Opinion of the European Central Bank of 25 August 2006 at the request of Banka Slovenije on a draft decision on the cash changeover  (CON/2006/43)
Date: 2006-08-25
Institutions: European Central Bank
Subjects: Slovenia, euro, monetary integration, money, money supply, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 25 August 2006 

at the request of Banka Slovenije 

on a draft decision on the cash changeover  

(CON/2006/43) 

Introduction and legal basis 

On  2  August  2006  the  European  Central  Bank  (ECB)  received  a  request  from  Banka  Slovenije  for  an 

opinion on a draft decision on the cash changeover (hereinafter the ‘draft decision’). 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European Community and the first and second 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  decision  relates  to  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 has adopted this opinion. 

1. 

Purpose of the draft decision 

The  main  objective  of  the  draft  decision  is  to  regulate  the  procedures  and  method  for  exchanging 

banknotes  and  coins  denominated  in  tolars  for  banknotes  and  coins  denominated  in  euro,  and  the 

conditions for transport, storage, security, provision of collateral and statistical monitoring in this respect. 

The  draft  decision  also  establishes  the  regime  for  frontloading  and  sub-frontloading  of  euro  banknotes 

and  coins  in  Slovenia  before  the  introduction  of  the  euro  on  1  January  2007.  Pursuant  to  the  draft 

decision, Banka Slovenije will begin frontloading euro coins to banks from the draft decision’s entry into 

force, but not before 1 September 2006, and euro banknotes on 11 December 2006. 

2. 

General observations  

2.1  The  ECB  welcomes  the  draft  decision  as  part  of  preparations  for  the  adoption  of  the  euro  in 

Slovenia. The draft decision is intended to complement other draft or already adopted legislation on 
the  introduction  of  the  euro,  in  particular  the  Law  on  Banka  Slovenije2  and  the  draft  law  on  the 

1  
2  

OJ L 189, 3.7.1998, p. 42.  
Zakon o Banki Slovenije, Uradni List RS No 72/06 – official consolidated version. 

 
 
 
 
 
                                                 
introduction of the euro on which the ECB already expressed its opinion, including the provisions 
on frontloading3. 

2.2  Furthermore,  the  draft  decision  is  intended  to  ensure  compliance  of  the  Slovenian  regime  with 

Guideline ECB/2006/9 of 14 July 2006 on certain preparations for the euro cash changeover and on 
frontloading and sub-frontloading of euro banknotes and coins outside the euro area4, and provide 

the  national  legal  basis  for  frontloading  and  sub-frontloading  of  euro  coins.  Following  Council 

Decision  2006/495/EC  of  11  July  2006  in  accordance  with  Article  122(2)  of  the  Treaty  on  the 
adoption by Slovenia of the single currency on 1 January 20075 which abrogated the derogation in 

favour  of  Slovenia,  these  efforts  are  in  line  with  Article  10  of  the  Treaty  according  to  which  the 

Member States take all appropriate measures, whether general or particular, to ensure fulfilment of 

the  obligations  arising  out  of  the  Treaty  or  resulting  from  action  taken  by  the  institutions  of  the 

Community.  In  addition  to  the  above,  Banka  Slovenije  exercises  its  power  to  establish  the 

framework for issue of euro coins in accordance with Article 106(2) of the Treaty. By adopting the 

draft decision, Banka Slovenije also acts in accordance with Article 19 of Guideline ECB/2006/9 

pursuant  to  which  the  rules  in  relation  to  euro  coins  laid  down  in  Guideline  ECB/2006/9  are 

recommendations to be applied by the national central banks within the framework for the issue of 

euro  coins  to  be  set  up  by  the  competent  national  authorities  of  the  future  participating  Member 

States. Banka Slovenije also introduces some solutions not found in Guideline ECB/2006/9. 

2.3 

In  the  ECB’s  view,  the  envisaged  possibility  of  starting  frontloading  euro  cash  well  ahead  of 

1 January 2007 should contribute to a smooth euro changeover on that date. 

3. 

The definition of indirect recipients 

Indirect recipients are defined in the tenth indent of Article 2 of the draft decision as natural persons that 

pursue  business  activities,  State  authorities,  local  government  authorities  and  legal  persons  that  in 

accordance with the law governing the introduction of the euro are obliged to return exclusively in euro 

cash the difference between the amount charged for goods or services and the amount received, and other 

persons that transact business in cash. The ECB would recommend supplementing this definition with an 

additional requirement that the indirect recipients must be located in Slovenia. This element is expressly 

included in the corresponding definition of ‘professional third parties’ in Guideline ECB/2006/9 to avoid 

any potential misuse of frontloaded euro cash.  

3 

4  
5  

See paragraph 3.20 of ECB Opinion CON/2006/17 of 13 March 2006 at the request of the Slovenian Ministry of Finance 
on a draft law amending the Law on Banka Slovenije and paragraph 4.3 of ECB Opinion CON/2006/29 of 12 June 2006 
at the request of the Slovenian Ministry of Finance on a draft law on the introduction of the euro.  
OJ L 207, 28.7.2006, p. 39. 
OJ L 195, 15.7.2006, p. 25. 

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4. 

Diligence of a good expert 

Article 10 of the draft decision provides that banks must store frontloaded euro cash in their vaults with 

the  ‘diligence  of  a  good  expert’.  The  ECB  understands  that  this  concept  represents  a  national  legal 

standard that must be assessed in every individual case, but emphasises that the diligence of a good expert 

must  in  any  event  include  compliance  with  security  standards  that  are  expected  from  and  normally 

applied by banks for cash handling. 

5. 

Costs of transport and security for frontloaded euro cash 

5.1  According to Article 11 of the draft decision, Banka Slovenije must cover the costs of transport and 

security  for  frontloaded  euro  cash  to  the  site  designated  by  banks  for  accepting  euro  cash.  Such 

acceptance  sites  will  be  designated  in  the  contract  on  euro  cash  frontloading  referred  to  in 

Article 4(2) of the draft decision. 

5.2  The  ECB  notes  in  this  context  the  position  of  the  Eurogroup  at  its  meeting  on  16  October  2000 

when they considered requests by a number of business sectors for compensation for costs related 
to  the  euro  changeover  in  20026.  Ministers  acknowledged  the  existence  of  these  costs,  but  held  a 

view  that  the  costs  were  relatively  low  compared  with  future  gains  for  all  business  sectors  and 

should  be  considered  as  an  investment  for  the  common  good.  Ministers  agreed  that  changeover 

costs  should  in  principle  be  borne  by  the  sectors  where  they  arise.  Taking  this  agreement  into 

account,  the  Governing  Council  also  stressed  that  the  Eurosystem  should  in  no  way  become 
involved in compensating banks for the operational costs of the changeover7.  

5.3  Notwithstanding the above, Banka Slovenije could take measures to compensate the costs provided 

that certain conditions are fulfilled. To this end, the compensation schemes would in particular have 

to: (i) be implemented to ensure smooth logistics for the cash changeover; and (ii) comply with the 
equal treatment principle and avoid significant cross-border spillover effects8. 

6. 

Return of surplus quantities of euro cash 

Articles  8  and  9  of  the  draft  decision  provide  that  frontloaded  euro  cash  may  be  returned  to  Banka 

Slovenije  in  the  period  between  15  and  31  January  2007,  whereby  the  payment  of  any  such  returned 

frontloaded cash will be offset against banks’ liabilities arising from the application of the linear debiting 

model  described  in  Article  12  of  the  draft  decision.  Given  that  all  frontloaded  euro  banknotes  become 

legal tender and are treated as ‘banknotes in circulation’ as of the date of the introduction of the euro in 

Slovenia  (pursuant  to  Article  4(7)  of  Guideline  ECB/2006/9),  and  in  order  not  to  undermine  the  linear 

debiting model set out in Article 15(1) in conjunction with Article 15(3) of Guideline ECB/2006/9, which 

6  
7  
8  

Referred to in ‘Evaluation of the 2002 cash changeover’, April 2002. Available on the ECB’s website at www.ecb.int.  
Ibidem. 
Ibidem. 

3 

 
 
                                                 
has  been  developed  to  support  a  smooth  cash  changeover,  the  ECB  recommends  that  the  possibility  of 

offsetting  returned  euro  banknotes  against  banks’  liabilities  is  omitted.  To  this  end:  (i)  Article  9  of  the 

draft decision should be reworded to refer only to the return of surplus quantities of frontloaded euro cash 

in accordance with the rules for standard cash returning; and (ii) the second sentence of the first paragraph 

of Article 12 of the draft decision should be deleted. 

7. 

Storage of frontloaded euro cash 

The  draft  decision  refers  to  the  requirement  that  frontloaded  and  sub-frontloaded  cash  has  to  be  stored 
‘correctly’9.  This  should  be  understood  as  storage  in  accordance  with  the  conditions  laid  down  in 

Article 10  of  the  draft  decision.  For  reasons  of  legal  clarity,  the  ECB  would  suggest  amending  the 

wording so as to refer to storage being in accordance with the conditions laid down in Article 10 of the 

draft decision rather than it being ‘correct’.  

8. 

Use of the term ‘sub-frontloading’ 

Article 5 of the draft decision provides that frontloaded euro cash may only be frontloaded onwards by 

banks  and  that  banks  may  frontload  euro  cash  onwards  only  to  indirect  recipients.  It  appears  that 

‘frontload onwards’ in this context should be understood as ‘sub-frontload’. If this is the case, the ECB 

would suggest using the terminology consistently to avoid any misinterpretation of the draft decision. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 25 August 2006. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

9  

See Article 14 (Consequences of breaches) and Article 16 (Contract on sub-frontloading) of the draft decision. 

4