Opinion of the European Central Bank of 27 June 2014 on the processing, distribution and protection against counterfeiting of banknotes and coins in Hungary (CON/2014/48)
Date: 2014-06-27
Institutions: European Central Bank
Subjects: Hungary, counterfeiting, fight against crime, issuing of currency, money, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 27 June 2014  

on the processing, distribution and protection against counterfeiting of banknotes and coins in 

Hungary  

(CON/2014/48) 

Introduction and legal basis 

On 4 June 2014, the European Central Bank (ECB) received a request from the Magyar Nemzeti Bank 

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

distribution  of  banknotes,  and  on  technical  tasks  relating  to  the  protection  of  banknotes  against 

counterfeiting  (hereinafter  the  ‘draft  banknote  decree’);  and  (ii)  on  the  amendment  of  rules  on  the 

processing  and  distribution  of  coins,  and  on  technical  tasks  relating  to  the  protection  of  coins  against 

counterfeiting (hereinafter 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  second  indent  of  Article  2(1)  of  Council  Decision 
98/415/EC1,  as  the  draft  decrees  relate  to  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 

1.1   According to the explanatory memorandum to the draft decrees, the MNB has reviewed its decree 
on  banknotes2  and  its  decree  on  coins3  and  proposes  several  amendments  for  the  purposes  of: 

(i) ensuring  the  sound  functioning  of  banknote  handling  machines  used  by  credit  institutions,  the 

postal  service  and  other  entities  processing  cash  (hereinafter  collectively  referred  to  as  ‘cash 

processors’) in verifying the authenticity and fitness of Hungarian forint banknotes; (ii) enhancing 

the  protection  of  banknotes  against  counterfeiting;  (iii)  ensuring  the  quality  of  banknotes 

recirculated by cash processors; (iv) improving the security of banknotes and coins in circulation; 

and (v) ensuring the availability for retail customers of certain cash distribution activities  carried 

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Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

MNB  Decree  11/2011  (IX.  6.)  on  the  processing  and  distribution  of  banknotes  and  on  technical  tasks  relating  to  the 
protection of banknotes against counterfeiting (hereinafter the ‘decree on banknotes’). 
MNB Decree 12/2011 (IX. 6.) on the processing and distribution of coins and on technical tasks relating to the protection 
of coins against counterfeiting (hereinafter the ‘decree on coins’). 

 
 
 
 
                                                 
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out  by  credit  institutions  and  the  postal  service.  The  explanatory  memorandum  also  outlines  that 

amendment of the decree on banknotes and the decree on coins has become necessary in the light 
of the recently adopted Law on the Magyar Nemzeti Bank4, which, inter alia, governs the MNB’s 

authority  to  issue  banknotes  and  coins,  as  well  as  its  competence  to  protect  the  Hungarian  forint 

against counterfeiting.  

1.2   The specific amendments effected by the draft decrees include: (i) an increase to 100 per cent in the 

ratio  of  forint  banknotes  to  be  checked  by  cash  processors  using  banknote  handling  machines 

successfully  tested  by  the  MNB,  with  an  exception  for  banknotes  that  are  damaged,  difficult  to 

identify,  or  withdrawn  from  circulation;  (ii)  the  introduction  of  stricter  rules  for  operators  of 

banknote handling machines; (iii) the extension of the scope of the data reporting requirements for 

entities wishing to operate banknote handling machines, in order  to provide the MNB with  more 

information  for  monitoring  purposes;  (iv)  the  introduction  of  data  reporting  requirements  for 

manufacturers  of  banknote  handling  machines  in  Hungary  and  distributors  of  banknote  handling 

machines  manufactured  outside  Hungary;  (v)  further  updates  to  the  recently  amended  rules 

applicable  to  the  business  contingency  plans  of  credit  institutions  and  post  offices;  (vi)  the 

introduction  of  new  rules  on  the  exchange  of  banknotes  and  coins  withdrawn  from,  or  unfit  for, 

introduced  by 
circulation;  and  (vii)  amendments  necessary 
Decision ECB/2012/195.  The  draft  decrees  also  update  references  to  applicable  Hungarian 

the  amendments 

to  reflect 

legislation. 

2. 

General observations  

2.1  The  ECB  welcomes  the  aim  of  the  draft  decrees  to  facilitate  the  improvement  of  the  security  of 

banknotes and coins in circulation in Hungary, as well as the efforts of the MNB to enhance the 

identification of counterfeit Hungarian forint banknotes and coins, and Hungarian forint banknotes 

and  coins  unfit  for  circulation.  Nevertheless,  having  regard  to  the  fact  that  an  amendment  to  the 
decree on banknotes was adopted earlier this year6, the need for a stable legal framework governing 

banknotes and coins must be emphasised. 

2.2  As previously observed7, Hungary is a Member State with a derogation pursuant to Article 139 of 

the  Treaty  and  the  ECB’s  requirements  regarding  the  recirculation  of  euro  banknotes  in  Member 
States that have adopted the euro do not apply to the MNB8. These requirements will apply once 

Hungary adopts the euro and the MNB becomes a fully integrated member of the Eurosystem. In 

this respect, the ECB welcomes the MNB’s proposed alignment of the decree on banknotes with 

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Law CXXXIX of 2013 on the Magyar Nemzeti Bank. 
Decision ECB/2012/19 of 7 September 2012 amending Decision ECB/2010/14 on the authenticity and fitness checking 
and recirculation of euro banknotes (OJ L 253, 20.9.2012, p. 19). 

See MNB Decree 2/2014 (II. 14.). 
See  Opinions  CON/2013/89,  CON/2011/59,  CON/2008/90,  CON/2006/2,  CON/2005/19  and  CON/2005/3.  All  ECB 
opinions are published on the ECB’s website at www.ecb.europa.eu. 

See, in particular, Opinions CON/2013/89, CON/2011/59 and CON/2008/90. 

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Decision ECB/2012/9 and notes that this is in accordance with a suggestion made by the ECB in a 
previous opinion9 on Hungarian banknotes. 

2.3  The ECB reiterates its previous observations on the MNB’s currency-issuing operations10 and urges 

the Hungarian legislator to consider addressing observations made in past ECB opinions and in the 
Convergence Report11 which remain outstanding. This includes the avoidance of frequent changes 
to Hungarian legislation relating to the MNB12. 

3. 

Specific observations 

3.1  Several  provisions  in  the  draft  coin  decree13  and  certain  provisions  in  the  decree  on  coins  which 
have not been amended relate to banknotes14. In a similar  manner, certain provisions of the draft 
banknote decree relate to coins15. For the purposes of consistency and legal certainty, all provisions 

in the draft coin decree and in the decree on coins which solely relate to banknotes should, insofar 

as  possible,  be  exclusively  contained  in  the  decree  on  banknotes,  and  all  provisions  in  the  draft 

banknote  decree  which  solely  relate  to  coins  should  be  exclusively  contained  in  the  decree  on 

coins.  

3.2  Furthermore, the definition of ‘legal tender’ in the draft coin decree16 is misleading as it only makes 

reference  to  coins,  whereas  banknotes  are  also  legal  tender.  This  definition  would  benefit  from 
further clarification. The corresponding definition in the decree on banknotes17 would also benefit 

from clarification for the similar reason that it only makes reference to banknotes. 

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

Done at Frankfurt am Main, 27 June 2014. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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See paragraph 3.3 of Opinion CON/2013/89. 
See paragraph 3.2.5 of Opinion CON/2013/56 and paragraph 2.3 of CON/2013/89. 
See Opinions CON/2013/71 and CON/2013/56, as well as the ECB’s Convergence Report of June 2014, in particular the 
assessment made under ‘Issue of banknotes’, p. 329. 
See,  for  example,  Opinions  CON/2013/56,  CON/2012/43,  CON/2011/104,  CON/2010/91,  CON2008/83  and 
CON/2007/14. 
See points 8, 9, 11 and 14 of Article 1 of the draft coin decree. 
See, for example, point 10 of Article 1 of the decree on coins. 
See points 11b, 11c, 11d and 16 of Article 1 of the draft banknote decree. 
See point 19 of Article 1 of the draft coin decree. 
See point 23 of Article 1 of the decree on banknotes. 

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