Opinion of the European Central Bank of 29 December 2006 at the request of the Portuguese Ministry of Finance and Public Administration on a draft decree-law on the recycling, the detection of counterfeits and the fitness sorting of euro banknotes (CON/2006/62)
Date: 2006-12-29
Institutions: European Central Bank
Subjects: Portugal, administrative sanction, central bank, counterfeiting, credit institution, euro, money

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 29 December 2006  

at the request of the Portuguese Ministry of Finance and Public Administration  

on a draft decree-law on the recycling, the detection of counterfeits and the fitness sorting of euro 

banknotes 

(CON/2006/62) 

Introduction and legal basis 

On 16 October 2006 the European Central Bank (ECB) received a request from the Portuguese Ministry 

of Finance and Public Administration for an opinion on a draft decree-law on the detection of counterfeits 

and the fitness sorting of euro banknotes (hereinafter the ‘draft decree-law’). 

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

European Community and 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 draft decree-law relates to means of payment and the Banco de Portugal. 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 decree law 

The purpose of the draft decree-law is to establish a legal framework at national level that is consistent 

with the ECB’s Framework for the detection of counterfeits and fitness sorting by credit institutions and 
other professional cash handlers (hereinafter the ‘Banknote Recycling Framework’)2. More specifically, 

the  proposed  draft  decree-law  (i)  regulates  the  detection  of  counterfeits  and  fitness  sorting  of  euro 

banknotes  carried  out  outside  the  Banco  de  Portugal;  (ii)  establishes  requirements  to  ensure  that  the 

relevant  operators  duly  withdraw  from  circulation  worn  or  defective  banknotes  that  are  unfit  for 

circulation, or banknotes that are, or are suspected to be counterfeit or forged; and (iii) grants the Banco 

de Portugal rights to issue additional regulations in this field, to inspect banknote sorting machines and to 

impose fines for breaches of the duties imposed by the draft decree-law. 

1  
2  

OJ L 189, 3.7.1998, p. 42.  
Available on the ECB’s website at www.ecb.int. 

 
 
 
 
 
                                                 
2. 

General observations  

2.1  The Banknote Recycling Framework aims to, inter alia: (i) implement a common policy regarding 

banknote  recycling  by  credit  institutions  and  other  professional  cash  handlers  (hereinafter 

collectively referred to as ‘professional cash handlers’); and (ii) recommend that professional cash 

handlers meet certain due diligence standards concerning the handling of euro banknotes, so as to 

contribute to maintaining the quality and authenticity of euro banknotes in circulation. As issuing 

authorities, it is of the utmost importance to the ECB and the national central banks of the Member 

States  that  have  adopted  the  euro  (hereinafter  ‘participating  NCBs’)  that  euro  banknotes  in 

circulation are in good physical condition so that the general public, as well as professional cash 

handlers,  can  check  their  authenticity  in  a  reliable  and  proper  manner  and  separate  authentic 

banknotes from counterfeits or suspected counterfeits.  

2.2  The ECB welcomes this legislative initiative to implement the Banknote Recycling Framework in 

Portugal,  which  will  enable  the  Banco  de  Portugal  better  to  perform  its  statutory  tasks  of 

maintaining the integrity and quality of euro banknotes in circulation, by ensuring compliance with 

the Eurosystem’s common policy and standards concerning authenticity and quality checks of euro 

banknotes. 

2.3  The  draft  decree-law  establishes  a  regime  which  is  broadly  compatible  with  Community  law 

concerning the protection of the euro against counterfeiting, in particular Council Regulation (EC) 

No  1338/2001  of  28  June  2001  laying  down  measures  necessary  for  the  protection  of  the  euro 
against counterfeiting3. Assuming that it is fully implemented and that the Banco de Portugal issues 

the envisaged follow-up regulations, the new regime  will contribute to the process of reinforcing 

public trust in the euro. 

3. 

Specific observations 

3.1  As  the  maintenance  of  the  integrity  of  euro  banknotes  in  circulation  forms  part  of  the  duties 

deriving from a participating NCB’s role as an issuing authority, the consulting authority may wish 

to consider stressing this aspect in the draft decree-law.  

3.2  The ECB notes that the wording of Article 2(2) of the draft decree-law is fairly broad. As the draft 

decree-law imposes sanctions on the addressees for non-compliance with the duties imposed by the 

draft  decree-law,  in  any  event  the  ECB  would  also  invite  the  consulting  authority  to  consider 

whether the scope of the addressees is sufficiently clear to fulfil the requirement of legal certainty 

under Portuguese law on administrative sanctions. 

3.3  For  the  sake  of  legal  clarity,  it  is  recommended  that  Article  12(3)  of  the  draft  decree-law  should 

specify  the  procedural  rules  which  apply  to  the  sanctions  referred  to  in  Article  (1)  and  (2)  of  the 

draft-decree-law. 

3  

OJ L 181, 4.7.2001, p. 6. 

2 

 
 
                                                 
3.4 

In order to ensure consistency, the title of Article 9 and the main body of both Article 11(2) and (3) 

and  Article  12(2)(a)  and  (c)  should  expressly  refer  to  ‘euro  banknotes’,  given  that  only  Article  3 

and Article 12(1) deal with foreign notes. 

3.5  Finally,  given  that  the  draft  decree-law  deals  exclusively  with  the  recycling  regime  of  banknotes 

and  that  a  separate  decree-law  is  being  prepared  covering  coins,  the  ECB  recommends  that  the 

references to coins in Article 3 and Article 12(1) of the present draft law are deleted. 

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

Done at Frankfurt am Main, 29 December 2006. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

3