Opinion of the European Central Bank of 18 June 2009 on the circulation of banknotes and coins (CON/2009/52)
Date: 2009-06-18
Institutions: European Central Bank
Subjects: Czechia, central bank, counterfeiting, issuing of currency, money, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 18 June 2009  

on the circulation of banknotes and coins 

(CON/2009/52) 

Introduction and legal basis 

On  27  March  2009  the  European  Central  Bank  (ECB)  received  a  request  from  Česká  národní  banka 

(CNB) for an opinion on a draft law on the circulation of banknotes and coins and on the amendment of 

Law No 6/1993 Coll. on Česká národní banka (hereinafter the ‘draft law’). 

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 law 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 law 

The draft law regulates legal relationships in the area of the circulation of banknotes and coins and their 

protection  against  counterfeiting  and  also  implements  certain  directly  applicable  regulations  of  the 

European Communities.  While the  main focus of the draft law  is to regulate the circulation of national 
banknotes  and  coins,  some  of  its  provisions  apply  irrespective  of  the  currency  involved2.  It  lays  down 

rules  relating,  inter  alia,  to  the  acceptance,  exchange,  processing,  recycling  and  reproduction  of 
banknotes and coins. CNB’s powers are explicitly stipulated3, including in relation to the registration and 

supervision  of  entities  involved  in  the  processing  of  national  tender.  The  draft  law  also  provides  for 

sanctions on credit institutions and other entities for breaches of obligations imposed by the draft law or 

by  a  directly  applicable  Council  regulation.  CNB  is  empowered  to  regulate  certain  issues  by  means  of 

decrees, which will be of a technical nature. It is envisaged that once it has been adopted, and subject to 

certain amendments, the draft law will continue to apply after the Czech Republic adopts the euro.  

1  
2  
3  

OJ L 189, 3.7.1998, p. 42.  
See, for example, Articles 7, 16 and 19 of the draft law. 
Under Article 3(6) of the draft law, CNB will perform functions of the national counterfeit centre, the national analysis 
centre (NAC) and the coin national analysis centre (CNAC). Functions identical to those of the NAC and CNAC have 
historically been carried out by CNB based on its responsibilities in the area of banknotes and coins despite the absence 
of specific legislative provisions to this end.  

 
 
 
 
 
                                                 
2. 

General observations  

2.1  While the Czech Republic is a Member State with a derogation within the meaning of Article 122 

of the Treaty and the ECB requirements regarding the organisation of cash cycles in Member States 

that  have  adopted  the  euro  currently  do  not  apply  to  CNB,  these  requirements  will  become 

applicable to CNB once the Czech Republic adopts the euro and CNB becomes a fully integrated 

member of the Eurosystem.  

2.2  Under  Article  106  of  the  Treaty,  the  Governing  Council  of  the  ECB  has  the  exclusive  right  to 

authorise  the  issue  of  banknotes  within  the  Community,  whereas  the  coins  are  issued  by  the 

Member  States  subject  to  the  ECB’s  approval  of  the  volume.  Consequently,  the  Eurosystem’s 

regulatory  competence  only  concerns  banknotes.  Hence,  with  a  view  to  national  central  banks 

(NCBs) joining the Eurosystem, the ECB consistently supports a clear separation between national 
rules relating to banknotes and rules relating to coins4. The ECB considers that the draft law would 

benefit from introducing such consistent internal separation. Should this not be feasible at the level 

of the draft law, the consulting authority should consider providing for such internal separation in 

the decrees to be issued by CNB pursuant to Article 21 of the draft law. This would facilitate the 

legal convergence of the Czech legislative framework, which is necessary for the Czech Republic 

to participate fully in economic and monetary union.  

2.3  As a general comment, some of the draft law’s provisions contain terminology and/or provide for 

concepts, such as ‘anonymous and non-anonymous equipment’ in Articles 11 and 12, which differ 

from  those  established  within  the  Eurosystem.  For  reasons  of  clarity  and  legal  certainty, 

particularly in view of the Czech Republic’s future adoption of the euro, the ECB would invite the 

consulting  authority  to  consider  aligning  such  terminology  and  concepts  with  the  approaches 
applied in the Eurosystem5. Furthermore the concept of ‘tender damaged in a non-standard way’ in 

Article 6(2) is not used by the Eurosystem. It should be noted in this context that unfit banknotes 

(e.g. those with holes or those that have been written on) and banknotes that have been stained by 

anti-theft devices are addressed together, which may lead to confusion. 

3. 

Specific observations 

3.1 

Scope of application of the obligation to withdraw suspicious banknotes and coins  

Article  7(1)  of  the  draft  law  specifies  entities  obliged  to  seize  suspicious  banknotes  and  coins. 
These include CNB, credit institutions performing cash operations, processors of national tender6, 

other  legal  entities,  money  exchangers  and  natural  persons  engaged  in  operating  non-anonymous 

equipment. The ECB understands that Article 7 of the draft law also applies to euro banknotes and 

4  

5  
6  

See, for example, Opinions CON/2008/90, CON/2008/47, CON/2008/36 and CON/2007/28. All Opinions are available 
on the ECB’s website at www.ecb.europa.eu. 
See also paragraph 3.1 below.  
Pursuant  to  Article  2(1)(g)  of  the  draft  law,  a  processor  of  national  tender  means  a  legal  entity that  processes  national 
tender for other parties, registered by CNB. 

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coins7.  In  this  context,  the  ECB  points  out  that  Article  6(1)  of  Council  Regulation  (EC) 

No 1338/2001  laying  down  measures  necessary  for  the  protection  of  the  euro  against 
counterfeiting8 imposes an obligation on a number of entities to withdraw euro banknotes and coins 

from circulation where there is a sufficient reason to believe that they are counterfeit. By virtue of 
Regulation (EC) No 1339/20019, these rules also apply in Member States that have not yet adopted 

the  euro,  but  are  modified  by  Article  6(1a)  of  Council  Regulation  (EC)  No 1338/2001.  These 

entities  include  credit  institutions,  other  payment  service  providers,  and  any  other  institutions 

engaged  in  the  processing  and  distribution  to  the  public  of  banknotes  and  coins,  including: 

(i) establishments  whose  activity  consists  in  exchanging  banknotes  and  coins  of  different 

currencies,  such  as  bureaux  de  change;  (ii)  transporters  of  funds;  and  (iii)  other  economic  agents 

such as traders and casinos engaged on a secondary basis in the processing and distribution to the 

public of banknotes via automated teller machines. The ECB notes that insofar as Article 7(1) of 

the  draft  law  also  applies  to  euro  banknotes  and  coins,  it  would  be  advisable  for  legal  certainty 

reasons  to  fully  align  its  wording  with  that  of  Article  6(1)  and  (1a)  of  Regulation  (EC) 

No 1338/2001. 

3.2  Hidden charge for the acceptance of cash  

The  ECB  notes  that  under  Article  9(4)  of  the  draft  law,  ‘CNB  and  credit  institutions  performing 

cash  operations  are  entitled  to  require  that  a  payer,  when  paying  in  cash  or  when  depositing 

national tender onto an account, presents national tender sorted by nominal value or, depending on 

the quantity, packaged in the way stipulated by decree’ and that they are ‘entitled to charge a fee 

stipulated  in  advance  if  the  payer  presents  national  tender  unsorted  or  unpackaged  in  the  way 

stipulated by decree’.  

The ECB understands the notion of legal tender to include the elements of mandatory acceptance at 

full value for the discharge of monetary debts. This is also laid down in Article 4 of the draft law, 

which stipulates that ‘Česká národní banka and credit institutions performing cash operation shall 

accept  national  tender  without  restriction’.  To  the  extent,  however,  the  payer  referred  to  in  the 

above provision is required to pay a fee for enjoying the right of discharging his obligations in cash 

(especially if such payer is a consumer without the means to sort or package banknotes or coins), 

there is a hidden charge for the use of legal tender, which prejudices the use of cash vis-à-vis other 

payment  instruments.  In  the  context  of  cash  services  not  necessarily  involving  discharge  of 

monetary debts, attention is additionally drawn to the common Eurosystem fee policy for the cash 
transactions  of  professional  clients  at  NCB  counters10  implemented  from  1  March  2002,  which 

defines different levels of services: 

7  

8  

9  

10  

According to the explanatory memorandum to the draft law, the definition of ‘suspicious tender’ includes, in addition to 
Czech banknotes and coins, banknotes and coins in other currencies, including the euro.  
OJ L 181, 4.7.2001, p. 6. Regulation (EC) No 1338/2001 was recently amended by Council Regulation (EC) No 44/2009 
(OJ L 17, 22.1.2009, p. 1).    
OJ  L  181,  4.7.2001,  p.  11.  Regulation  (EC)  No 1339/2001  was  recently  amended  by  Regulation  (EC)  No  45/2009 
(OJ L 17, 22.1.2009, p. 4). 
ECB Annual Report 2002, p. 134. Available on the ECB’s website at www.ecb.europa.eu. 

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• 

• 

free-of-charge: these are the basic services provided by all NCBs, taking into account their 

unique role in providing the economy with cash; and 

fee-based: these are additional services that NCBs may provide. A fee must be paid for these 

optional services, taking into account the fact that they may also be provided by commercial 

third parties. 

In  view  of  the  future  adoption  by  the  Czech  Republic  of  the  euro,  it  is  advisable  to  ensure  that 

Czech legislation is compatible with the main principle of basic, free-of-charge cash services. 

3.3  The NAC’s obligation to transmit new types of suspected counterfeit banknotes under Article 4(2) 

of Regulation (EC) No 1338/2001   

The ECB understands that functions of the NAC will be carried out by CNB (Article 3(6) of the 

draft law). In this context, the ECB would like to point out that Article 4(3) of Council Regulation 

(EC) No 1338/2001 and Article 1 of Regulation (EC) No 1339/2001 authorise the NAC to transmit 

as necessary to the ECB for examination or testing at least part of a batch of suspected counterfeit 
banknotes or coins being used or retained as evidence in criminal proceedings11. 

3.4 

Specific references to relevant Eurosystem rules 

3.4.1  Article 16 of the draft law provides that reproductions of national and foreign banknotes and coins 

or items similar to them may only be made under the conditions stipulated by decree or a directly 

applicable  regulation  of  the  European  Communities.  In  this  regard,  CNB  is  invited  to  consider 

including  a  reference  in  the  draft  law  or,  as  the  case  may  be,  in  the  implementing  decree  to  be 

issued pursuant to Article 21(f) of the draft law to Decision ECB/2003/4 of 20 March 2003 on the 
denominations,  specifications,  reproduction,  exchange  and  withdrawal  of  euro  banknotes12.  The 

ECB notes that there is such a reference in the currently applicable CNB Decree No 553/2006 Coll. 

of  30  November  2006  on  the  terms  and  conditions  under  which  it  is  possible  to  reproduce 
banknotes, coins, cheques, securities and payment cards and to produce objects imitating them13. 

3.4.2  Under  Article  9(1)  of  the  draft  law,  CNB,  credit  institutions  performing  cash  operations  and 

processors  of  national  tender  are  required  to  process  national  tender  accepted  from  circulation  in 
accordance  with  the  standards  for  the  processing  of  national  tender  stipulated  by  decree14  before 

they recycle it. According to the explanatory memorandum to the draft law, it is envisaged that the 

above  processing  standards  will  be  stipulated  in  a  way  similar  to  the  standards  laid  down  by  the 

ECB in the ‘Framework for the detection of counterfeits and fitness sorting by credit institutions 
and  other  professional  cash  handlers’  (hereinafter  the  ‘Banknote  Recycling  Framework’)15.  The 

ECB invites the consulting authority to consider including a reference to the Banknote Recycling 

11  

12  

13  
14  
15  

See also Recommendation ECB/2006/13 of 6 October 2006 on the adoption of certain measures to protect euro banknotes 
more effectively against counterfeiting (OJ C 257, 25.10.2006, p. 16). 
OJ L 78, 25.3.2003, p. 16. The ECB understands from the explanatory memorandum to the draft law that conditions for 
reproducing euro banknotes laid down in Decision ECB/2003/4 will be implemented through a CNB decree issued under 
Article 21(f) of the draft law.  
Available on CNB’s website at www.cnb.cz. 
See Article 21(e) of the draft law.  
Document available on the ECB’s website. 

4 

                                                 
Framework  in  the  draft  law  or,  as  the  case  may  be,  in  the  implementing  decree  to  be  issued 

pursuant to Article 21(e) of the draft law.  

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

Done at Frankfurt am Main, 18 June 2009. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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