Decisions on the issue of euro banknotes and on the allocation of monetary income

As from 1 January 2002 , euro banknotes will be legal tender in all the euro area countries. All banknotes of each denomination will be identical, irrespective of the country in which they will be put into circulation, and they will freely migrate throughout the countries of the euro area.

The Governing Council of the European Central Bank (ECB) has decided that the ECB and the 12 national central banks (NCBs), which together comprise the Eurosystem, shall issue euro banknotes.

The ECB will be allocated a share of 8% of the total value of the euro banknotes in circulation from the start of 2002, while 92% of the euro banknotes will be issued by the 12 NCBs. Each NCB will show in its balance sheet a share of the euro banknotes issued corresponding to its paid-up share in the ECB's capital. The total banknote issue of the Eurosystem will be shown in its consolidated weekly financial statement, as published by the ECB.

In accordance with the principle of decentralisation for the execution of Eurosystem operations, the 12 NCBs will put into and withdraw from circulation, and will physically handle, all euro banknotes, including those issued by the ECB.

The performance of the monetary policy function generates monetary income, also commonly called "seigniorage income". In accordance with the Statute of the European System of Central Banks and of the European Central Bank, this income, generated in the euro area, is to be pooled and to be allocated to the NCBs in accordance with their respective paid-up shares in the ECB's capital, in a manner that ensures that the relative income positions of NCBs are not affected in the future by shifts in banknote circulation.

In the three years from 1999 to 2001, the seigniorage income from the national banknotes in issue was not pooled and allocated. The decision of the Governing Council of the ECB which establishes the regime applicable as from 2002 includes all banknotes in the monetary liabilities of NCBs for the purpose of calculating monetary income. The effect of this inclusion will be phased in under a transitional regime which will be implemented in order to mitigate the impact on the NCBs' current relative income positions. During the transitional period up to the end of 2007, monetary income to be allocated to NCBs will be adjusted by taking into account the differences between the average value of banknotes in circulation of each NCB in the period from July 1999 to June 2001 and the average value of banknotes that would have been allocated to them during that period under the ECB's capital key. This adjustment will be reduced in annual stages until the end of 2007, after which monetary income will be allocated fully in proportion to the NCBs' paid-up shares in the ECB's capital.