness sorting of euro banknotes by  credit institutions and other professional cash 
handlers that are contained in the Annex to the Banknote Recycling Framework
18. Further, the ECB 
notes that the draft ordinance’s criteria for qua lifying banknotes as unfit for circulation are without 
prejudice to the separate NBP’s provisions rela ting to the exchange of worn or damaged 
banknotes19. In view of preparations for the future ad option of the euro by Poland, the ECB invites 
                                                 
14  See points 2.1.2. and 2.1.3. of  the Banknote Recycling Framework. 
15  Paragraph 6(1) to (2) of the draft ordinance. 
16  Paragraph 7 of the draft ordinance. 
17  Paragraph 6(4) of the draft ordinance. 
18  See Annex to the Banknote Recycling Fr amework ‘Minimum standard s for fitness sorting of euro banknotes by credit 
institutions and other professional cash handlers’, available on request from the ECB. 
19  See Ordinance No 1/2003 referred to in footnote 7 above. 
5 the NBP to already consider the overall alignment of such NBP’s standards for fitness sorting with 
the Banknote Recycling Framework and its Annex. 
3.6 The ECB notes that the draft ordinance applies only to domestic banks, branches of European 
Union credit institutions and branches of foreign (i.e. non-EU) banks20 as well as to NBP itself21, 
whereas the Banknote Recycling Framework applies to all professional cash handlers, i.e. both 
credit institutions and other professional cash handl ers. The ECB understands that under Polish law 
the NBP has no powers to regulate non-bank entities22, such as non-bank cash handlers. Taking into 
account the potentially increasing role of non-bank cash handlers23 in the Polish cash cycle, the 
ECB therefore recommends taking appropriate steps to ensure uniform application of Eurosystem 
standards contained in the Banknote Recycling Fr amework to all relevant categories of cash 
handling entities. Hence, in addition to fully aligning with the Framework of the NBP’s own 
legislative instruments directed to banks, which w ould be an important firs t step, other appropriate 
legislative or contractual instruments may need to be introduced for the remaining categories of 
cash handlers. 
 This opinion will be published on the ECB’s website.  Done at Frankfurt am Main, 25 September 2007. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                 
20  The term ‘credit institutions’ under Polish law only relates to EU credit institutions from outside Poland. Polish credit 
institutions are legally referred to as ‘banks’ (this definition does not cover the Polish variety of credit unions, operating 
on the basis of the Law of 14 December 1995 on cooperative sa vings and loan associations (Dz.U. of 4 January 1996 
No 1, Item 2, as amended)). Non-EU banks are referred to as ‘foreign banks’ (A rticle 2 and Article 4(1)(17) to (20) of the 
Law on banking). 
21  Paragraph 1(2) of the draft ordinance. 
22  See Article 68(2) of the Law on banking in conjunction with  Article 92 of the Constitution of the Republic of Poland of 
2 April 1997 (Dz.U. of 16 July 1997 No 78, Item 483, as amended); cf. judgment of the Constitutional Tribunal of 
28 June 2000 in Case K25/99 (Dz.U. of 7 July 2000 No 53, Item 648). 
23  Including, among others, specialised cash handling service providers, bureaux de cha nge, retailers, etc. Operations in the 
area of banknotes counting, sorting and packaging may be outs ourced by banks to other entit ies, subject to supervisory 
clearance under Article 6a(1)(2) in conjunction with Article  6d of the Law on banking; cf. point II of the NBP’s 
explanatory note NB-BPN-I-022-70/04 of 3 August 2004 on the  a pplication of certain provisions  related to outsourcing.