The European Central Bank (ECB) has the exclusive right to authorise the issue of euro banknotes by national central banks (NCB). 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 the euro area member states on behalf of the Treasury of the respective country. The European Commission is the competent authority for the coordination of issuances and not the ECB.
Cash management services
The European System of Central Banks is required to ensure, in general, a smooth operation of payment systems.
The introduction of euro banknotes and coins meant that NCBs in the euro area had to deal with different practices applying to cash management organisation and cash transactions due to national specificities (e.g. structure of NCBs' systems and commercial banks' systems, legal regime, transactional behaviour, geographical characteristics).
In February 2007 the ECB's Governing Council approved a timetable for further convergence of NCBs' cash services so as to obtain greater benefits from the single currency and ensure a level playing field.
Although it is necessary to ensure harmonisation of services, due to the specific economic and geographical characteristics of each country, the Eurosystem does not anticipate a single model for cash supply within the euro area.
Under the timetable, NCBs provide, upon request, cash management services to credit institutions of the euro area operating outside their territory.
To ensure a smooth functioning of the cash cycle in euro, appropriate cash management services by the Eurosystem and the implementation of the Single Euro Payments Area (SEPA), the ECB's Governing Council adopted the following measures:
- Common pricing policy for cash transactions of NCBs' corporate clients
- Identification of services provided free of charge by NCBs and services for a fee which may be offered by NCBs' decision
- Common policy on banknote recycling by credit institutions and other professional cash handlers
Common approach to working hours and rules on debit and credit of any cash transactions provided by NCBs at their counters. In order to achieve further convergence, other issues are still examined such as:
- Electronic data exchange with credit institutions in relation to cash lodgements and withdrawals;
- Common banknote packaging standards for free cash management services by NCBs.
The role of the Bank of Greece
The Bank of Greece plays a pivotal role in the cash cycle. The services provided by the Bank and the network of its business units monitor developments and any new circumstances created across 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 the issuance and management of euro banknotes. The Bank's key concern is to ensure the seamless and effective supply of the banking sector with euro banknotes and coins. The demand for euro banknotes is met by the Bank of Greece through annual orders for banknote production, reserves management and effective use of euro banknotes.
Euro banknote production and issuance
Under the Eurosystem, the euro banknote production is organised on the basis of a decentralised system, under which each NCB produces a specific portion from the total quantity of one or more banknote denominations.
This decentralised production system allows the Eurosystem to benefit from economies of scale during the banknote production process and ensure consistent quality of the banknotes produced as each banknote denomination is produced in fewer printing works.
The European Central Bank entrusts 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 in the euro area undertakes to produce the portion corresponding to the same from the total quantity of euro banknotes for a small number only of banknote denominations.
The euro banknote production is carried out either by the NCBs' printing works or by [certified] third parties following a public tender procedure. Those NCBs which have their own or use state printing works can be exempted, if they so wish, from the common public tender procedure; in this case, they can continue to produce the euro banknotes conferred to them in their own printing works. This applies to the Bank of Greece which produces the euro banknotes conferred to it in the Banknote Printing Works of the Bank of Greece (ΙΕΤΑ).
The public tender procedure for the euro banknote production was established in September 2004 by decision of the ECB's Governing Council. The purpose of this procedure is to ensure equal treatment of all candidate suppliers and a transparent process in their selection. Procurement contracts include strict terms of confidentiality, quality and security.
The Banknote Printing Works of the Bank of Greece has undertaken to produce euro coins on behalf of the Greek State.