EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 27 June 2014  
on the processing, distribution and protection agai nst counterfeiting of banknotes and coins in 
Hungary  
(CON/2014/48) 
 
Introduction and legal basis 
On 4 June 2014, the European Central Bank (ECB) received a request from the Magyar Nemzeti Bank 
(MNB) for an opinion on two draft MNB decrees: (i) on the amendment of rules on the processing and distribution of banknotes, and on technical tasks relating to the protection of banknotes against 
counterfeiting (hereinafter the ‘draft banknote decr ee’); and (ii) on the amendment of rules on the 
processing and distribution of coins,  and on technical tasks relating to the protection of coins against 
counterfeiting (hereinafter the ‘draft  coin decree’; the draft banknote decr ee and the draft coin decree are 
hereinafter jointly 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 second indent of Article 2(1) of Council Decision 
98/415/EC
1, as the draft decrees relate to means of pa yment. In accordance with  the first sentence of 
Article 17.5 of the Rules of Procedure of the Eur opean Central Bank, the Governing Council has adopted 
this opinion. 
 1. Purpose of the draft decrees 
1.1  According to the explanatory memorandum to th e draft decrees, the MNB has reviewed its decree 
on banknotes
2 and its decree on coins3 and proposes several amendments for the purposes of: 
(i) ensuring the sound functioning of banknote handli ng machines used by credit institutions, the 
postal service and other entities processing cash (her einafter collectively referred to as ‘cash 
processors’) in verifying the authenticity and fitn ess of Hungarian forint banknotes; (ii) enhancing 
the protection of banknotes against counterfe iting; (iii) ensuring the quality of banknotes 
recirculated by cash processors; (iv) improving the security of banknotes and coins in circulation; and (v) ensuring the availability for retail customer s of certain cash distribution activities carried 
                                                 
1  Council Decision 98/415/EC of 29 June 1998 on the consultati on of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
2  MNB Decree 11/2011 (IX. 6.) on the processing and distribut ion of banknotes and on techni cal tasks relating to the 
protection of banknotes against counterfeiting (hereinafter the ‘decree on banknotes’). 
3  MNB Decree 12/2011 (IX. 6.) on the processing and distributio n of coins and on technical ta sks relating to the protection 
of coins against counterfeiting (her einafter the ‘decree on coins’). 
ECB-PUBLIC  
2 out by credit institutions and the postal service.  The explanatory memorandum also outlines that 
amendment of the decree on banknotes and the decr ee on coins has become necessary in the light 
of the recently adopted Law on the Magyar Nemzeti Bank4, which, inter alia, governs the MNB’s 
authority to issue banknotes and coins, as well as its  competence to protect the Hungarian forint 
against counterfeiting.  
1.2  The specific amendments effected by the draft decrees include: (i) an incr ease to 100 per cent in the 
ratio of forint banknotes to be checked by cash processors using banknote handling machines 
successfully tested by the MNB,  with an exception for banknotes that are damaged, difficult to 
identify, or withdrawn from circulation; (ii) th e introduction of stricter rules for operators of 
banknote handling machines; (iii) the extension of the scope of the data reporting requirements for 
entities wishing to operate banknote handling machin es, in order to provide the MNB with more 
information for monitoring purposes; (iv) the introduction of data reporting requirements for manufacturers of banknote handling machines in Hungary and distributors of banknote handling machines manufactured outside Hungary; (v) fu rther updates to the recently amended rules 
applicable to the business contingency plans of  credit institutions and post offices; (vi) the 
introduction of new rules on the exchange of ban knotes and coins withdrawn from, or unfit for, 
circulation; and (vii) amendments necessary to reflect the amendments introduced by 
Decision ECB/2012/19
5. The draft decrees also update refe rences to applicable Hungarian 
legislation. 
 2. General observations  2.1 The ECB welcomes the aim of the draft decrees to  facilitate the improvement of the security of 
banknotes and coins in circulation in Hungary, as well as the efforts of the MNB to enhance the identification of counterfeit Hungarian forint ba nknotes and coins, and Hungarian forint banknotes 
and coins unfit for circulation. Nevertheless, having  regard to the fact that an amendment to the 
decree on banknotes was adopted earlier this year
6, the need for a stable legal framework governing 
banknotes and coins must be emphasised. 
2.2 As previously observed7, Hungary is a Member State with a derogation pursuant to Article 139 of 
the Treaty and the ECB’s requirements regarding the recirculation of euro banknotes in Member 
States that have adopted the euro do not apply to the MNB8. These requirements will apply once 
Hungary adopts the euro and the MNB becomes a fu lly integrated member of the Eurosystem. In 
this respect, the ECB welcomes the MNB’s propo sed alignment of the decree on banknotes with 
                                                 
4  Law CXXXIX of 2013 on the Magyar Nemzeti Bank. 
5  Decision ECB/2012/19 of 7 September 2012 amending Decision  ECB/2010/14 on the authenticity and fitness checking 
and recirculation of euro banknotes (OJ L 253, 20.9.2012, p. 19). 
6  See MNB Decree 2/2014 (II. 14.). 
7  See Opinions CON/2013/89, CON/2011/59, CON/2008/ 90, CON/2006/2, CON/2005/19 and CON/2005/3. All ECB 
opinions are published on  the ECB’s website at www.ecb.europa.eu. 
8 See, in particular, Opinions CON/2013/89, CON/2011/59 and CON/2008/90. 
ECB-PUBLIC  
3 Decision ECB/2012/9 and notes that this is in accord ance with a suggestion made by the ECB in a 
previous opinion9 on Hungarian banknotes. 
2.3 The ECB reiterates its previous observa tions on the MNB’s currency-issuing operations10 and urges 
the Hungarian legislator to consider addressing ob servations made in past ECB opinions and in the 
Convergence Report11 which remain outstanding. This includes the avoidance of frequent changes 
to Hungarian legislation relating to the MNB12. 
 3. Specific observations 3.1 Several provisions in the draft coin decree
13 and certain provisions in the decree on coins which 
have not been amended relate to banknotes14. In a similar manner, certain provisions of the draft 
banknote decree relate to coins15. For the purposes of consistency and legal certainty, all provisions 
in the draft coin decree and in the decree on coins which solely relate to banknotes should, insofar 
as possible, be exclusively contained in the decree on banknotes, and all provisions in the draft banknote decree which solely relate to coins s hould be exclusively contained in the decree on 
coins.  
3.2 Furthermore, the definition of ‘leg al tender’ in the draft coin decree
16 is misleading as it only makes 
reference to coins, whereas banknotes are also le gal tender. This definition would benefit from 
further clarification. The corresponding definition in the decree on banknotes17 would also benefit 
from clarification for the similar reason that it only makes reference to banknotes. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 27 June 2014. 
 
[signed] 
The President of the ECB 
Mario DRAGHI 
                                                 
9  See paragraph 3.3 of Opinion CON/2013/89. 
10 See paragraph 3.2.5 of Opinion CON/ 2013/56 and paragraph 2.3 of CON/2013/89. 
11 See Opinions CON/2013/71 and CON/2013/56, as well as the E CB’s Convergence Report of June 2014, in particular the 
assessment made under ‘Issue of banknotes’, p. 329. 
12 See, for example, Opinions CON/2013/56, C ON/2012/43, CON/2011/104, CON/2010/91, CON2008/83 and 
CON/2007/14. 
13  See points 8, 9, 11 and 14 of Article 1 of the draft coin decree. 
14  See, for example, point 10 of Article 1 of the decree on coins. 
15  See points 11b, 11c, 11d and 16 of Article 1 of the draft banknote decree. 
16  See point 19 of Article 1 of the draft coin decree. 
17  See point 23 of Article 1 of the decree on banknotes.