Guideline of the European Central Bank of 10 January 2001 adopting certain provisions on the 2002 cash changeover (ECB/2001/1)
Date: 2001-01-10
Institutions: European Central Bank
Subjects: European Central Bank, central bank, euro, paper money

L 55/80

EN

Official Journal of the European Communities

24.2.2001

GUIDELINE OF THE EUROPEAN CENTRAL BANK

of 10 January 2001

adopting certain provisions on the 2002 cash changeover

(ECB/2001/1)

(2001/151/EC)

THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL
BANK,

Having regard to the Treaty establishing the European
Community (hereinafter referred to as the ‘Treaty’), and in
particular to Article 106(1) thereof, and to Articles 16 and
26.4 of the Statute of the European System of Central Banks
and of the European Central Bank (hereinafter referred to as the
‘Statute’),

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

(7)

According to Article 10 of Council Regulation (EC) No
974/98 of 3 May 1998 on the introduction of the
euro (1), as from 1 January 2002,
the ECB and the
central banks of the participating Member States shall
put into circulation banknotes denominated in euro.

Frontloading of euro banknotes before 1 January 2002
to certain target groups would alleviate the logistical
burden related to the introduction of the euro and will
contribute to reduce the costs associated with dual
currency circulation after the end of the transitional
period.

Frontloading of euro banknotes shall not have the effect
of anticipated circulation of euro banknotes amongst the
general public as the euro banknotes will not have legal
tender
status until 1 January 2002. Consequently,
certain restrictions have to be observed in order to avoid
putting euro banknotes into circulation before 1 January
2002.

Frontloading of euro banknotes to credit institutions or
to their appointed agents and sub-frontloading to other
organisations may only be put in place if statutory or
contractual arrangements are set forth between national
central banks (NCBs) of the participating Member States
and credit institutions.

Before 1 January 2002 euro banknotes
shall be
accounted off-balance sheet, but at their full face value,
as there is legal certainty pursuant to Article 10 of
Regulation (EC) No 974/98 that such banknotes will
become legal tender from 1 January 2002.

Frontloaded banknotes shall be debited at the dates and
according to the debiting model specified in this Guide-
line. The debiting model takes into account the addi-
tional cash holdings caused by the 2002 cash change-
over.

Appropriate means to cover credit risks associated with
frontloading must be taken into account. Such means
may involve the use of retention of ownership, assets

(1) OJ L 139, 11.5.1998, p. 1.

(8)

(9)

(10)

given as collateral through appropriate arrangements or
cash given as collateral in the form of a deposit on a
dedicated account remunerated with the same rate as
form
applied for minimum reserves or
deemed appropriate by the NCBs.

in another

For as long as frontloaded banknotes and coins remain
the property of NCBs, insurance policies or other appro-
priate means shall be used to cover at least the risks of
damage, theft or robbery. Penalty clauses,
inspections
and auditing may be used in order to cover the risk of
anticipated public use of the frontloaded euro banknotes
and with the sole purpose of verifying the presence of
the frontloaded banknotes.

Frontloading of euro banknotes is a logistical operation
aimed at facilitating the implementation of the national
cash changeover scenarios for which NCBs are primarily
responsible. When implementing this Guideline, NCBs
shall endeavour to follow an unbureaucratic and flexible
approach, shall take into account national peculiarities
and shall attempt to minimise the burden on the credit
sector in order to ensure a smooth cash changeover.

It is acknowledged that while the primary competence
for establishing the regime for the issuance of euro coins
lies with the participating Member States, the NCBs play
an essential role in the distribution of the euro coins.
Therefore those provisions of this Guideline which relate
to euro coins are of a supplementary nature and are
only to be applied by NCBs within the framework set up
by the competent national authorities.

(11)

In accordance with Articles 12.1 and 14.3 of the Statute,
ECB Guidelines form an integral part of Community law,

HAS ADOPTED THIS GUIDELINE:

CHAPTER I

GENERAL PROVISIONS

Article 1

Definitions

For the purposes of this Guideline:

— ‘cash in transit companies’

shall mean entities
providing transport, storage and handling services of bank-
notes and coins for credit institutions,

(CITs)

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— ‘credit institutions’ shall mean the institutions eligible for
monetary policy operations in accordance with Guideline
ECB/2000/7 of the European Central Bank on monetary
policy instruments and procedures of the Eurosystem of 31
August 2000 (1),

— ‘Eurosystem’ shall mean the national central banks of the

participating Member States (NCBs) and the ECB,

— ‘euro area’ shall mean the territory of the participating

Member States,

— ‘frontloading’ shall mean the physical delivery of euro bank-
notes and coins from NCBs to credit institutions or to their
appointed agents, between 1 September 2001 and 31
December 2001, according to any statutory or contractual
arrangements set forth, respectively, by NCBs or between
NCBs and credit institutions,

— ‘NCB’ shall mean the national central bank of a partici-

pating Member State,

— ‘participating Member States’ shall mean Belgium, Germany,
Greece, Spain, France, Ireland, Italy, Luxembourg, Nether-
lands, Austria, Portugal and Finland,

— ‘sub-frontloading’ shall mean the delivery of euro banknotes
and coins from credit institutions or their appointed agents
to third parties between 1 September 2001 and 31
December 2001 according to any contractual arrangements
set
institutions or their appointed
forth between credit
agents and such third parties.

CHAPTER II

FRONTLOADING

Article 2

Eligible counterparties

NCBs shall be entitled to frontload euro banknotes and

1.
coins to credit institutions.

NCBs may allow credit institutions to appoint CITs or
2.
entities such as Automatia in Finland having an account with
the NCBs to act on behalf of such credit institutions as their
appointed agents for frontloading.

NCBs shall be entitled to frontload euro banknotes and
3.
coins to the institutions referred to in the second indent of
Article 2(3) of Directive 2000/12/EC of the European Parlia-
ment and of the Council of 20 March 2000 relating to the
taking up and pursuit of the business of credit institutions (2),
as amended by Directive 2000/28/EC of 18 September
2000 (3), which provide deposit services for private individuals.

4.
NCBs may allow national post offices having an account
with the NCBs to receive euro banknotes and coins for fron-
tloading purposes.

(1) OJ L 310, 11.12.2000, p. 1.
(2) OJ L 126, 26.5.2000, p. 1.
(3) OJ L 275, 27.10.2000, p. 37.

Article 3

Delivery

NCBs may start frontloading to credit institutions or to

1.
their appointed agents from 1 September 2001.

NCBs shall

2.
institutions and their
appointed agents keep the frontloaded euro banknotes and
coins in safe custody.

require that credit

from disposing of

NCBs shall prohibit credit institutions and their appointed
3.
the euro banknotes delivered
agents
pursuant to the above before 00.00 on 1 January 2002 local
time, except as otherwise provided for under this Guideline.

Article 4

Property rights over frontloaded euro banknotes

Frontloaded euro banknotes shall remain the property of

1.
NCBs until 00.00 on 1 January 2002,

local time.

In the event

2.
that arrangements for the retention of
ownership are not considered by NCBs to be legally feasible or
legally enforceable, eligible assets as defined in Article 11 can
be provided as collateral for the NCBs' rights over frontloaded
euro banknotes. Such assets may also be provided as collateral
in parallel with arrangements for the retention of ownership.

Article 5

Coverage of the risks of damage, theft or robbery of
banknotes and coins

NCBs shall ensure that credit institutions or their appointed
agents, as the case may be, cover at least the risks of damage,
theft or robbery of frontloaded banknotes and coins which
remain the property of NCBs by subscribing to insurance poli-
cies or by any other appropriate means. The conditions for
frontloading do not address the insurance of the own risk of
the credit institution or their appointed agents, as the case may
be, which is their exclusive responsibility.

Article 6

Prevention of anticipated public use

In order to ascertain compliance by credit institutions or their
appointed agents with their obligations regarding prevention of
the anticipated public use of the frontloaded euro banknotes,
and with the sole purpose of verifying the presence of the
frontloaded banknotes, NCBs may provide that auditing and
inspection provisions are included in any statutory or contrac-
tual arrangements set forth for frontloading.

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Article 7

agents shall be credited to their respective accounts with NCBs,
as the case may be, according to current practice.

Contractual or statutory penalties

Any breach by the credit institutions or their appointed agents
including but not limited to putting or
of their obligations,
acting in a way that is conducive to putting the euro banknotes
into circulation before 1 January 2002, shall be deemed to
damage the Eurosystem objective of a smooth cash changeover
and shall be subject to the payment of contractual or statutory
penalties, as appropriate, to be required by NCBs in an amount
proportional to the respective damage. Such penalties shall not
be required by NCBs where a regulatory framework providing
an equivalent level of protection has been set forth by the
participating Member State in question.

Article 8

ESCB reporting

For the purposes of drawing up the weekly consolidated finan-
cial statements and the consolidated balance sheet of the ESCB/
Eurosystem:

(a) between 1 September and 31 December 2001, the amount
of frontloaded euro banknotes and coins shall be recorded
off-balance sheet at their face value by the NCBs. From 1
January 2002 euro banknotes and coins shall be regarded
as on-balance sheet
recording
required to be conducted by the first business day in 2002;

items with their actual

(b) from 1 January 2002 the overall amount of frontloaded
banknotes shall be recorded in the banknotes in circulation
figure with the actual recording required to be conducted
by the first business day in 2002. The difference between
the overall amount of
frontloaded banknotes and the
amounts of banknotes debited in the accounts of credit
institutions or their appointed agents, as appropriate, with
the NCBs, shall be treated as a collateralised non-remun-
erated loan to be paid back in accordance with the provi-
sions laid down in Article 9.

Article 9

Debiting and crediting

1.
Euro banknotes and coins frontloaded to credit institu-
tions or to their appointed agents shall be debited in their
respective accounts with the NCBs, as the case may be, for their
face value, according to the following ‘linear debiting model’:
one-third of
the frontloaded sum on 2 January 2002, 23
January 2002, and 30 January 2002 respectively.

Euro banknotes and coins delivered to credit institutions
2.
or to their appointed agents from 1 January 2002, shall be
debited in their respective accounts with NCBs, as the case may
be, according to current practice; and euro banknotes and
coins returned by credit institutions or their appointed agents
from 1 January 2002, shall be credited to their respective
accounts with NCBs, as the case may be, according to current
practice.

Article 10

Coverage of credit risks

Eligible assets as defined in Article 11 shall be provided to
NCBs by close of business on the last business day of 2001, at
the latest, as collateral for the amounts of frontloaded bank-
notes and coins delivered on or before 31 December 2001. The
assets referred under Article 11(1) shall be submitted through
appropriate arrangements in accordance with Guideline ECB/
2000/7. Sufficient collateral shall be maintained until discharge
of the guaranteed obligations.

Article 11

Eligible assets

1.
All assets considered eligible collateral for Eurosystem
credit operations in accordance with ECB Guideline ECB/2000/
7 or such other assets as may be approved by the Governing
Council on the proposal of an NCB are eligible as collateral for
frontloading and sub-frontloading.

2.
Cash in the form of a deposit on a dedicated account,
remunerated at the same rate as applied for minimum reserves,
or in another form deemed appropriate by the NCBs, can also
be provided as eligible collateral.

Article 12

Statistical aspects

For the purposes of the application of Regulation (EC) No
2819/98 of the European Central Bank of 1 December 1998
concerning the consolidated balance sheet of the monetary
financial institutions sector (1), as amended by Regulation (EC)
No 1921/2000 of 31 August 2000 (2), NCBs shall ensure that
MFIs do not record on-balance sheet the positions and transac-
tions relating to frontloaded banknotes and coins between 1
September and 31 December 2001.

Article 13

Distribution to branches established inside the euro area

Subject to the conditions laid down in this Guideline, NCBs
shall allow credit
institutions or their appointed agents to
distribute frontloaded banknotes from 1 September 2001, to
their branches established inside the euro area.

Article 14

Distribution to branches or headquarters located outside
the euro area

Subject to the conditions laid down in this Guideline, in partic-
ular to the delivery of appropriate collateral according to
Article 4(2), NCBs shall allow credit
institutions or their
appointed agents to distribute frontloaded banknotes from 1
December 2001, to their branches or headquarters located
outside the euro area, as appropriate.

3.
Banknotes and coins denominated in national currency
units and returned by credit institutions or by their appointed

(1) OJ L 356, 30.12.1998, p. 7.
(2) OJ L 229, 9.9.2000, p. 34.

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CHAPTER III

SUB-FRONTLOADING

Article 15

Delivery conditions

1.
NCBs shall allow credit institutions or their appointed
agents to sub-frontload euro banknotes and coins to third
parties from 1 September 2001 until 31 December 2001.
Sub-frontloading by credit institutions or by their appointed
agents shall take place at their own risk and full responsibility
and shall be subject to the conditions laid down by the NCBs in
accordance with this Guideline.

NCBs may subject sub-frontloading by credit institutions

2.
or by their appointed agents to reporting obligations.

shall

NCBs

3.
their
appointed agents specifically provide in their sub-frontloading
arrangements that:

require that credit

institutions or

(a) third parties receiving euro banknotes pursuant

to the
above shall not dispose of them in any way before 00.00
on 1 January 2002,

local time;

(b) third parties receiving frontloaded banknotes shall keep the

frontloaded euro banknotes in safe custody;

(c) any breach of the obligations of third parties receiving
frontloaded banknotes be subject
to the payment of
contractual penalties, except where such penalties overlap
with existing national legislation providing for an equiva-
lent level of protection.

Article 16

Exclusion of the general public

NCBs shall prohibit credit
institutions and their appointed
agents from concluding any sub-frontloading arrangements
regarding euro banknotes which would have the effect of
anticipated circulation of euro banknotes amongst the general
public.

Article 17

Coverage of credit risks

If not provided earlier pursuant to Article 4(2), eligible assets as
specified under Article 11 shall be provided to NCBs as collat-
eral from the moment of sub-frontloading and for the amounts
of sub-frontloaded banknotes and coins until discharge of the
guaranteed obligations. The assets referred to under Article
11(1) shall be submitted through appropriate arrangements in
accordance with Guideline ECB/2000/7.

Article 18

Sub-frontloading outside the euro area

Notwithstanding paragraph 2, NCBs shall prohibit credit
1.
institutions and their appointed agents from sub-frontloading

to any other third parties, including retailers, located outside
the euro area.

2.
NCBs shall allow sub-frontloading to (i) credit institu-
tions, as defined in Article 1(1)(a) of Directive 2000/12/EC,
which are located outside the euro area and which are subsidia-
ries of credit institutions whose main place of business is
located inside the euro area; and to (ii) other credit institutions,
which have neither their registered nor their head office inside
the euro area, under the following conditions:

(a) the sub-frontloading shall take place from 1 December

2001;

(b) the provisions of this Chapter III shall apply;

(c) the entities referred to in paragraph 2(i) and (ii) shall be
prohibited from further sub-frontloading to any other third
parties whatsoever.

CHAPTER IV

FINAL PROVISIONS

Article 19

Verification

NCBs shall forward to the ECB copies of the legal instruments
adopted by them in order to comply with this Guideline by 2
March 2001, at the latest.

Article 20

Final provision

1.
This Guideline shall not apply to the physical delivery of
euro banknotes and coins from NCBs to other central banks
located outside the euro area.

2.
It is recommended that NCBs apply the provisions of this
Guideline that refer to euro coins unless otherwise provided for
by the national rules governing the relationship between each
NCB and the respective Treasury.

This Guideline is addressed to the national central banks

3.
of participating Member States.

This Guideline shall be published in the Official Journal of

4.
the European Communities.

Done at Frankfurt am Main, 10 January 2001.

On behalf of the Governing Council of the
ECB

The President

Willem F. DUISENBERG