According to the Treaty on the functioning of the European Union, euro banknotes fall within the remit of the European Central Bank (ECB) and euro area national central banks. Thus, the latter are responsible for issuing, maintaining and managing the quality of euro banknotes in circulation. As such, the European Central Bank and the 19 national central banks of the Eurosystem must each year define the number of new banknotes needed to replace the banknotes that have become unfit for circulation (approximately 15% of banknotes lodged with the Banque de France are replaced after sorting as they are stained, damaged or torn).
Every year, each national central bank (including the Banque de France) estimates the number of banknotes needed to meet the requirements of its clients, for each of the 7 current denominations in the range of euro banknotes (6 denominations from the end of 2018 once the EUR 500 denomination has stopped being issued). The clients of the Banque de France consist mainly of commercial banks which withdraw banknotes at its counters through cash management companies. At the Banque de France, this estimation is performed using statistical models based on data on lodgements and withdrawals made by commercial banks at its counters.
The ECB acts as coordinator. It centralises the estimates made by each national central bank to organise their supply of banknotes the following year. This process is based on a principle of pooling excess production and stocks. Thus, the ECB distributes available banknotes in the euro area according to the needs of each country
INITIALISATION PHASE : from April-May to July of year N, the national central banks of the euro area estimate the volume of banknotes that they require to meet the needs of their clients for years N + 1 and N + 2. This estimation is decentralised in order to precisely take into account the national specificities.
CONSOLIDATION PHASE : at the end of July of year N the ECB collects, through a written procedure, the estimates of banknote requirements made by the national central banks for the next two years. Over the next three months, the ECB, in conjunction with the national central banks, checks the consistency of national estimates and consolidates them to define a monthly schedule of deliveries of available banknotes for the year N + 1.
FINALISATION PHASE : at the end of November – beginning of December of year N, the ECB Governing Council validates the final banknote delivery schedule for the year N + 1.
ROLL-OUT PHASE : during year N+1, the national central banks organise the logistical aspects according to the predefined schedule for shipping and delivering euro banknotes throughout the various countries of the euro area.
Updated on: 01/10/2017 11:53