Central bank control over cash circulation
One of the fundamental duties of the central bank is to ensure the appropriate quality of cash in circulation and to avoid disruptions of cash circulation. Since the late nineties, market actors other than the central bank, involved in wholesale money circulation in Hungary (typically the so-called cash-in-transit companies or CITs, credit institutions and the Post Office), have been recirculating banknotes and coins following the verification of their genuineness and suitability for circulation. The MNB ensures the required quality of the recirculated banknotes and coins through the legal regulation of the conditions of the recirculation, the testing of the types of the banknote verification devices operated by the market actors and the monitoring of compliance with the legal provisions.
Other important duties of the central bank include ensuring that credit institutions and the post office provide cash circulation services meeting the requirements of the public. To that end, the MNB has adopted a rule of law on the conditions of converting cash into other denominations, including the exchanging of damaged banknotes and coins, regarding the monitoring of compliance with such legal regulations a priority area of central bank control.
Central bank audits affecting cash circulation are carried out by the Cash Logistics Unit of the MNB. The legal framework of central bank control is provided for in Act CXXXIX of 2013 on the Magyar Nemzeti Bank (the ‘MNB Act’). Pursuant to the MNB Act, control by the central bank is regarded as public proceedings.
During the administrative inspections, the Cash Logistics Unit conducts audits both on and off the premises of the audited organisation. The organisation audited need not be notified in advance of the launch of the administrative inspection if such notification put the success of the proceedings at risk. Similarly, the Cash Logistics Unit does not notify the audited organisations of the administrative inspection of compliance with their disclosure and information obligations as such inspections are carried out on an ongoing basis.
In the event it is established by the administrative inspection that any provision of the law or any administrative resolution adopted by the MNB has been breached, not complied with or not complied with fully or in due time, the MNB is entitled to apply measures and impose fines pursuant to Act CXXXIX of 2013 on the Magyar Nemzeti Bank.
Contact details of the MNB’s Cash Logistics Unit:
tel.: +36 1 421-3386 és +36 1 421-3367
fax: +36 1 421-3391