Explanatory Memorandum to COM(2009)459 - Authentication of euro coins and handling of euro coins unfit for circulation - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2009)459 - Authentication of euro coins and handling of euro coins unfit for circulation. |
|---|---|
| source | COM(2009)459  |
| date | 11-09-2009 |
- Grounds for and objectives of the proposal
The objective of this proposed Regulation is to lay down procedures regarding the authentication of euro coins and the handling of euro coins unfit for circulation.
Council Regulation (EC) No 1338/2001 provides for measures necessary for the protection of the euro against counterfeiting i. Among other provisions, it establishes the obligation for credit institutions, and a number of other institutions, such as cash transporters, to ensure that euro notes and coins which they have received and which they intend to put back into circulation are checked for authenticity and that counterfeits are detected.
Euro coin authentication has been based until now on the practices put forward in Commission Recommendation of 27 May 2005, concerning authentication of euro coins and handling euro coins unfit for circulation i. The proposed Regulation constitutes the legally binding instrument now necessary for the establishment of a common method for the euro coin authentication to be applied by the institutions concerned and of the necessary controls by Member States.
- General context
i) Euro coin authentication
Counterfeiting of euro coins is a significant threat, particularly for the highest coin denominations. In order to render euro coins safer for the users, coins in circulation need to be regularly checked for authenticity so that counterfeits are detected and removed from circulation. An obligation in that sense was explicitly introduced in Council Regulation 1338/2001, through the modification of 18 December 2008. The large number of Member States which have adopted authentication procedures in line with the provisions of Commission Recommendation of 27 May 2005 has led to a more general acceptance of the efficient methods to detect counterfeits.
There remain, however, substantial differences among Member States in the level of implementation of coin authentication methods. The lack of a mandatory common framework for coin authentication may, in some Member States, constitute an impediment for the institutions concerned to actively look for counterfeits; this creates differences, across the EU, in the degree of protection of the currency. In this context, the present proposal aims to ensure the effective implementation, throughout the euro area, of common procedures for authentication of the circulating euro coins and of control mechanisms of these procedures by the authorities.
In the course of the authentication process, only genuine euro coins should be cleared for re-circulation. Consequently, all other objects should be rejected, including, mainly, counterfeits and genuine euro coins which are no longer fit for circulation. It is therefore appropriate to also provide for the handling of those unfit euro coins. Euro coins may become unfit for circulation by long use, accident or damage. The circulation of such coins makes them more difficult to use, particularly in coin-operated machines, and may create confusion to the users as to the authenticity of the coins. These unfit coins must, therefore, be removed from circulation. The process related to the withdrawal of these coins from circulation is therefore considered as part of the procedures aiming to protect euro coins against fraud and counterfeiting.
The need for common rules for the handling of euro coins unfit for circulation also stems from the different treatment of such coins in Member States resulting in distorting effects. Indeed, despite the implementation of the relevant provisions in the above mentioned Commission Recommendation, rules and conditions remain different among Member States or, in some cases, there are none. Finally, it must also be ensured that these unfit coins removed from circulation are destroyed, so they could not become the object of fraud.
The need for such binding common rules concerning euro coin authentication and unfit euro coins was underlined in the context of the evaluation of the above mentioned Commission Recommendation, carried out in line with its Article 12. This was conducted in collaboration with the Member States, which expressed broad support for the provisions currently proposed. For the purpose of the evaluation, a number of workshops and meetings were organised, also involving representatives of the private sector.
The proposed measures are designed in such a way as to avoid causing disruption to the institutions concerned. In particular, euro coin authentication is proposed to be carried out either with appropriate coin-processing machines or by trained staff. It was seen that the main actors concerned, namely the cash-in-transit companies, are already equipped with high performing machines, which either are or can easily be adjusted to detect counterfeits. In cases where institutions use manual authentication methods, the relevant staff (cashiers) has normally received the relevant training.
As a result, by using existing coin sorting processes and equipment, euro coin authentication can be implemented without disrupting the cash cycle and without creating the need for significant investment.
Contents
- Summary of the proposed action
The proposed procedures are based on the practices laid down in Commission Recommendation of 27 May 2005 concerning authentication of euro coins and handling of euro coins unfit for circulation i, taking into account the evaluation of its functioning.
The proposed Regulation includes provisions regarding:
The institutions concerned must ensure that euro coin authentication is carried out by means of coin processing equipment capable of detecting counterfeits; or manually, by trained staff. The coin processing equipment is to be adjusted on the basis of a detection test, the modalities of which are defined by the European Technical and Scientific Centre (ETSC). Testing possibilities for these machines shall become available at the Coin National Analysis Centres and at the ETSC and a list of the machines having successfully undergone the test will be published by the Commission. Member States will be responsible for overseeing the functioning of the euro coin authentication system.
Member States remove from circulation not only counterfeits but also those genuine euro coins which are no longer fit for circulation. They reimburse those which have been rendered unfit by long circulation or accident but would refuse reimbursement of coins become unfit as a result of manipulation. The designated services in Member States will charge a 5% levy on the value of unfit coins submitted but have the possibility to offer broad exemptions to companies that cooperate closely with the authorities in cleaning the market from counterfeits and unfit coins. Specific packaging will be required for submissions and Member States will destroy the unfit coins removed from circulation.
Provision is made for reporting and communication, with a view to presenting to Member States a global view of the relevant activity.
The proposed procedures on the euro coins are complementary to the ones proposed by the European Central Bank concerning the detection of counterfeit euro banknotes and their fitness sorting.
The proposed provisions are designed for Member States which use the euro as their single currency. This is because euro coin authentication methods, in a less complete form, are already established for non-euro area Member States in the modified Regulation 1338/2001.
- Legal basis
The legal basis is the article 123 i of the Treaty establishing the European Community, and in particular its third sentence.
- Subsidiarity principle
While EC Treaty Article 106 i attributes the responsibility for issuing coins to Member States, measures of common application in the Member States having the euro as their single currency have been taken at Community level, generally by the Council. Such measures concern either the harmonisation of denominations and technical specifications, based on Article 106 i or, most frequently, the protection of the euro, based on Article 123 i, third sentence. Particularly regarding counterfeit euro coins, the need for action at Community level led to the adoption of Council Decision 2003/861/EC i by which Member States entrust the Commission with the coordination of the activities of the competent technical authorities to protect euro coins against counterfeiting.
On the specific issue of euro coin authentication, action at EU level was initiated with Commission Recommendation of 27 May 2005. Based on the Recommendation, some Member States adopted specific legislation, while the majority are implementing its provisions based on generic national rules. With the adoption of the explicit requirement for coin authentication in Regulation (EC) 1338/2001, it is clear that a uniform authentication procedure of euro coins is necessary. This requires procedures established at EU level i.
- Proportionality principle
The proposal complies with the proportionality principle. The provisions included in this proposal do not go beyond what is necessary to achieve the objectives of the protection of euro coins against counterfeiting and the handling of unfit euro coins. In addition, the proposed measures are designed in such a way as to avoid causing disruption to the institutions concerned.
- Choice of instruments
The instrument chosen, the Regulation is the most adequate instrument to ensure that euro coins benefit from the same level of protection against counterfeiting throughout the Union. This is because the methodology proposed is very specific and needs to be directly applicable, since it does not entail national differences.
The proposal has no implication for the Community budget.