Opinion of the European Central Bank of 9 December 2011 on the authentication of euro coins and handling of euro coins unfit for circulation and the imposition of administrative measures and penalties (CON/2011/105)
Date: 2011-12-09
Institutions: European Central Bank
Subjects: Malta, administrative sanction, counterfeiting, euro, money, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 9 December 2011 

on the authentication of euro coins and handling of euro coins unfit for circulation and the 

imposition of administrative measures and penalties 

(CON/2011/105) 

Introduction and legal basis 

On 16 November 2011, the European Central Bank (ECB) received a request from the Central Bank of 

Malta  (CBM)  for  an  opinion  on  its  draft  Directive  No  11  on  the  authentication  of  euro  coins  and  the 

handling of euro coins unfit for circulation (hereinafter the ‘draft Coins Directive’) and Directive No 12 

on the administrative  measures  and penalties for offences and infringements  under the Central Bank of 
Malta Act1 (hereinafter the ‘draft Administrative Penalties Directive’; the draft Coins Directive and the 

draft  Administrative  Penalties  Directive  are  hereinafter  collectively  referred  to  as  the  ‘draft  CBM 

directives’). 

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  ECB  by  national  authorities  regarding 
draft legislative provisions2 as the draft amendments concern currency matters, means of payment and the 

CBM.  In  accordance  with  the  first  sentence  of  Article 17.5  of  the  Rules  of  Procedure  of  the  ECB,  the 

Governing Council has adopted this opinion. 

1.  

Purpose of the draft CBM directives 

1.1  Article 5(3) of the Central Bank of Malta Act (hereinafter the ‘CBM Act) empowers the CBM to 

issue directives to implement the CBM Act. The draft CBM directives will be published before the 

end of 2011 and are expected to enter into force on 1 January 2012. 

1.2  The draft Coins Directive aligns national law with Regulation (EU) No 1210/2010 of the European 

Parliament and of the Council of 15 December 2010 concerning authentication of euro coins and 
handling  of  euro  coins  unfit  for  circulation3.  It  introduces  specific  obligations  for  the  CBM  with 

regard  to  the  authentication  procedures  and  controls.  Furthermore,  it  contains  provisions  on  the 

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Cap. 204 of the Laws of Malta. 
OJ L 189, 3.7.1998, p. 42.  
OJ L 339, 22.12.2010, p. 1. 

 
 
 
 
                                                 
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handling of coins which are unfit for circulation as  a result of use, accident or damage. The new 

procedures  relating  to  euro  coins  are  complementary  to  those  in  CBM  Directive  No  10  on  the 
authenticity, fitness checking and recirculation of euro banknotes4. 

1.3  The draft Administrative Penalties Directive introduces specific penalties for breaches of the CBM 
Act,  the  draft  CBM  directives  and  Regulation  (EC)  No  924/2009  on  cross-border  payments5.   

Annex I sets out the administrative penalties which may be imposed by the CBM without recourse 

to  a  court  hearing.  Annex  II  lays  down  the  administrative  measures  and  penalties  for  failure  to 

comply with CBM Directive No 10. Administrative measures and penalties applicable for failure to 

comply with the draft Coins Directive are listed separately in Annex III.  

2. 

General observations 

2.1  The  draft  Coins  Directive  establishes  obligations  on  cash  handlers  and  seeks  to  safeguard  the 

integrity  of  euro  coins  as  a  means  of  payment.  The  ECB  generally  welcomes  the  draft  Coins 

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

circulation and will therefore maintain the general public’s confidence in euro coins. 

2.2  The  ECB  considers  it  essential  that  any  draft  legislation  should  clarify  the  primacy  and  direct 

application of Union law on the authentication of euro coins and the handling of euro coins unfit for 

circulation.  For  consistency  reasons,  the  ECB  favours  the  use  of  direct  references  to  Regulation 

(EU)  No  1210/2010  or,  alternatively,  reproduction  of  its  provisions  without  any  alterations  or 

additions.   

2.3  With regard to the draft Administrative Penalties Directive, the ECB notes that most of the offences 

provided for are already set out in Subsidiary Legislation 204.056.  

2.4 

In  addition,  although  national  authorities  are  not  formally  obliged  to  consult  the  ECB  on  the 

implementation  of  the  Member  States’  obligation  to  take  the  necessary  measures  to  ensure  that 

breaches  of  Article  6(1)  of  Regulation  (EC)  No 1338/2001  are  subject  to  effective,  proportionate 

and  deterrent  sanctions,  the  ECB  believes  it  is  beneficial  to  harmonise  throughout  the  Union  the 

national  measures  implementing  the  abovementioned  obligation  to  the  extent  possible,  subject  to 
national peculiarities7.  

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5  

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CBM  Directive  No  10  was  the  subject  of    CON/2010/90.  All  opinions  are  available  on  the  ECB’s  website  at 
www.ecb.europa.eu. 
Regulation  (EC)  No  924/2009  of  the  European  Parliament  and  of  the  Council  of  16  September  2009  on  cross-border 
payments in the Community and repealing Regulation (EC) No 2560/2001 (OJ L 266, 9.10.2009, p. 11). 
Central Bank of Malta (Penalties for Offences and Infringements) Regulations, Legal Notice 75 of 2003. 
Paragraph 1.1 of Opinion CON/2010/87. 

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3. 

The draft Coins Directive 

3.1  The  definition  of  ‘euro  coins  unfit  for  circulation’  in  paragraph  3  of  the  draft  Coins  Directive 

should be amended to reflect the definition in Regulation (EU) No 1210/2010 which refers to euro 

coins  that  have  been  rejected  during  the  authentication  process  or  euro  coins  the  appearance  of 

which  has  been  significantly  altered.  The  definition  should  cover  both  euro  coins  unfit  for 

circulation  on  the  basis  of  their  visual  appearance  and  those  unfit  for  circulation  on  the  basis  of 

their technical appearance.  

3.2  With  regard  to  the  delivery  to  the  CBM  of  counterfeits  following  detection,  the  ECB  notes  that 

paragraph  4  of  the  draft  Coins  Directive  only  requires  immediate  delivery  to  the  CBM  (as  the 

designated  national  authority)  in  the  case  of  counterfeits,  thereby  appearing  to  limit  the  scope  of 

Article 3(2) of Regulation (EU) No 1210/2010, which also refers to suspected counterfeit coins and 

euro coins unfit for circulation. Paragraph 4 should be amended accordingly.  

3.3   When dealing with the withdrawal and reimbursement of euro coins unfit for circulation, the draft 

Coins  Directive  does  not  include  a  provision  ensuring  that  after  withdrawal  euro  coins  unfit  for 

circulation are destroyed by physical and permanent deformation, thereby reflecting the obligation 

set  out  in  Article  8(3)  of  Regulation  (EU)  No  1210/2010.  A  paragraph  to  this  effect  should  be 

included in the draft Coins Directive. 

3.4  The ECB notes that paragraph 5 of the draft Coins Directive is not fully consistent with Article 6(3) 

of  Regulation  (EU)  No  1210/2010.  In  particular,  it  should  provide  that  the  number  of  coin-

processing machines checked on an annual basis, represent, in terms of the volume of euro coins 

processed  by  those  machines  during  a  particular  year,  at  least  25%  of  the  total  cumulated  net 

volume of coins issued by Malta from the introduction of euro coins in 2008 until the end of the 

previous  year.  The  current  wording  of  paragraph  5  limits  that  period  to  the  end  of  2010,  thereby 

excluding any developments in the euro coin issuance volume of Malta after 2010. Therefore, the 

ECB recommends aligning paragraph 5 of the draft Coins Directive with Article 6(3) of Regulation 

(EU) No 1210/2010. 

3.5  As regards the composition of the standardised bags or boxes for the packing of euro coins unfit for 

circulation, the ECB notes that paragraph 18(a) of the draft Coins Directive is not consistent with 

Article 10(1)(a) of Regulation (EU) No 1210/2010 for any denominations except EUR 2 and 0,01. 

The draft Coins Directive should be aligned accordingly.  

3.6  The CBM is the competent authority to supervise compliance with Regulation (EC) No 1210/2010 

and to take decisions regarding offences under the draft Coins Directive. In view of the human and 

financial resources required for the performance of these tasks, the ECB has consistently expressed 

its concern that, when allocating additional tasks to national central banks, it must be ensured that 

they have sufficient human and financial resources, both in terms of quantity and quality, for all of 

their tasks, and in particular that their capacity to perform their European System of Central Banks 

or Eurosystem-related tasks is not affected. 

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The draft Administrative Penalties Directive 

4.1  By  virtue  of  recent  amendments  to  Article  56  of  the  CBM  Act,  the  power  to  issue  regulations 

providing  for  administrative  penalties,  formerly  vested  in  the  Minister  for  Finance,  has  been 
transferred to the CBM. Furthermore, the CBM has been empowered8 to issue directives in order to 

impose  administrative  measures  for  breach  of  the  rules  on  the  authenticity,  fitness  checking  and 

recirculation of euro banknotes and coins. 

4.2  The  ECB  reiterates  the  importance  of  effective,  proportionate  and  deterrent  sanctions.  To  ensure 

the deterrent effect of administrative fines, the maximum amount should allow setting the fine at an 

amount which effectively deters cash handlers from breaching their obligations. While defining the 

particular  amounts  of  the  administrative  fines  is  a  national  competence,  the  national  legislator 

should aim at achieving a certain degree of harmonisation across the Member States to contribute 

to  the  establishment  of  a  level  playing  field  among  cash  handlers  within  the  euro  area  without 

prejudice  to:  (a)  the  particularities  of  the  cash  cycle  and  the  organisation  of  cash  handlers  at  a 

national  level;  and  (b)  the  consistency  of  the  levels  of  financial  sanctions  available  in  their  legal 
orders9.In  this  context,  the  ECB  welcomes  the  introduction  of  the  separate  draft  Administrative 

Penalties Directive dealing specifically with administrative measures and penalties in a structured 

manner. 

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

Done at Frankfurt am Main, 9 December 2011. 

[signed] 

The President of the ECB 

Mario DRAGHI 

8  
9   

By virtue of Article 50A of the CBM Act. 
Paragraph 3.4 of Opinion CON/2010/87. 

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