Opinion of the European Central Bank of 31 August 2004 at the request of Sveriges Riksbank on two draft legal acts amending the Sveriges Riksbank Act concerning certain matters related to the circulation of banknotes and coins (CON/2004/28)
Date: 2004-08-31
Institutions: European Central Bank
Subjects: Sweden, central bank, money, national law, payment system

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 31 August 2004 

at the request of Sveriges Riksbank on two draft legal acts amending the Sveriges Riksbank Act 

concerning certain matters related to the circulation of banknotes and coins 

(CON/2004/28) 

1. 

On 25 June 2004, the European Central Bank (ECB) received a request from Sveriges Riksbank for 

an opinion on two legislative proposals from Sveriges Riksbank to the Swedish Parliament to adopt 

two draft legal acts amending the Sveriges Riksbank Act (1988:1385) (hereinafter the ‘legislative 

proposals’).  

2. 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  the  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  legislative 

proposals  relate  to  means  of  payment  and  the  Swedish  central  bank.  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. 

3. 

One of the two legislative proposals is intended to enhance the ways in which Sveriges Riksbank 

may cooperate with third parties in the handling and circulation of banknotes and coins (hereinafter 

the ‘draft act on cash distribution’). The other legislative proposal introduces a prohibition on the 

circulation of banknotes and coins that have been changed or otherwise tampered with (hereinafter 

the  ‘draft  act  on  the  prohibition  on  the  circulation  of  changed  banknotes  and  coins’).  The 

background  to  and  rationale  behind  the  legislative  proposals  are  explained  in  the  explanatory 

memoranda which form part of them. 

4. 

Sweden is a Member State with a derogation and the ECB requirements regarding the issue of euro 

banknotes by the national central banks (NCBs) of the Member States that have adopted the euro 

do  not  apply  to  Sveriges  Riksbank  before  the  adoption  by  Sweden  of  the  euro.  The  regime 

applicable  within  the  Eurosystem  for  the  issue  of  banknotes  will  however  also  apply  to  Sveriges 

Riksbank  as  soon  as  Sweden  adopts  the  euro  and  it  becomes  a  fully  integrated  part  of  the 

Eurosystem.  The  ECB  would  therefore  wish  to  take  this  opportunity  to  mention  that  the 

1  

OJ L189, 3.7.1998, p. 42. 

 
 
 
                                                 
Eurosystem is itself in the process of developing its own set of principles in the important area of 

euro banknote issuance, as further explained in paragraph 7 below.  

The draft act on cash distribution 

5. 

The  ECB  notes  that  the  draft  act  on  cash  distribution  is  proposed  in  the  context  of  a  new  cash 
handling  model  that  was  introduced  by  Sveriges  Riksbank  in  February  20032.  According  to  this 

new  model,  the  cash  is  delivered  by  the  Riksbank  to  its  subsidiary  company  Svensk 

Kontantförsörjning AB (SKAB). SKAB is fully owned and controlled by the Riksbank and acts as 

a  cash  wholesaler.  The  ECB  understands  that  SKAB  is  entrusted,  on  the  one  hand,  with  the 

issuance and acceptance of cash for deposits with and withdrawals from banks’ accounts with the 

Riksbank  and,  on  the  other  hand,  with  authenticity  and  fitness  sorting  as  well  as  destruction  of 

banknotes.  Furthermore,  SKAB  has  the  task  of  storing  logistical  and  strategic  stocks.  Sveriges 

Riksbank  is  responsible  for  overseeing  that  destruction  and  fitness  sorting  are  carried  out  in  a 

secure and correct manner. The ECB further notes that, under the new cash handling model, SKAB 

only receives banknotes and coins when a net surplus of cash exists among cash retailers (i.e. cash-

in-transit  companies  and  counting  centers).  In  order  to  have  banknotes  returned  to  SKAB,  these 

must  be  delivered  in  standard  packages  and  sorted  for  fitness  and  authentication.  From  the 
explanatory  memorandum3,  the  ECB  understands  that  SKAB  branches  are  faced  with  an 

overcapacity situation and, at the same time, that there are strong incentives for private parties to 

deliver  to  the  Riksbank  any  excess  cash  at  their  depositories  in  order  to  avoid  having  to  pay 

unnecessary interest. This, in turn, leads to situations where these parties transport excess cash over 

long distances to avoid paying interest, when these transports are not otherwise justified, at great 

societal costs and with significant security risks. 

6. 

In  order  to  address  the  above  problem,  the  draft  act  on  cash  distribution  contains  a  proposal  for 

amendments to Chapter 5, Section 3 of the Riksbank Act aiming at a more efficient circulation of 

cash.  Chapter  5,  Section  3  states  that  Sveriges  Riksbank  shall  be  responsible  for  the  supply  of 

Sweden’s  banknotes  and  coins.  In  this  respect,  the  preparatory  work  on  the  Riksbank  Act 

(SOU 1986:22,  p.  108)  states  that  cash  supply,  comprising  both  the  issue  and  distribution  of 

banknotes  and  coins,  belongs  to  the  core  tasks  of  central  banks,  which  shall  be  laid  down  by 

legislation. The draft act on cash distribution amends Chapter 5, Section 3 of the Riksbank Act by 

introducing  a  clarification  that  Sveriges  Riksbank  may  carry  out  its  tasks  with  regard  to  the 

distribution  of  banknotes  and  coins  in  cooperation  with  third  parties.  Moreover,  it  enables  the 

Riksbank  to  compensate  or  provide  credit  free  of  charge  to  entities  that  separate  and  store 

banknotes and coins in accordance with its instructions. 

2  
3  

See Section 2.3 of the explanatory memorandum concerning the draft act on cash distribution. 
See Section 3.3 of the explanatory memorandum concerning the draft act on cash distribution. 

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7. 

The ECB shares the view that the issue of banknotes belongs to the core tasks of central banks and, 

in the case of the Eurosystem, considers that the issue of euro banknotes is a public task attributed 

to the ECB and the Eurosystem NCBs  by Article 106(1) of the Treaty establishing the European 

Community  and  Article  16  of  the  Statute  of  the  European  System  of  Central  Banks  and  of  the 
European Central Bank4. The ECB is currently in the process of elaborating certain relevant aspects 

of the regime for the issue of euro banknotes with regard to (i) the putting of euro banknotes into 

circulation;  (ii)  the  taking  of  individual  banknotes  out  of  circulation;  and  (iii)  the  withdrawal  of 
types or series of banknotes from circulation5, in particular the involvement of third parties in this 

activity.  In  this  context,  the  ECB  is  furthermore  considering  the  competence  to  decide  on  the 

sorting  standards,  the  rules  on  the  issuance  and  return  of  banknotes  and  regarding  the 

denominations, specifications, reproductions, exchange and withdrawal of banknotes, as well as the 

competence  to  take  all  necessary  legal  measures  to  protect  the  integrity  of  euro  banknotes  as  a 

means of payment. Once these deliberations have been concluded within the Eurosystem, the ECB 

would be pleased to share the outcome with Sveriges Riksbank, including the criteria that it may 

establish for the cooperation with third parties in the field of euro banknote issuance, in view of the 

prospective adoption of the euro by Sweden.  

The draft act on the prohibition on the circulation of changed banknotes and coins 

8. 

The  draft  act  on  the  prohibition  on  the  circulation  of  changed  banknotes  and  coins  aims  at  a 

phenomenon  referred  to  as  ‘advertisement  coins’.  During  the  spring  of  2004,  a  company  in  the 

advertisement business circulated ordinary coins issued by the Riksbank, onto which it had applied 

an  adhesive  label  with  a  marketing  message.  The  coins  are  therefore  used  as  vehicles  for  these 

marketing  messages  once  they  are  reintroduced  into  circulation.  According  to  information  in  the 

press, an individual marketing campaign may involve as many as 100,000 one krona coins and it is 

not  known  to  what  extent  the  adhesive  labels  may  damage  the  counting  machines  for  coins  and 

other coin operated machines. The relevant explanatory memorandum considers that the Swedish 

legislation  is  insufficient  in  this  regard  and  it  is  therefore  proposed  in  the  draft  act  on  the 

prohibition  on  the  circulation  of  changed  banknotes  and  coins  that  a  prohibition  is  added  to  the 

Riksbank Act against the circulation of banknotes and coins which have been changed or otherwise 

tampered with. In order to enforce this new prohibition, Sveriges Riksbank is entitled to issue more 

detailed regulations, including the possibility of setting financial penalties which would apply if the 

prohibition was breached.  

9. 

The  ECB  notes  that  the  phenomenon  of  advertisement  coins  is  not  unknown  elsewhere  and 

legislation  addressing  this  issue  exists  in  other  countries  (e.g.  France,  Belgium  and  Poland).  The 

4   
5  

See also Decision ECB/2001/15 of 6 December 2001 on the issue of euro banknotes, OJ L 337, 20.12.2001, p. 52. 
See Article 5 of Decision ECB/2003/4 of 20 March 2003 on the denominations, specifications, reproduction, exchange 
and withdrawal of euro banknotes, OJ L 78, 25.3.2003, p. 16. 

3 

 
                                                 
ECB welcomes the draft act on the prohibition on the circulation of changed banknotes and coins 

as  it  constitutes  a  legal  measure  to  deter  behaviour  which  affects  the  integrity  of  banknotes  and 

coins.  The  ECB  notes  that,  in  the  case  of  euro  banknotes,  where  NCBs  know  or  have  sufficient 

reason  to  believe  that  they  have  been  intentionally  mutilated  or  damaged,  the  Eurosystem  NCBs 

shall refuse to exchange and shall withhold them as per Article 3(3)(a) of Decision ECB/2003/4 of 

20  March  2003  on  the  denominations,  specifications,  reproduction,  exchange  and  withdrawal  of 

euro  banknotes.  The  ECB  suggests  in  this  regard  that  the  effectiveness  of  the  draft  act  on  the 

prohibition  on  the  circulation  of  changed  banknotes  and  coins  could  be  further  enhanced  if  a 

similar provision was included in it.  

10.  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, 31 August 2004. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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