Opinion of the European Central Bank of 13 December 2010 on authenticity, fitness checking and recirculation of euro banknotes (CON/2010/90)
Date: 2010-12-13
Institutions: European Central Bank
Subjects: Malta, counterfeiting, euro, money, national law

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 13 December 2010 

on authenticity, fitness checking and recirculation of euro banknotes  

(CON/2010/90) 

Introduction and legal basis 

On 17 November 2010, the European Central Bank (ECB) received a request from the Central Bank of 

Malta (CBM) for an opinion on a draft CBM Directive No. 10 on the Authenticity and Fitness Checking 
and Recirculation of Euro Banknotes issued under the Central Bank of Malta Act1  (hereinafter the ‘draft 

Directive’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  and  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 provisions2, as the draft Directive concerns currency matters, means 

of  payment  and  the  Central  Bank  of  Malta.  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 CBM Directive 

1.1  Under Article 5(3) of the Central Bank of Malta Act, read in conjunction with Article 5(1)(e), the 

CBM is empowered to issue directives to provide for the circulation of euro banknotes. The draft 

Directive will be a binding legal act, transposing Decision ECB/2010/14 of 16 September 2010 on 
the  authenticity  and  fitness  checking  and  recirculation  of  euro  banknotes3  and  will  replace  the 

CBM’s current Directive No. 10 on the Banknote Recycling Framework (BRF). 

1.2  The draft Directive lays down measures on the authenticity, fitness checking and recirculation of 

euro banknotes and will enter into force on 1 January 2011. 

1  
2  
3  

Chapter 2014 of the Laws of Malta  
OJ L 189, 3.7.1998, p. 42.  
OJ L 267, 9.10.2010, p. 1. 

 
 
 
 
 
                                                 
2. 

General observations 

2.1  The  common  rules  and  procedures  on  authenticity,  fitness  checking  and  recirculation  of  euro 

banknotes  laid  down  in  the  draft  Directive  impose  obligations  on  cash  handlers  and  seek  to 

safeguard  the  integrity  of  euro  banknotes  as  a  means  of  payment.  The  ECB  welcomes  the  draft 

Directive  and  is  confident  that  its  provisions  will  ensure  the  preservation  of  euro  banknotes  in 

circulation and will result in the maintenance of public confidence in euro banknotes. 

2.2  Council Decision 98/415 does not contain provisions under which national authorities are required 

to  consult  the  ECB  on  implementing  measures.  Subject  to  the  specific  observations  in  Section  3 

below,  the  ECB  notes  that  the  draft  Directive  generally  constitutes  a  faithful  reproduction  of  the 

provisions  of  Decision  ECB/2010/14  and  introduces  no  new  points.  Also,  as  Decision 

ECB/2010/14  applies  to  cash  handlers  by  virtue  of  Article  6(1)  of  Council  Regulation  (EC) 

No 1338/2001  of  28  June  2001  laying  down  measures  necessary  for  the  protection  of  the  euro 
against  counterfeiting4,  which  refers  to  ECB  procedures  for  checking  euro  banknotes,  there is  no 

strict need to implement Decision ECB 2010/14 into Maltese law. It is also acknowledged that the 

draft  Directive  may  contribute  to  making  cash  handlers  in  Malta  comply  with  the  rules  and 

procedures laid down in the Decision ECB/2010/14. 

3.  

Specific observations 

3.1  Paragraph  37  of  the  draft  Directive  provides  that  the  draft  Directive  will  enter  into  force  on 

1 January  2011,  with  the  reporting  obligation  laid  down  in  paragraph  34  to  take  effect  from 

1 January  2012.  The  reporting  obligations  of  credit  institutions  and  professional  cash  handlers, 

defined as ‘intermediaries’ in the BRF, are, at present, dealt with in paragraph 16 of the BRF. The 

wording  of  paragraph  37  of  the  draft  Directive  should  be  reconsidered  given  that  it  may  create 

some ambiguity as it could be inferred that categories of cash handlers currently within the scope of 

the BRF would, in future, not be obliged to report to the CBM until 1 January 2012. 

3.2  The ECB also notes that paragraph 11 of the draft Directive entrusts responsibility for the testing of 

banknote  handling  machines  to  the  CBM,  thereby  appearing  to  limit  the  scope  of  Article  3(3)  of 

Decision  ECB/2010/14.  Therefore,  paragraph  11  of  the  draft  Directive  should  be  amended 

accordingly. 

3.3  Furthermore, paragraph 12 of the draft Directive provides that euro banknotes delivered directly to 

a cash handler by the CBM do not require authenticity and fitness checks prior to recirculation. The 

ECB also notes a discrepancy here with Article 3(4) of Decision ECB/2010/14 which provides that 

authenticity  and  fitness  checks  are  not  required  in  the  case  of  euro  banknotes  that  have  been 

delivered directly to a cash handler by a national central bank. The draft provision seems to limit 

4  

OJ L 181, 4.7.2001, p. 6. 

2 

 
                                                 
the scope of the equivalent provisions of Decision ECB/2010/14 and the ECB is of the opinion that 

the relevant provisions of the draft CBM Directive should be amended accordingly. 

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

Done at Frankfurt am Main, 13 December 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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