The European Central Bank (ECB) has the exclusive right to authorise the issue of euro banknotes by national central banks (NCBs). However, the responsibility for producing, issuing and withdrawing from circulation euro banknotes is shared by the NCBs of the euro area Member States.
Euro coins are issued by the NCBs of euro area Member States on behalf of the Treasury of the respective country. The European Commission coordinates all coin-related matters at the euro area level.
The European System of Central Banks is responsible for ensuring the smooth functioning of payment systems in general.
The introduction of euro banknotes and coins posed challenges to euro area NCBs, as the organisation of the cash supply chain differs from one country to another, in view of the different national environments (e.g. the structure of the central bank and commercial banking systems, the legal regime, the payment behaviour of the general public and geographical considerations).
In February 2007, the ECB's Governing Council approved a timetable and a roadmap for further convergence of NCBs' cash services with a view to increasing harmonisation and integration so as to allow stakeholders to fully reap the benefits of the single currency and ensuring fair competitive treatment.
Although harmonisation of cash services within the euro area is necessary, in view of the different national economic and geographical environments the Eurosystem does not envisage a “one-size-fits-all” cash supply system.
Under the timetable, NCBs may provide, upon request, cash management services to euro area credit institutions in their respective jurisdictions. To ensure the smooth functioning of the cash cycle in the euro area, the provision of appropriate cash services by the Eurosystem and the implementation of the Single Euro Payments Area (SEPA), the ECB's Governing Council has adopted the following measures:
a common Eurosystem fee policy for cash services of professional clients at NCB counters;
a distinction between free-of-charge services provided by all NCBs and fee-based services that NCBs may decide to offer;
a common policy on banknote recycling by credit institutions and other professional cash handlers;
a common approach to opening hours and debiting/crediting rules for cash services at NCB counters.
In order to achieve further convergence, other issues are still examined such as:
The role of the Bank of Greece
The Bank of Greece plays a pivotal role in the cash cycle. The cash services provided by the Bank and its network keep abreast of changes and the new conditions emerging in the financial system, and contribute to its further development.
As a member of the European System of Central Banks, the Bank of Greece is responsible for issuing and handling of euro banknotes. Its key concern is to ensure a smooth and efficient supply of euro banknotes and coins to the banking sector. Demand for euro banknotes is met by the Bank of Greece through annual orders for banknote production, stock management and efficient use of euro banknotes.
Euro banknote production and issuance
Within the Eurosystem, euro banknote production is organised on a decentralised basis with pooling, whereby each NCB is responsible for the procurement of an allocated share of the total requirement for a certain denomination(s).
This decentralised production system enables the Eurosystem to benefit from economies of scale and helps it to ensure a supply of consistent-quality banknotes, by reducing the number of production sites for each denomination.
The European Central Bank commissions the production of different banknote denominations to the NCBs, taking into consideration to the greatest possible extent the NCBs' preferences and the denominations for which each NCB was responsible the previous year. Each NCB is responsible for the procurement of an allocated share of the total requirement for certain denominations.
Euro banknote production is carried out either by the NCBs' printing works or by accredited manufacturers following a tender procedure. NCBs with in-house printing works or those using public printing works may decide not to participate in the tender procedure and will then continue to produce the euro banknotes allocated to them in those printing works. This is the case with the Bank of Greece, which produces its allocation of euro banknotes at its Banknote Printing Works (ΙΕΤΑ).
A single Eurosystem tender procedure for the production of euro banknotes was established in September 2004 by decision of the ECB's Governing Council. This procedure is designed to ensure equal treatment of all candidate suppliers, as well as transparency in their selection. Procurement contracts include strict confidentiality, quality and security clauses.
The Banknote Printing Works of the Bank of Greece has undertaken to produce euro coins on behalf of the Greek State.
Euro banknote and coin sorting and counting
The Bank of Greece takes all necessary measures to maintain the quality of banknotes in circulation and contribute to counterfeiting prevention. To ensure a smooth banknote lifecycle and high-quality banknotes in circulation, the Bank of Greece monitors the quality of euro banknotes.
As banknotes inevitably deteriorate during circulation, worn or defective banknotes are withdrawn from circulation by the Bank of Greece and replaced by new or fit banknotes. All euro banknotes and coins returned to the Bank of Greece are checked for quality and authenticity on fully automated machines.