EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 31 August 2004 
at the request of Sveriges Riksbank on two dra ft legal acts amending the Sveriges Riksbank Act 
concerning certain matters related to th e circulation of banknotes and coins 
(CON/2004/28)  
 1. On 25 June 2004, the European Central Bank (ECB)  received a request from Sveriges Riksbank for 
an opinion on two legislative proposals from Sveriges  Riksbank to the Swedis h Parliament to adopt 
two draft legal acts amending the Sveriges Riksbank Act  (1988:1385) (hereinafter the ‘legislative 
proposals’).  
2. The ECB’s competence to deliver an opinion is based on 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 
Central Bank by national authorities re garding draft legislative provisions
1 as the legislative 
proposals relate to means of payment and the Sw edish central bank. In accordance with the first 
sentence of Article 17.5 of the Rules of Procedur e of the European Central Bank, the Governing 
Council has adopted this opinion. 
3. One of the two legislative proposals is intended to  enhance the ways in which Sveriges Riksbank 
may cooperate with third parties in the handling and circulation of banknotes and coins (hereinafter 
the ‘draft act on cash distribution’). The other legislative proposal introduces a prohibition on the circulation of banknotes and coins that have been changed or otherwise tampered with (hereinafter 
the ‘draft act on the prohibition on the circulation of changed banknotes and coins’). The background to and rationale behind the legisla tive proposals are explained in the explanatory 
memoranda which form part of them. 
4. Sweden is a Member State with a derogation and the ECB requirements regarding the issue of euro 
banknotes by the national central banks (NCBs) of th e Member States that have adopted the euro 
do not apply to Sveriges Riksbank before the adoption by Sweden of the euro . The regime 
applicable within the Eurosystem for the issu e of banknotes will however also apply to Sveriges 
Riksbank as soon as Sweden adopts the euro and it becomes a fully integrated part of the 
Eurosystem. The ECB would therefore wish to take this opportunity to mention that the 
                                                 
1  OJ L189, 3.7.1998, p. 42. 
2 Eurosystem is itself in the process of developing its own set of principles in the important area of 
euro banknote issuance, as further explained in paragraph 7 below.  
 
The draft act on cash distribution 
5. The ECB notes that the draft act on cash distribution is proposed in the context of a new cash 
handling model that was introduced by Sveriges Riksbank in February 20032. According to this 
new model, the cash is delivered by th e Riksbank to its subsidiary company Svensk  
Kontantförsörjning AB  (SKAB). SKAB is fully owned and c ontrolled by the Riksbank and acts as 
a cash wholesaler. The ECB understands that SKAB is entrusted, on th e one hand, with the 
issuance and acceptance of cash for deposits with  and withdrawals from banks’ accounts with the 
Riksbank and, on the other hand, with authenticity  and fitness sorting as well as destruction of 
banknotes. Furthermore, SKAB has the task of stor ing logistical and strategic stocks. Sveriges 
Riksbank is responsible for overseeing that destru ction and fitness sorting are carried out in a 
secure and correct manner. The ECB further notes that, under the new cash handling model, SKAB 
only receives banknotes and coins when a net surplu s of cash exists among cash retailers (i.e. cash-
in-transit companies and counting centers). In or der to have banknotes returned to SKAB, these 
must be delivered in standard packages and so rted for fitness and authentication. From the 
explanatory memorandum3, the ECB understands that SKAB branches are faced with an 
overcapacity situation and, at the same time, that  there are strong incentives for private parties to 
deliver to the Riksbank any excess cash at thei r depositories in order to avoid having to pay 
unnecessary interest. This, in turn, leads to situa tions where these parties transport excess cash over 
long distances to avoid paying interest, when these transports are not otherwise justified, at great societal costs and with significant security risks. 
6. In order to address the above problem, the draft act on cash distribution c ontains a proposal for 
amendments to Chapter 5, Section 3 of the Riksba nk Act aiming at a more efficient circulation of 
cash. Chapter 5, Section 3 states that Sveriges Ri ksbank shall be responsible for the supply of 
Sweden’s banknotes and coins. In this respect , the preparatory work on the Riksbank Act 
(SOU 1986:22, p. 108) states that cash supply, comprising both the issue and distribution of banknotes and coins, belongs to the core tasks of central banks, which shall be laid down by legislation. The draft act on cash distribution ame nds Chapter 5, Section 3 of the Riksbank Act by 
introducing a clarification that Sveriges Riksba nk may carry out its tasks with regard to the 
distribution of banknotes and coins in cooperation with third parties. Moreover, it enables the 
Riksbank to compensate or provide credit free of charge to entities that separate and store 
banknotes and coins in accordan ce with its instructions. 
                                                 
2  See Section 2.3 of the explanatory memorandum concerning the draft act on cash distribution. 
3  See Section 3.3 of the explanatory memorandum concerning the draft act on cash distribution. 
3 7. The ECB shares the view that the issue of banknotes be longs to the core tasks of central banks and, 
in the case of the Eurosystem, considers that the issu e of euro banknotes is a public task attributed 
to the ECB and the Eurosystem NCBs by Article  106(1) of the Treaty establishing the European 
Community and Article 16 of the Statute of the European System of Central Banks and of the European Central Bank
4. The ECB is currently in the process of  elaborating certain relevant aspects 
of the regime for the issue of euro banknotes with regard to (i) the putting of euro banknotes into 
circulation; (ii) the taking of individual banknotes ou t of circulation; and (iii) the withdrawal of 
types or series of banknotes from circulation5, in particular the involvement of third parties in this 
activity. In this context, the ECB is furthermor e considering the competence to decide on the 
sorting standards, the rules on the issuance and return of banknotes and regarding the 
denominations, specifications, repr oductions, exchange and withdrawal  of banknotes, as well as the 
competence to take all necessary legal measures to protect the integrity of euro banknotes as a means of payment. Once these deliberations have been concluded within the Eurosystem, the ECB 
would be pleased to share the outcome with Sver iges Riksbank, including the criteria that it may 
establish for the cooperation with third parties in th e field of euro banknote issuance, in view of the 
prospective adoption of the euro by Sweden.  
 
The draft act on the prohibition on the circulation of changed banknotes and coins 
8. The draft act on the prohibition on the circulation of changed banknotes and coins aims at a 
phenomenon referred to as ‘advertisement coins’. During the spring of 2004, a company in the advertisement business circulated ordinary coins i ssued by the Riksbank, on to which it had applied 
an adhesive label with a marketing message. Th e coins are therefore used as vehicles for these 
marketing messages once they are reintroduced into circulation. According to information in the 
press, an individual marketing campaign may involve as many as 100,000 one krona coins and it is not known to what extent the adhesive labels may damage the counting machines for coins and 
other coin operated machines. The relevant e xplanatory memorandum considers that the Swedish 
legislation is insufficient in this regard and it is therefore proposed in the draft act on the 
prohibition on the circulation of changed banknotes and coins that a prohibition is added to the Riksbank Act against the circulation of banknotes a nd coins which have been changed or otherwise 
tampered with. In order to enforce this new prohi bition, Sveriges Riksbank is entitled to issue more 
detailed regulations, including the possibility of se tting financial penalties which would apply if the 
prohibition was breached.  
9. The ECB notes that the phenomenon of adverti sement coins is not unknown elsewhere and 
legislation addressing this issue exists in other countries (e.g. France, Belgium and Poland). The 
                                                 
4   See also Decision ECB/2001/15 of 6 December 2001 on the issue of euro banknotes, OJ L 337, 20.12.2001, p. 52. 
5  See Article 5 of Decision ECB/2003/4 of 20 March 2003 on the denominations, specificati ons, reproduction, exchange 
and withdrawal of euro banknotes , OJ L 78, 25.3.2003, p. 16. 
4 ECB welcomes the draft act on the prohibition on the circulation of ch anged banknotes and coins 
as it constitutes a legal measure to deter behaviour  which affects the integrity of banknotes and 
coins. The ECB notes that, in th e case of euro banknotes, wher e NCBs know or have sufficient 
reason to believe that they have been intenti onally mutilated or damaged, the Eurosystem NCBs 
shall refuse to exchange and shall withhold them  as per Article 3(3)(a) of Decision ECB/2003/4 of 
20 March 2003 on the denominations, specifications , reproduction, exchange and withdrawal of 
euro banknotes. The ECB suggests in this regard that the effectiveness of the draft act on the 
prohibition on the circulation of changed banknotes  and coins could be further enhanced if a 
similar provision was included in it.  
10. The ECB confirms that it has no objection to the competent national authorities making this 
opinion publicly available at their discretion. Th is opinion will be published on the ECB’s website 
six months after the date of its adoption. 
  Done at Frankfurt am Main, 31 August 2004.  
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET