Recycling of euro banknotes
According to the provisions of Article 128 para. 1 of the Treaty on the Functioning of the European Union and of Article 16 of the Statute of the European System of Central Banks (ΕSCB), the European Central Bank (ECB) has the exclusive right to authorise the issue of euro banknotes. A primary task of executing this mandate is to ensure the integrity and preservation of euro banknotes in circulation.
In December 2004, the ECB Governing Council approved a “Framework for the detection of counterfeits and fitness sorting by credit institutions and other professional cash handlers” (the “Framework”), so as to:
allow credit institutions and other professional cash handlers to perform their role in the currency supply in a more effective and more cost-efficient manner;
ensure a good quality of euro banknotes in circulation; and
establish harmonised standards on banknote recycling within the euro area .
The Framework laid down clear requirements as regards banknote recycling, in particular common rules for the detection of counterfeits, as well as minimum standards for euro banknote fitness checking.
NCBs were called to implement the Framework with respect to credit institutions and other professional cash handlers in their jurisdiction by end-2006.
A two-year transition period was provided to credit institutions and other professional cash handlers at national level for the adaptation of their procedures and existing machines in operation.
In December 2006, by a Decision of the ECB Governing Council, the transition period was extended for six euro area countries (France, Greece, Spain, Ireland, Italy and Portugal). For Greece, the transition period expired at end-2010.
On 16 September 2010, the ECB issued Decision ECB/2010/14 on the authenticity and fitness checking and recirculation of euro banknotes (the “ECB Decision”), which came into force on 1 January 2011 and replaced the Framework.
The main objectives of the ECB Decision are:
to lay down common rules and procedures on the authenticity and fitness checking and recirculation of euro banknotes according to Article 6 para. 1 of Council Regulation (EC) 1338/2001
to effectively implement a common policy regarding banknote recirculation by credit institutions and other professional cash handlers in order to avoid competitive distortions within the euro area;
to contribute to the establishment of a single euro cash area;
to recommend to credit institutions and other professional cash handlers the observance of due diligence standards concerning the handling of euro banknotes so as to contribute to maintaining the quality and genuineness of euro banknotes in circulation.