Opinion of the European Central Bank of 20 July 2011 on cash recycling and the protection of national and foreign legal tender against counterfeiting (CON/2011/59)
Date: 2011-07-20
Institutions: European Central Bank
Subjects: Hungary, counterfeiting, fight against crime, money, national law

EN 

ECB-Public 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 20 July 2011 

on cash recycling and the protection of national and foreign legal tender against counterfeiting 

(CON/2011/59) 

Introduction and legal basis 

On 3 June 2011, the European Central Bank (ECB) received a request from the Magyar Nemzeti Bank 

(MNB)  for  an  opinion  on  two  MNB  Governor  draft  decrees:  (i)  on  the  processing  and  distribution  of 

banknotes and on technical tasks relating to the protection of banknotes against counterfeiting (the ‘draft 

banknote decree’), and (ii) on the processing and distribution of coins, and on technical tasks relating to 

the protection of coins against counterfeiting (the ‘draft coin decree’; the draft banknote decree and the 

draft coin decree are hereinafter jointly referred to as the ‘draft decrees’) . 

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 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  decrees  relate  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 decrees 

According  to  the  explanatory  memorandum,  the  draft  decrees  are  justified  by  the  increasing  risk  of 

counterfeit forint banknotes, the MNB’s practical experience with the application of the decrees currently 
in force2, the need for a legal framework to assess and manage the operational risks of cash distribution, 

and the obligation to harmonise national legislation with the Union regulations on the protection of euro 

banknotes and euro coins against counterfeiting. 

To that end, the draft decrees, inter alia, provide:  

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from 1 January 2012, only the banknote handling machines tested by the MNB meeting the relevant 

requirements may be operated, 

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2  

OJ L 189, 3.7.1998, p. 42. 
Decree No 2/2009 (I. 23.) of the Governor of the MNB on the processing and distribution of banknotes, and on technical 
tasks relating to the protection of banknotes against counterfeiting and Decree No 3/2009. (I. 23.) of the Governor of the 
MNB  on  the  processing  and  distribution  of  coins,  and  on  technical  tasks  relating  to  the  protection  of  coins  against 
counterfeiting. 

 
 
 
 
                                                 
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from  1  January  2012,  the annual  ratio  of  checked  forint  banknotes  conducted  by  cash  processing 

providers  with  banknote  handling  machines  successfully  tested  by  the  MNB  will  increase  from 

80% to 90%, 

banknotes rejected by staff-operated banknote handling machines, which may sometimes provide a 

lower level of security, that prove to be genuine during the subsequent manual authenticity check 

may not be re-circulated, but will be delivered as unfit banknotes to the MNB, 

from  1  January  2013,  branches  of  credit  institutions  and  the  postal  service  may  only  recirculate 

forint banknotes received as supplies if the authenticity and fitness check of the annual ratio of the 

received  forint  banknotes  is  carried  out  with  a  banknote  handling  machine  successfully  tested  by 

the  MNB,  the  ratio  of  the  checked  forint  banknotes  by  a  successfully  tested  banknote  handling 

machine  has  increased  year  by  year  until  it  reaches  90%  in  2017  and  only  forint  banknotes 

deposited in the specific branch and re-circulated over the counter may be checked manually, 

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the credit institutions and the postal service shall accept small amounts of unfit forint banknotes and 

coins for denomination exchange in return for a limited fee. 

2. 

General comments 

2.1   As  already  stated  in  ECB  Opinion  CON/2008/903,  since  Hungary  is  a  Member  State  with  a 

derogation  pursuant  to  Article  139  of  the  Treaty,  the  ECB’s  requirements  regarding  the 

recirculation  of euro banknotes in Member States that have adopted the euro do not apply to the 

MNB.  These  requirements  will  apply  to  the  MNB  once  Hungary  adopts  the  euro  and  the  MNB 

becomes  a  fully  integrated  member  of  the  Eurosystem.  However,  in  this  respect,  the  ECB 

welcomes  the  MNB’s  alignment  of  Decree  No  2/2009  with  Decision  ECB/2010/14  of 
16 September 2010 on the authenticity and fitness checking and recirculation of euro banknotes4.  

2.2  Under Article 128 of the Treaty, the ECB has the exclusive right to authorise the issue of banknotes 

within  the  Union,  whereas  coins  are  issued  by  euro  area  Member  States  subject  to  the  ECB’s 

approval  of  their  volume.  Consequently,  the  ECB’s  regulatory  competence  concerns  only 

banknotes.  

3. 

Specific observations 

Pursuant  to  Article  21(1)  of  the  draft  banknote  decree,  credit  institutions  and  the  postal  service  may 

charge  a  fee  for  the  exchange  of  fit  or  unfit  forint  banknotes  to  different  denominations  of  fit  forint 

banknotes  or  coins.  As  regards  the  euro  currency,  the  ECB  considers  that  the  replacement  of  euro 

banknotes, whether fit or unfit for circulation, should, as a general rule, be free from any handling fees.  

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4  

Available on the ECB’s website at www.ecb.europa.eu. 
OJ L 267, 9.10.2010, p. 1. 

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

Done at Frankfurt am Main, 20 July 2011. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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