Central Banks and Cash Round-Up

With the abundance of central bank annual and financial reports being published each month, we will focus from now on a region/continent per Currency News™ issue. This month we look at Europe, and the annual reports of some Eurosystem central banks, as well as the central banks of Albania, Denmark, Kosovo and Hungary.

Central Bank of Albania (CBA)

Banknotes: as of end 2022, around 161 million notes were in circulation worth around ALL 394.7 billion, an increase of 4.9% in volume terms and 6% in value terms.

100 million banknotes were processed and checked for authenticity and fitness for recirculation. The sorting rate was 20.7%, compared to 19% in 2021. The banknote circulation coefficient for 2022 was 0.66, implying that a banknote is returned to the CBA on average less than once a year.

Coins: at the end of 2022, there were 257 million coins in circulation, compared to 241 million at the end of 2021, 6.6% more. The value of coins reached ALL 6.44 billion, compared to ALL 5.96 billion at the end of 2021, 8% more.

Counterfeiting: throughout 2022, 343 counterfeit banknotes and 79 counterfeit coins were withdrawn from circulation. The ratio remains low, at 2.2 ppm.

www.bankofalbania.org/Publications/Periodic/Annual_Report/.

Danmarks Nationalbank (DNB)

Circulation: the value of banknotes and coins in circulation fell by 3.2% during 2022. Behind those figures, coins were actually up 0.5% but the fall was driven by a decline in the Kr 1,000 note denomination in response to an increase in interest rates in the second half of the year.

In the first half of 2022 banknote values actually rose 0.7%, driven by demand for the Kr 500. The Kr 1,000 fell 1.7%. In the second half of the year the Kr 1,000 circulation value fell 7.5%. The Kr 500 now represents 27.4 billion compared with the Kr 1,000’s 25.2 billion.

In 2020 and 2021 the value of banknotes and coins in circulation had increased by 5.6% and 4.1% respectively.

Counterfeiting: The number of counterfeits rose from 795 to 1,452, 83%, although only 985 of that total were found in circulation. This figure equates to eight counterfeits per million notes in circulation (assumes a circulation figure of 190.7 billion banknotes). The counterfeits were largely the Kr 1,000.

Coin and banknotes expenses: while the value in circulation fell 3.2%, the total expenses rose 4.2%.

nationalbanken.dk

Eesti Pank (EP)

Banknotes: Eesti Pank (EP), Estonia’s central bank, issued 28.5 million banknotes in 2022 with a value of €1.02 billion, less than its average issue of 32.4 million since adopting the euro. In common with most eurozone countries, the €50 was the most popular note, accounting for 55% of issues. It is an ATM denomination used both for transactions and storing value.

Banknote returns, at 17.6 million, were flat year-on-year compared with 2021, but less than the 26.4 million average since euro adoption.

Coins: EP issued 30.2 million coins in 2022 with a total value of €11.9 billion. The coins issued most were 1 and 2 euro cent coins, which made up 44% of all the coins issued. Demand was similar to 2021 but down on the long term average of 36 million coins issued per year.

8.3 million coins were returned in 2022 with a total value of €5.5 million. The coin returned most commonly was the 20 cent, of which 2 million were returned.

The ECB’s survey of payment behaviour found that cash and card payments are used about equally for transactions, at 46% of purchases each. Estonians had a lower commitment to being able to pay in cash than the euro are average – the ability to pay in cash was considered very important or important by 47% of respondents to the survey, 13% less than the euro area average of 60%.

The ECB survey found that Estonia has the second highest percentage of people storing cash at home, 49%.

An Eesti Pank survey found that around 90% of people in Estonia live within 5 kms of a place where they can withdraw cash. Cash is most commonly withdrawn from ATMs. There were 667 ATMs in Estonia in 2022, of which 250 also accept cash depositing. There were 25 bank offices that could handle cash deposits and withdrawals in 2022, and 684 locations across Estonia where cash could be withdrawn from shop tills.

Cash processing: 17.3 million banknotes were processed in 2022, 3.2 million fewer than in 2021. 4.4 million were classed as unsuitable for circulation. 319 million banknotes have been processed since Estonia joined the euro area, with a yearly average of 26.6 million.

Production: EP procured 16.64 million €50 banknotes on behalf of the ECB from Bundesdruckerei in Germany. In 2023 the bank has ordered 8.4 million €50 notes from Oberthur Fiduciaire.

Eesti Pank received 10 million 2 cent, 5.6 million 5 cent, 4.2 million 10 cent, 4.9 million 20 cent, and 4 million €2 circulation coins from the Portuguese mint INCM.

www.eestipank.ee/en/publications/annual-report/2022/eesti-pank-annual-report-2022.

European Central Bank (ECB)

Banknotes: the Russian invasion of Ukraine drove an increase in demand for cash from March 2022, while the raising of interest rates in July 2022 led to a flow of some banknotes back into the ECB. The result was an increase in the volume of banknotes of 4.5% to 295 billion pieces and a rise in the value of 1.8% to €1.57 trillion.

The National Central Banks (NCBs) of the ECB processed 24.8 billion used banknotes, of which 3.2 billion were destroyed as unfit for further circulation.

Coins: the value of coins in circulation rose by 4% to €32.5 billion. 145 billion coins were in circulation.

Counterfeiting: 376,000 counterfeits were discovered, equivalent to 13 counterfeits per million notes in circulation. This figure was an increase of 8.4% on 2021, but still lower than most previous years.

Other: the ECB conducted a payments survey of consumers and, for the first time, a payment survey of businesses. The number of payments made using cash at the point of sale remained high at 59%, although this is a reduction from 72% in the 2019 survey. 96% of businesses serving mostly private customers take payment in cash. 90% expect this to remain true.

In its payment section, the ECBs annual report talked about its work preparing for a possible future Digital Euro.

The ECB continues its work on new security features. It is also working to reduce the environmental footprint of the cash cycle.

Annual Report: (www.ecb.europa.eu/pub/annual/html/index.en.html).

Central Bank of Kosovo (CBK)

Kosovo adopted the euro in 2002 as its de facto legal currency, despite not being part of the European Union or the eurozone or having a formal agreement with the ECB. Unlike other countries that use the euro under formal arrangements and have their own versions of euro coins, Kosovo does not mint its own coins.

In 2022 the overall value of cash supply grew by 1.5% compared with 2021. The CBK supplied the banking sector with over 19 million banknotes (worth c. €981.5 million) and over 10.54 million coins (worth c. €1.62 million).

Demand for denominations: during 2022, demand for €200, €100, €5 and €20 notes increased by 46.6%, 20.1%, 22% and 7.6% respectively. Demand for €50 notes decreased by 63.1% and for €10 notes by 12.1% compared to 2021.

Recirculation: about 18.9 million banknotes (42% of the total number deposited by the banking sector) during 2022 were classified as unfit for recirculation and were withdrawn, resulting in a significant improvement of the quality of cash in circulation. The quality was also improved by supplying the banking sector with completely new euro banknotes brought in from the euro area. In 2022, the CBK supplied the banking sector with more than 2.39 million new banknotes (12.5% of the total number of notes supplied).

Coins: demand for coins increased by around 36.2% compared with 2021. Demand was dominated by the small value coins of (1, 2 and 5 euro cents), which together increased by 40.8% and made up 67.4% of the total supplied. The supply of €2, €1 and 50, 20 and 10 cent coins increased by 27.5% compared to the previous year.

https://bqk-kos.org/publications/cbk-annual-report/?lang=en.

Magyar Nemzeti Bank (MNB)

In 2022, currency in circulation increased, reaching HUF 8,226.1 billion by the end of the year, a 7.2% cent increase compared to the end of the previous year. The increase was similar to that of 2021 (7.1%).

In terms of volume, 668.6 billion notes were in circulation, and 2,354.2 billion coins, up by 7% and 6% respectively. The values and volumes do not include commemorative notes or coins.

The two largest banknote denominations play a dominant role in cash turnover: at the end of 2022 they jointly accounted for 73% of the volume.

Relative to GDP and households’ consumption expenditure, the amount of currency in circulation has been on the decline for two years, amounting to 12.3% of GDP and 25.1% of consumption at the end of 2022.

266.6 million banknotes were issued to credit institutions and the Hungarian Post, and 222.2 million notes were returned. 80.9 million notes were destroyed.

In 2022, the MNB focused on operations. The number of customers increased and MNB’s focus was on managing their banknote handling machines, as well as the legal compliance of credit institutions regarding the minimum required level of cash services offered to households.

Counterfeiting: counterfeiting of the recently replaced Hungarian banknotes remained negligible. 518 counterfeit banknotes were identified in 2022 among the total banknotes in circulation, equivalent to a ratio of 0.8 ppm. More than 90% of the counterfeits were the high denomination HUF 10,000 and 20,000 notes.

Coins: MNB issued 28 collector coins in 16 thematic schemes. Six previously started series were continued, and three new ones were launched in 2022. In addition, 2 million 100 forint commemorative coins entered circulation to mark the opening of the Money Museum.

Compared to the end of the previous year, the volume of forint coins in circulation expanded by 6%.

Production: expenditure on cash production was HUF 11.7 billion in 2022, HUF 0.6 billion more than in the previous year. Of this, HUF 7.4 billion was spent on banknotes, 2% less than in 2021 due to lower volumes. HUF 4.3 billion was spent on the production of circulating coins, 23% higher than 2021 due to coin replacement programmes and higher raw material costs.

Subsidiaries: the report also provides a brief summary of its subsidiaries, including banknote printing and coins. Pénzjegynyomda Zrt (Hungarian Banknote Printing plc), which produces forint banknotes as well as other secure documents and cards, along with its subsidiary Diósgyőri Papírgyár (DIPA), which makes security paper, returned a profit of HUF 3.1 billion. Magyar Pénzverő (the Hungarian Mint) returned a profit of HUF 566 million.

www.mnb.hu/en/publications/reports/annual-report/annual-report-2022.

Banco de España (BdE)

Banknotes: in 2022 BdE put just under 2.6 billion banknotes into circulation, equivalent to €79.3 billion, a 0.4% increase compared with 2021.

2.8 billion notes were withdrawn, €88.7 billion in value terms, which was 10% higher than the previous year. Lodgements and withdrawals of banknotes remained at 85% of the volume of the years prior to pandemic.

Net issuance in Spain in 2022 was negative, 282 million banknotes worth €9.32 billion. The main reason was the recovery of tourism in 2022, since foreigners coming to Spain contribute to the increase of banknotes in circulation.

BdE processed c. 2.78 billion notes, of which 82.4% were recirculated and the remainder destroyed. In addition, 514 visits were made to the facilities of CIT companies and 223 visits to bank branches, in which the operation of 724 processing machines was verified.

Coins: 845 million coins were put into circulation, equivalent to €208 million, a 65.5% increase in relation to 2021 figures, and only 6.6% less than prior to the pandemic.

Net issuance of coins in Spain in 2022 was 794 million pieces (€172 million), almost double and six times, respectively, higher than in 2021. Issuance was concentrated in the three lowest denominations (65.3%). Of the higher denominations, the coin most in demand was the €1 (13.5% ), in contrast to Eurosystem area as a whole, where the preference is for the €2 coin.

BdE carried out control checks on 44% of currency treatment centres, verifying around 974 million €2, €1 and 50 cent coins.

Counterfeits: 58,593 counterfeit euro banknotes were identified in 2022 among the total banknotes in circulation, an increase of 3.8% compared with 2021. Additionally, the counterfeit National Analysis Centre registered 28,557 banknotes identified as counterfeits by the police prior to circulation.

26,175 counterfeits coins were withdrawn, a decrease of 10% when compared with 2021. No counterfeits were withdrawn prior to circulation.

On September 2022, BdE’s Investigation Brigade (BIBE) dismantled an organised crime group involved in the production and distribution of counterfeit euro high denomination banknotes, one of the largest offset printshops discovered in Europe. The counterfeiters were using top-end technology to produce the counterfeit bills, in what are considered to be some of the most sophisticated fakes ever detected in the EU.

www.bde.es/informeinstitucional2022.