Opinion of the European Central Bank of 28 August 2015 on the circulation of banknotes and coins (CON/2015/29)
Date: 2015-08-28
Institutions: European Central Bank
Subjects: Czechia, counterfeiting, foreign currency, money, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 28 August 2015 

on the circulation of banknotes and coins  

(CON/2015/29) 

Introduction and legal basis 

The  European  Central  Bank  (ECB)  received  a  request  from  the  Czech  Ministry  of  Finance  (‘MoF’  or 

‘consulting  authority’)  for  an  opinion  on  Part  I  of  a  draft  law  amending  certain  laws  concerning  the 

circulation of banknotes and coins and the foreign exchange market and repealing the Foreign Exchange 

Law No. 219/1995 (hereinafter the ‘draft law’). Part I deals with technical amendments to the Law on the 
circulation of banknotes and coins1 (hereinafter the ‘Law’). As the Government is shortly to adopt the draft 

law the consulting authority has asked to receive the ECB’s opinion on an urgent basis.  

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  (hereinafter  ‘the  Treaty’)  and  the  first,  second  and  third  indents  of 
Article 2(1)  of  Council  Decision  98/415/EC2,  as  the  draft  law  relates  to  currency  matters,  means  of 

payment and the national central bank. 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 principal amendments to the Law introduced by Part I of the draft law are as follows.  

a) 

Banknotes  that  have  been  written  on,  drawn  on  or  printed  on/over  and  coins  that  have  holes 

through  them  are  removed  from  the  list  of  what  constitutes  excessive  (non-standard)  damage  to 

domestic banknotes and coins. Such damaged domestic banknotes and coins shall be subject to 

the less onerous administrative regime that applies to lightly damaged domestic tender. 

b) 

The operational requirements imposed on certain self-service devices3 (e.g. ATMs) are relaxed by 

no longer requiring such devices to retain suspicious coins. In view of the fact that such devices do 

not  have  technology  that  allows  them  to  recognise  a  specific  transaction  with  a  suspicious  coin, 

they  will  only  be  required  to  reject  such  coins  and  return  them  to  the  person  using  the  device, 

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2  

3  

Law  No  136/2011  Coll.  on  the  circulation  of  banknotes  and  coins  and  amending  Law  No  6/1993  Coll.  on  Česká 
národní banka.  
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).  
Article 11(2) of the draft law refers to self-service devices (e.g. ATMs or automatic cash telling systems) that facilitate 
the  handling  of  funds  held  on  an  account  with  a  payment  service  provider,  in  terms  of  the  receipt,  exchange  or 
payout  of  domestic  or  foreign  banknotes  or  coins  as  ‘non-anonymous  devices’.  (It  should  be  noted  that  Article  11 
also  regulates  the  handling  of  banknotes  and  coins  by  self-service  devices  that  are  used  for  providing  services or 
paying  out  funds,  without  a  connection  to  an  account;  however  the  operational  requirements  for  this  latter  type  of 
self-service device (referred to in Article 11(1)) are not being amended by the draft law.) 

 
 
 
 
                                                 
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whereas  currently  retention  is  required  for  banknotes  introduced  into  ATMs  and  automatic  telling 

systems. 

c) 

Provisions  are  included  detailing  how  Česká  národní  banka  (ČNB)  shall  handle:  (i)  domestic  and 

foreign  bank  notes  and  coins  which  have  been  seized  on  suspicion  of  being  forgeries,  and 

(ii) claims for compensation should such banknotes prove to be genuine. It also stipulates that ČNB  

will seize suspicious banknotes and coins that are damaged in a non-standard manner, even if they 

later prove to be genuine, without paying compensation to the person from whom they were seized. 

d) 

Individual  administrative  offences  relating  to  the  making  of  reproductions  of  banknotes  and  coins 

(or  of  articles  resembling  them)  and  administrative  offences  against  the  monetary  circulation 

regime and other related offences are specified. 

e) 

A stipulation is added that anyone who accepts domestic banknotes or coins in fulfilment of his own 

claim shall not require any fee in relation to this acceptance. 

For  the  sake  of  completeness,  it  should  be  noted  that  Part  II  of  the  draft  law  repeals  the  Foreign 
Exchange Law4, transferring, in an adapted form, the part of that law dealing with a ‘state of emergency in 
the foreign exchange market’ to the Law on Crisis Management5, and thereby also amending the Law on 

ČNB  No.  6/1993. Finally,  Part III of the  draft law  introduces  a  new criminal  offence  of ‘endangering  the 

foreign  exchange  market’  into  the  Criminal  Code.  The  ECB  does  not  have  any  specific  comments  on 

Parts II and III. 

2. 

General observations 

2.1  The Czech Republic is a Member State with a derogation within the meaning of Article 139 of the 

Treaty. Therefore, the requirements under Union law regarding the handling and protection of euro 

banknotes  and  coins  are  currently  not  fully  applicable  to  ČNB  and  other  entities  in  the  Czech 

Republic. Article 1 of Council Regulation (EC) No 1339/2001 extends certain measures necessary 

for  the  protection  of  the  euro  against  counterfeiting  to  those  Member  States  which  have  not 
adopted  the  euro  as  their  currency6.  Hence,  such  Union  law  is  directly  applicable  in  the  Czech 

Republic  and  must  be  complied  with  by  the  Czech  legislator.  The  reproduction  rules  for  euro 
banknotes  contained  in  Article  2  of  Decision  ECB/2013/107  currently  do  not  apply  in  a  Member 

State with a derogation. All requirements will fully apply once the Czech Republic adopts the euro 

and ČNB becomes a fully integrated member of the Eurosystem. In this context, while taking into 

account the  sovereign powers  of the  Czech legislator, keeping the  Czech legal framework  in line 

with the rules applicable in the euro area will facilitate the Czech Republic’s future participation in 

the economic and monetary union.  

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5  
6  

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Law 219/1995 Coll., as amended. 
Law 240/2000 Coll., as amended. 

Council  Regulation  (EC)  No  1339/2001  of  28  June  2001  extending  the  effects  of  Regulation  (EC)  No 1338/2001 
laying down measures necessary for the protection of the euro against counterfeiting to those Member States which 
have not adopted the euro as their single currency (OJ L 181, 4.7.2001, p. 11). 

Decision  ECB/2013/10  of  19  April  2013  on  the  denominations,  specifications,  reproduction,  exchange  and 
withdrawal of euro banknotes (OJ L 118, 30.4.2013, p. 37).  

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2.2  The  ECB  generally  welcomes  the  proposed  technical  amendments,  which  aim  to  improve  the 

quality of the Law and to reflect the experience of ČNB as the authority responsible for overseeing 

the  monetary  circulation  regime  under  the  Law.  However,  certain  provisions  of  Part  I  of  the  draft 

law  contain  terminology  and/or  provide  for  concepts  which  differ  from  those  established  within 

directly applicable Union law and from procedures applied in the Eurosystem.  

3. 

Specific observations 

3.1 

 As regards Part I of the draft law the ECB has the following comments. 

3.1.1  The  proposed  amendments  to  the  provisions  on  the  handling  of  banknotes  and  coins  with  self-
service technical devices8 do not take into account that Regulation (EC) No 1339/2001 requires a 

specific  regime  for  the  protection  of  the  euro  against  counterfeiting.  Article  6(1a)  of  Council 
Regulation (EC) No 1338/20019 grants a derogation to Member States that do not have the euro as 

their single currency from the obligation, established by the second subparagraph of Article 6(1) of 

that  Regulation,  to  carry  out  authenticity  checks  for  euro  banknotes  in  line  with  the  procedures 

defined by the ECB. However, this derogation only permits that, in deviation from the procedures 

defined  by  the  ECB,  checks  on  the  authenticity  of  euro  banknotes  shall  be  carried  out  either  by 
trained personnel or by a machine for handling banknotes that is on the list published by the ECB10. 

In accordance with the derogation under Article 6(1a) of Regulation (EC) No 1338/2001, either the 

list  of  banknote  handling  machines  published  by  the  ECB  should  be  referenced  or,  alternatively, 

authenticity  checks  by  trained  personnel  should  be  provided  for  in  the  draft  law.  The  remaining 

requirements of Article 6 of Regulation (EC) No 1338/2001 continue to be fully applicable and need 

to  be  complied  with  by  the  Czech  Republic.  In  particular,  the  concept  of  ‘anonymous  and  non-

anonymous equipment’ in the amended Article 11(1) and (2) of the draft law does not appear to be 

in  line  with  Article  6(1)  of  Regulation  (EC)  No  1338/2001,  which  is  also  directly  applicable  in  the 

Czech Republic pursuant to Regulation (EC) No 1339/2001. The institutions and economic agents 

subjected to the authenticity check for euro banknotes by the first subparagraph of Article 6(1) of 

Regulation  (EC)  No  1338/2001  are  required  by  the  third  subparagraph  of  the  same  provision  to 

withdraw  from  circulation  all  euro  notes  and  coins  which  they  know  or  have  sufficient  reason  to 

believe to be counterfeit. Article 11 of the draft law, by contrast, allows such euro banknotes and 

coins to be recirculated when certain devices are used for the authenticity check.  

3.1.2  The ECB further invites the consulting authority to consider aligning the terminology and concepts 

referred to in paragraph 2.2 above with the approaches applied in the euro area. In particular, the 

concept  of  ‘a  [domestic]  excessively  [non-standard]  damaged  banknote’  in  Article  2(4)(d)  of  the 
draft  law  is  not  used  within  the  euro  area,  as  highlighted  in  earlier  ECB  opinions11  on  a  previous 

draft decree and draft law amending the Law. The ECB would moreover urge that the requirements 

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9  

10  
11   

Article 11 of the draft law. See also footnote 3.  

Council Regulation (EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the 
euro against counterfeiting (OJ L181, 4.7.2001, p. 6). 
See https://www.ecb.europa.eu/euro/cashprof/cashhand/recycling/html/tested.en.html 
See  ECB  Opinions  CON/2011/51  and  CON/2009/52.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu. 

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introduced in the Czech Republic should fully reflect the relevant ECB legal acts12 as regards the 

authenticity, fitness checking and recirculation of euro banknotes. 

3.1.3  As regards the reproduction of banknotes and coins, which is dealt with in the amended Articles 14, 

28 and Article 28a of the draft law, the ECB would welcome that these provisions also differentiate 

between  euro  banknotes  and  coins  and  other  foreign  banknotes  and  coins.  In  particular,  the 

terminology referring to euro banknotes should be aligned with the relevant ECB legal acts in this 
field13.  The  respective  provisions  of  the  draft  law  could  moreover  refer  to  the  ECB’s  competence 
under Article 2(5) (c) of Guideline ECB/2003/514 if approved by the Czech legislator. 

3.1.4  Similarly, as regards the provisions on offences and administrative offences relating to the making 
and handling of reproductions of banknotes and coins and articles resembling them15, reference is 

only made to breaching ‘the directly applicable European Union regulations concerning medals and 
tokens  similar  to  euro  coins’16.  The  ECB  would  welcome  that  these  provisions  also  include  an 

explicit reference to Decision ECB/2013/10.  

3.1.5  Furthermore,  as  regards  Article  13  of  the  draft  law  entitled  ‘verification  of  the  authenticity  of 

banknotes  and  coins  by  ČNB’,  it  should  be  clearly  stated  that  this  article  does  not  apply  to  euro 

banknotes.  The  rules  on  authenticity  checks  of  euro  banknotes,  as  laid  down  in  Article  1  of 

Regulation  (EC)  No  1339/2001,  in  conjunction  with  Article  6  of  Regulation  (EC)  No  1338/2001, 

apply directly in the Czech Republic within the mentioned limits of Article 6(1a) of Regulation (EC) 

No 1338/2001. In particular, this derogation remains limited to the means by which the authenticity 

check for euro banknotes is carried out and does not affect the rules on compensation. Therefore, 

the  rules  on  compensation  for  damaged  euro  banknotes  should  preferably  be  aligned  with  the 

procedures defined by the ECB. In order to avoid any legal uncertainty, Article 13 of the draft law 

should differentiate between domestic currency, the euro and other foreign currency. 

3.1.6  Finally, the ECB notes the new Article 5(4) in Part I of the draft law, pursuant to which nobody that 

accepts domestic banknotes or coins in fulfilment of his own claim shall be allowed to charge a fee 

in relation to this acceptance. The new provision is in line with the notion of legal tender, which, it 

should be noted, includes the mandatory acceptance of payments at full value for the discharge of  

12  

13  
14  

15   
16  

See  principally  Decision  ECB/2010/14  of  16  September  2010  on  the  authenticity  and  fitness  checking  and 
recirculation of euro banknotes (OJ L 267, 9.10.2010, p. 1). 
In particular, Article 2 of Decision ECB/2013/10. 

Guideline ECB/2003/5 of the European Central Bank of 20 March 2003 on the enforcement of measures to counter 
non-compliant reproductions of  euro banknotes  and on  the exchange and  withdrawal of euro banknotes  (OJ  L 78, 
25.3.2003, p. 20). 

Articles 28 and 28a of the draft law. 
See Articles 28(1)(a) and 28a(1)(a) of the draft law.  

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monetary debts17. 

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

Done at Frankfurt am Main, 28 August 2015. 

[signed] 

The President of the ECB 

Mario DRAGHI 

17   

See paragraph 3.2 of ECB Opinion CON/2009/52.  

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