WRITTEN QUESTION E-2450/02

by Erik Meijer (GUE/NGL) to the Commission

(29 August 2002)

Subject: Rapid wear and tear of euro notes as result of savings in paper and coating

1. Can the Commission confirm that the present euro notes become creased and torn remarkably quickly and that because of wear and tear it is more difficult to detect whether the tattered notes are forgeries and that, as a result, the notes have to be replaced sooner and more often than those of the former currencies of the Member States?

2. Can the Commission also confirm that this rapid wear and tear is caused not only by the fact that the paper used is thinner and of poorer quality but also because there is no coating to prevent wear and tear?

3. Why is it no longer possible to obtain the same quality of banknotes as was previously possible for Deutschmarks or Dutch guilders? Which Member States are standing in the way of better quality?

4. What savings has the European Central Bank made by using lower grade paper and no coating and how do these savings compare with the higher costs involved in withdrawing and replacing banknotes?

5. Who ultimately incurs the additional costs referred to in paragraph 4?

6. Does the Commission intend to ask the European Central bank to change over in the near future to the production of banknotes of a quality that is not inferior to the best banknotes in circulation in the Member States of the EU up until the end 2001?

Source: Rotterdams Dagblad, 13 August 2002

Answer given by Mr Solbes Mira on behalf of the Commission

(15 October 2002)

According to Article 106 of the EC Treaty, the European Central Bank (ECB) has the sole responsability for banknotes. The answer to the questions has therefore been prepared in close relation with ECB services.

1. The Eurosystem is aware of the existence of some anecdotal complaints about the quality of EUR 5 banknotes in circulation. These are currently being assessed. The current situation at only nine months after the introduction of the euro banknotes is that overall replacement rates are rather low as many new or hardly used banknotes are in circulation. There are no indications that the lifetime of the euro banknotes would be shorter than that of the legacy currencies. However, the life times of the banknote denominations can only be accurately determined after a full life cycle of the banknotes, which is estimated to be on average three years.

2. The quality of the banknote paper is similar to the one used to produce the national legacy currency banknotes. So far, there are no indications of rapid wear and tear. Some countries may have issued certain denominations with a better resistance against soiling and wear, e.g. by varnishing the printed banknotes. However, when doing such comparisons, the entire specifications of the banknotes need to be compared as many parameters (including the integration of certain security features) may influence the banknotes' durability.

3. The banknote paper and processes involved in the production of the euro banknotes are very similar to those involved in the production of the former Deutsche Mark banknotes. There is a slight difference in paper weight that cannot justify any difference in behaviour in circulation. The former Dutch Guilders were varnished on both sides, which may result in a better resistance in circulation. However, as indicated earlier, a comparative assessment can only be made over the whole lifecycle and considering all of the features included in both currencies.

4. As already indicated in the answer to question 1, the national central banks of the Eurosystem have not experienced high unfit rates when processing euro banknotes. It should be noted that varnishing the banknotes makes them more resistant to soiling, but has no effect on the banknotes' structural resistance to wear and tear.

5. If it would turn out that there were higher replacement rates of the euro banknotes because of their quality, the following would apply: The estimated replacement rates are taken into account when determining the volume of banknotes to be printed. The national central bank (NCB) printing quotas are allocated in accordance with a key and the NCBs are responsible for the production of their quota, which includes the placing of the print orders and meeting the costs of the freshly printed banknotes.

6. Banknote research and development work within the Eurosystem continues with the aim of maintaining the integrity of the euro banknotes. Based on the substantiated information known today, there are no indications for the need to issue upgraded euro banknotes.