Opinion of the European Central Bank of 16 March 2004 at the request of the French Ministry of Economic Affairs, Finance and Industry on a draft decree concerning the legal framework for the recycling of euro banknotes and coins (CON/2004/8)
Date: 2004-03-16
Institutions: European Central Bank
Subjects: France, counterfeiting, euro, money, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 16 March 2004 

at the request of the French Ministry of Economic Affairs, Finance and Industry 

on a draft decree concerning the legal framework for the recycling of euro banknotes and coins 

(CON/2004/8) 

1. 

On  12  February  2004  the  European  Central  Bank  (ECB)  received  a  request  from  the  French 

Ministry of Economic Affairs, Finance and Industry for an opinion on a draft decree concerning the 

legal framework for the recycling of euro banknotes and coins (hereinafter the ‘draft decree’).  

2. 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  the  first,  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 regarding draft legislative provisions1, as the draft decree deals 

with national central banks (NCBs), currency matters and means of payment. In accordance with 

the  first  sentence  of  Article  17.5  of  the  Rules  of  Procedure  of  the  European  Central  Bank,  the 

Governing Council of the ECB has adopted this opinion. 

Preliminary considerations 

3. 

The  purpose  of  the  draft  decree  is  to  supplement  Article  6  of  Council  Regulation  (EC) 

No 1338/2001  of  28  June  2001  laying  down  measures  necessary  for  the  protection  of  the  euro 
against counterfeiting2 and to provide for a specific legal framework for the recycling of euro coins 

and  banknotes.  In  the  context  of  the  present  consultation,  it  is  understood  that  the  expression 

‘recycling  of  euro  coins  and  banknotes’  is  intended  to  cover  rules  and  standards  concerning  the 

detection of counterfeits and sorting for fitness of euro banknotes and coins.  

4. 

The draft decree is intended to reinforce the Banque de France’s powers regarding the detection of 

counterfeits and sorting for fitness of euro banknotes and coins. In particular, the ECB notes that 

the adoption of the draft decree would enable the Banque de France to ensure the implementation 

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2 

OJ L 189, 3.7.1998, p. 42. 
According to Article 6, credit institutions engaged in the sorting and distribution to the public of banknotes and coins as a 
professional  activity,  including  establishments  whose  activity  consists  in  exchanging  notes  and  coins  of  different 
currencies, such as bureaux de change, shall withdraw from circulation all euro banknotes and coins received by them 
which they know or have sufficient reason to believe to be counterfeit. The same Article also imposes an obligation on 
these  institutions  to  immediately  hand  such  notes  over  to  the  competent  national  authorities  and  for  Member  States  to 
take  the  necessary  measures  to  ensure  that  the  establishments  which  fail  to  discharge  their  obligations  are  subject  to 
effective, proportionate and deterrent sanctions.  

 
 
 
 
                                                      
in France of Eurosystem standards concerning counterfeit detection and sorting for fitness such as 

the ‘Terms of reference for the use of cash-recycling machines by credit institutions and other euro 

area institutions engaged in the sorting and distribution of banknotes to the public as a professional 

activity’  approved  by  the  Governing  Council  on  18  April  2002.  The  ECB  understands  that  the 

French  authorities  wish  to  make  the  principles  contained  in  these  terms  of  reference  generally 

applicable. 

5.  Maintaining the quality of banknotes in circulation is a primary objective of the ECB and the NCBs 

of the Member States which have adopted the euro as issuing authorities of euro banknotes since 

only euro banknotes in good physical condition can be easily and reliably checked by the public for 

counterfeits. The ECB therefore welcomes the initiative taken by the French authorities in this field 

as one of the Banque de France’s statutory tasks as part of the Eurosystem is to maintain the quality 

of  euro  banknotes  and  coins  and  to  manage  their  smooth  circulation  throughout  the  territory. 

Furthermore, it is acknowledged by the Eurosystem  that credit institutions and other professional 

cash  handlers  can  usefully  contribute  to  the  recycling  of  euro  banknotes  if  they  check  them  for 

authenticity and fitness against specific strict criteria before returning them to circulation.  

6. 

The ECB would like to point out that the setting-up of a framework for the detection of counterfeits 

and sorting for fitness by credit institutions and other professional cash handlers is currently being 

considered at the Eurosystem level. The objective of this exercise is to provide such entities with 

assistance  in  complying  with  Article  6  of  Regulation  (EC)  No  1338/2001  and  to  provide  for 

common  standards  on  banknote  recycling  throughout  the  euro  area,  as  it  is  of  the  utmost 

importance that there is a level playing field throughout the participating Member States.   

7. 

Regulation  (EC)  No  1338/2001 imposes  an  obligation  on  Member  States  to  inform  the  ECB  and 

the  European  Commission  of  the  measures  adopted  for  the  implementation  of  its  Article  6.  The 

ECB notes in this respect that the draft decree deals with the detection of false or counterfeit euro 

coins  as  well  as  with  sorting  standards  for  them.  Therefore  the  ECB  would  recommend  that  the 

French  authorities  liaise  with  the  European  Commission  for  further  guidance  on  this  matter  and 

with a view to ensuring harmonized rules applicable to euro coins. 

Specific comments 

8. 

Articles  1  and  2  of  the  draft  decree  concern  the  obligations  imposed  under  Article  6  of 

Regulation (EC)  No  1338/2001  on  credit  institutions,  La  Poste  and  suppliers  which  carry  out  in 

their name and on their behalf processing of euro banknotes as a professional activity (in particular 

cash in transit companies). Article 1 provides that those entities shall comply with the obligations 

of Regulation (EC) No 1338/2001 when they withdraw from circulation euro banknotes received 

from  the  public  in  order  to  hand  them  over  to  the  Banque  de  France.  The  ECB  notes  that  the 

entities listed in Article 1 will have to respect any provisions laid down by the Banque de France, 

in particular any standards on packaging and transfer laid down by it in conformity with any rules 

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of the ECB. Article 2 concerns the obligations imposed on credit institutions, La Poste and bureaux 

de change prior to issuing to their counters any euro banknotes they have received from the public. 

The ECB notes that the entities listed in Article 2 have to carry out an inspection before any euro 

banknotes  are  issued  to  their  counters.  The  ECB  also  notes  that  under  Article  10  of  the  draft 

Decree, which applies both to banknotes and coins, credit institutions will have to establish written 

internal rules concerning the procedures for the handing over of euro banknotes and coins which 

they have sufficient reason to believe to be false. 

9. 

As a derogation from the principle established in Article 3 of the draft decree, Article 4 of the draft 

decree  provides  that  credit  institutions  or  La  Poste  which  wish  to  supply  self-service  cashpoint 

machines  (hereinafter  ‘ATMs’)  with  euro  banknotes  which  do  not  come  directly  from  a  central 

bank  of  the  Eurosystem  or  to  use  self-service  cash-recycling  machines,  shall  first  make  an 

agreement with the Banque de France. Article 7 of the draft decree provides that these agreements 

shall specify the means, in particular the equipment, to be used by credit institutions to prevent the 

circulation of counterfeit or unfit euro banknotes, as well as the conditions under which the Banque 

de France may verify the application of these agreements. The ECB assumes that these agreements 

will  cover  the  applicable  standards  on  counterfeit  detection  and  sorting  for  fitness  and  welcomes 

this proposed arrangement which enables the extension to ATMs of the requirements defined in the 

abovementioned  Eurosystem  terms  of  reference.  Furthermore,  the  ECB  notes  that  similar 

obligations  will  be  imposed  on  suppliers  to  which  credit  institutions  delegate  all  or  part  of  the 

operations  of  processing  euro  banknotes  such  as  cash  in  transit  companies.  Lastly,  the  ECB 

understands  that  Article  5  of  the  draft  decree  specifies  the  conditions  of  use  of  self-service 

exchange machines by bureaux de change. 

10.  Article  6  of  the  draft  decree  refers  to  the  standards  to  be  adopted  by  the  Banque  de  France 

concerning  euro  banknotes  which  may  be  returned  to  circulation  and  those  whose  physical 

condition makes them unsuitable for circulation. It provides that these standards should be adopted 

‘in  conformity  with,  where  appropriate,  any  rules  of  the  European  Central  Bank’.  As  indicated 

above,  the  Eurosystem  is  currently  preparing  standards  on  sorting  for  fitness  of  euro  banknotes. 

Therefore,  the  ECB  would  recommend  deleting  the  expression  ‘where  appropriate’.  In  addition, 

since the above standards will encompass the physical characteristics which make euro banknotes 

unsuitable for circulation, the ECB would suggest amending the third paragraph of Article 6 to take 

into account any guidance provided by the Eurosystem in this respect.    

11.  The  ECB  notes  that  the  last  sentence  of  Article  11(1)  of  the  draft  decree  refers  to  information 

published by the Banque de France on security features of euro banknotes. As this information is 

highly confidential it is suggested that this sentence should be redrafted in such a way that it merely 

refers  to  information  on  euro  banknotes  published  by  the  Banque  de  France  in  accordance  with 

guidance provided by the ECB. 

12.  The ECB notes that several provisions of the draft decree deal with issues related to euro coins (for 

instance,  Articles  8,  9,  10,  12  and  13).  In  particular,  the  draft  decree  deals  with  the  obligations 

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imposed on credit institutions concerning the supply of euro coins to the public in terms of sorting 

and, in particular, the use of equipment capable of detecting false or counterfeit coins. As for euro 

banknotes,  the  ECB  understands  that  the  intention  is  for  agreements  concerning  counterfeit 

detection  and  fitness  standards  to  be  concluded  between  the  Banque  de  France  and  credit 

institutions.  In  addition,  the  ECB  suggests  that  it  could  be  specified  that  the  abovementioned 

equipment has to be capable of detecting coins which are not legal tender in the whole euro area 

(instead of in France only).  

13.  Article  13  of  the  draft  decree  introduces  criminal  sanctions  to  punish  failure  to  comply  with  the 

obligations that it introduces concerning euro banknotes and coins which there is sufficient reason 

to believe to be counterfeit within the meaning of Article 6 of regulation (EC) No 1338/2001. The 

ECB  notes  that  this  concerns  both  the  employees  of  a  credit  institution,  La  Poste  or  a  bureau  de 

change and the persons responsible in any capacity for the management or administration of those 

institutions. Furthermore, legal persons may be declared criminally liable for the offences laid out 

in  Article  13.  The  ECB  notes  that  these  provisions  are  intended  to  implement  Article  6(2)  of 

Regulation (EC) No 1338/2001 and enhance the existing criminal legal framework on counterfeit 

euro banknotes and coins. 

14.  The  ECB  confirms  that  it  has  no  objection  to  the  competent  national  authorities  making  this 

opinion publicly available at their discretion. This opinion will be published on the ECB’s website 

six months after the date of its adoption. 

Done at Frankfurt am Main on 16 March 2004. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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