EN ECB-PUBLIC  
 
 
 OPINION OF THE EUROPEAN CENTRAL BANK 
of 29 August 2014 
on authenticity and fitness checking and recirculation of euro banknotes and coins 
(CON/2014/65) 
 
Introduction and legal basis 
On 5 August 2014, the European Central Bank (ECB) received a request from Lietuvos bankas for an 
opinion on a draft resolution setting out procedures for authenticity and fitness checking and recirculation 
of euro banknotes and coins (hereinafter the ‘draft resolution’). 
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, seco nd and third indents of Article 2(1) of Council 
Decision 98/415/EC1, as the draft resolution relates to curren cy matters, means of payment and Lietuvos 
bankas. 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 resolution 
1.1 The main objective of the draft resolution is to implement the requirements of Regulation (EC) 
No 1338/2001
2, Regulation (EU) No 1210/20103, and Decision ECB/2010/144. 
1.2 The draft resolution lays down an authorisation regime whereby the cash services department of 
Lietuvos bankas (hereinafter the ‘Cash Service’) will have administrative discretion to grant or 
deny cash handling service providers (hereinafter  ‘cash handlers’) the right to verify the 
authenticity and fitness of euro banknotes and coins prior to their recirculation. If a cash handler is 
granted such a right, it will be included in the pub lic register of cash handlers which is published on 
Lietuvos bankas’s website. 
1.3 The draft resolution also sets out requirements  for cash handlers permitted to check the authenticity 
and fitness of euro banknotes and coins and establishes procedures for monitoring the activities of 
cash handlers. Cash handlers will be obliged to re port data concerning: (a) the machines used in 
cash handling activities; and (b) the volume of euro banknotes and coins processed, sorted as unfit, 
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
2  Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro 
against counterfeiting (OJ L 181, 4.7.2001, p. 6). 
3  Regulation (EU) No 1210/2010 of the European Parliament and of the Council of 15 December 2010 concerning 
authentication of euro coins and handling of euro coins unfit for circulation (OJ L 339, 22.12.2010, p. 1). 
4  Decision ECB/2010/14 of 16 September 2010 on the authenticity and fitness checking and recirculation of euro 
banknotes (OJ L 267, 9.10.2010, p. 1). 
ECB-PUBLIC  
2 handed over as suspected counterfeit, recirculat ed and distributed via customer operated machines 
or cash dispensers. 
 
2. General observations 
2.1 The draft resolution imposes obligations on cash  handlers and seeks to safeguard the integrity of 
euro banknotes and coins as a means of payment.  The ECB generally welcom es the draft resolution 
and is confident that its provisions will suppor t the protection of euro banknotes and coins in 
circulation and thereby maintain the general pub lic’s confidence in euro banknotes and coins. 
2.2 The ECB considers it essential that any draft legislation should uphold the principle of the primacy 
and direct application of Union law on the authentication of euro banknotes and coins and the 
handling of euro banknotes and coins unfit for ci rculation. For consistency’s sake, the ECB favours 
the use in national legislation of direct referenc es to Regulation (EC) No 1338/2001, Regulation 
(EU) No 1210/2010 and Decision ECB/2010/14 or, alternatively, reproduction of their provisions without any alterations or additions
5. 
2.3 Finally, national authorities are not formally obl iged to consult the ECB on the implementation of 
the Member States’ obligation to take the necessary measures to ensure that breaches of Article 6(1) of Regulation (EC) No 1338/2001 are subject to effective, proportionate and deterrent sanctions. Notwithstanding this, the ECB believes it is beneficial to harmonise the national 
measures implementing that obligation throughout the Union to the greatest extent possible, subject 
to specific national requirements
6. 
 3. Concepts and definitions used in the draft resolution 
3.1 The concepts and definitions used in the draft resolution should be fully consistent with existing 
Union legislation. The definition of ‘legal persons’  set out in the Lithuanian language version of 
Article 4(7)(3) of the draft resolution
7 is narrower than the definition of ‘economic agents’ in 
Article 6(1) of Regulation (EC) No 1338/2001 and th erefore is not in line with that Regulation. The 
draft resolution should be amended accordingly. 
3.2 The description of entities elig ible to be included in the public register of cash handlers8 further 
limits the scope of Article 6(1) of Regulation (EC) No 1338/2001 by providing that only legal 
persons whose core business activity is related to authenticity and fitness checking and 
recirculation of euro banknotes and coins are eligible to be included in the public register of cash handlers. The ECB notes that the processing and distribution to the public of banknotes via automated teller machines (cash dispensers) may be a secondary activity – and not core business –
                                                 
5  See paragraph 2.2 of Opinion CON/2013/65. All ECB opinions are published on the ECB’s website at 
www.ecb.europa.eu.  
6  See paragraph 2.4 of Opinion CON/2011/105 and paragraph 2.3 of Opinion CON/2013/65. 
7 See Article 4(7)(3) and other relevant provisions of the draft resolution. 
8  Contained in the application form for inclusion in the public register of cash handlers (Annex 1 to the draft resolution). 
ECB-PUBLIC  
3 of some entities falling within the definition of ‘e conomic agents’ in Artic le 6(1) of Regulation 
(EC) No 1338/2001; the draft resolution should therefore be amended accordingly. 
 
4. Authorisation, the public register of ca sh handlers and powers of the Cash Service 
4.1 Only cash handlers that are included in the public  register have to carry out authenticity and fitness 
checking of euro banknotes and coins. The ECB understands that this public register may facilitate 
the monitoring and control of cash handlers’ activities in this area in Lithuania, foster transparency 
and increase consumer awareness of the rights and obligations of cash handlers. The authorisation regime under the draft resolution limits the scop e of the obligation on cash handlers to carry out 
authenticity and fitness checking to those that ha ve submitted an application to Lietuvos bankas, 
have been authorised by it for this purpose and have been included in the public register. The ECB 
notes that the authorisation regime deviates from Regulation (EC) No 1338/2001, which requires 
all cash handlers, irrespective of the need for registration, to perform authenticity and fitness 
checking of euro banknotes and coins prior to recirculation, and the draft resolution should be 
amended accordingly.  
4.2 The draft resolution also exempts certain cash handlers from the authorisation regime and the 
reporting requirements
9. Under certain conditions set out in Decision ECB/2010/1410, an NCB may 
exclude certain cash handlers from some reporting requirements. However, as noted above, Union 
acts, including ECB legal acts, require all cash  handlers to perform authenticity and fitness 
checking of euro banknotes and coins prior to thei r recirculation. The exemption of certain entities 
from the authorisation regime ‘due to the specific character of their activities’11 and the ‘limited 
cash handling operations they carry out’ is  therefore not in line with Regulation (EC) 
No 1338/2001 and Decision ECB/2010/14 to the extent  that the cash handlers will not be subject to 
the obligation to carry out authenticity and fitne ss checking of euro banknotes and coins. The draft 
resolution should be amended accordingly. 
4.3.  The ECB also notes that the power of the Cash  Service to decide which cash handlers should be 
included in the public register is of a discreti onary nature. It should be ensured that the Cash 
Service has the full range of necessary di scretionary powers under Lithuanian law. 
 5. Handover and delivery of euro banknotes and coins 
5.1 The draft resolution provides that cash handlers shall hand over to the national competent 
authorities immediately, but in any event within a maximum of 20 working days, not only euro banknotes and coins suspected to be counterfeit,  but also euro banknotes and coins unfit for 
circulation
12. The ECB recommends that the consulting authority assess the proportionality of such 
                                                 
9  Article 44 of the draft resolution. 
10  Paragraphs 3.8 and 3.13 of Annex IV to Decision ECB/2010/14. 
11  Article 44 of the draft resolution. 
12  Article 35(1) of the draft resolution. 
ECB-PUBLIC  
4 a short period for handover to Lietuvos bankas of euro banknotes and coins unfit for circulation, as 
it may unnecessarily increase the administrative burden and costs for cash handlers affected. 
5.2 Article 27 of the draft resolution provides that euro banknotes delivered directly to a cash handler 
by Lietuvos bankas do not require authenticity and fitn ess checks prior to recirculation. Article 3(4) 
of Decision ECB/2010/14 extends this exemption to euro banknotes that any national central bank has delivered directly to a cash handler. The draft provision thus limits the scope of the equivalent 
provisions of Decision ECB/2010/14 and the draft resolution should be amended accordingly
13. 
 
6. Sanctions and reporting 6.1 The ECB reiterates the importance of effective,  proportionate and deterrent sanctions for breaches 
of the rules on the authenticity and fitness checki ng and recirculation of euro banknotes and coins. 
6.2 Under the draft resolution, when non-compliance by a cash handler with relevant Union acts, 
including ECB legal acts, or the provisions of th e draft resolution is det ected, the Cash Service 
may, among other things, prohibit a cash handler from recirculating euro banknote denominations 
of the series concerned until such non-compliance is rectified
14. The ECB highlights that when the 
Cash Service prohibits recirculation in such a situation, it does so on behalf of the ECB15. 
6.3 The ECB understands that Lithuanian legislatio n provides for administrative penalties (fines) for 
failing to withdraw counterfeit euro banknotes an d coins from circulation and for failing to take 
measures to detect counterfeit euro banknotes and coins16. Authorised employees and managers of 
cash handlers are personally liable for these penalti es (fines). This regime does not fully reflect 
Regulation (EC) No 1338/2001 and Decision ECB/2010/14 as regards the range of sanctions that may be imposed for failing to carry out authenticity and fitness checking of euro banknotes and 
coins prior to recirculation. In addition, the ECB notes that nationa l legislation does not provide for 
the imposition of administrative penalties (fines) on legal entities.  
                                                 
13  Paragraph 3.3 of Opinion CON/2010/90. 
14  Articles 13(2), 19 and 41 of the draft resolution. 
15  Article 10(3) of Decision ECB/2010/14. 
16  Article 173(21) of the Lithuanian Code of Administrative Offences. 
ECB-PUBLIC  
5 6.4 As regards the data reporting deadlines set by Article 36 of the draft resolution, which are 31 July 
and 31 January of each year, the ECB recomme nds extending the reporting deadlines to end-
August and end-February in line with Article 3.9 of Annex IV to Decision ECB/2010/14.  
 
This opinion will be published on the ECB’s website.   
 
Done at Frankfurt am Main, 29 August 2014. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI