In order to achieve greater transparency, the Magyar Nemzeti will publish the production costs of forint banknotes and coins by denomination, as well as the annual cost of producing banknotes and coins
Which companies are involved in the production of forint banknotes?
Forint banknotes are produced to the order of the Magyar Nemzeti Bank by the Hungarian Banknote Printing Company, an enterprise wholly owned by the MNB. Special banknote paper required for printing forint banknotes is produced by the Diósgyőr Papermill, a wholly owned subsidiary of the Hungarian Banknote Printing Company. Both organisations have long been involved in the production of forint banknotes. The Diósgyőr Papermill, Hungary’s oldest paper mill in operation, has over 200 years of tradition. The Hungarian Banknote Printing Company has been producing banknotes since the 1920s and, obviously, the very first forint banknotes were printed there. The Diósgyőr Papermill and the Hungarian Banknote Printing Company were reconstructed in the first part of the 1990s, as a result of which the new series of forint banknotes have been produced using advanced materials and new, state-of-the-art technology and procedures.
Where are forint coins minted?
Forint coins are produced to order of the Magyar Nemzeti Bank by the Hungarian Mint, an enterprise 100% owned by the MNB. The Mint has been minting coins since the 1920s and, therefore, the very first forint coins were also struck here. Prior to the complete replacement of circulation coins in 1993, the Mint underwent a large-scale investment and restructuring programme in the early 1990s.
- decides on the denomination supply of the forint, has banknotes and coins produced and puts them into circulation, and keeps cash stock in order to satisfy the demand for cash of the economy;
- continuously checks the quality of cash in circulation, and replaces worn-out currencies;
- provides for the protection against the counterfeiting of forint banknotes and coins;
- regulates, oversees and provides professional support for the cash distribution and cash processing outside the Central Bank.
1. Having the exclusive right to issue banknotes and coins, the MNB carries out the tasks related to the production and putting into circulation of cash. At present, the new banknotes and coins required because of the expansion of the turnover and in order to replace worn-out currency are produced by the Pénzjegynyomda Zrt. (Hungarian Banknote Printing Shareholding Company) and the Magyar Pénzverő Zrt. (Hungarian Mint Ltd.), respectively, on the basis of bilateral contracts. Banknotes and coins are mainly put into circulation through the Central Bank’s wholesale distribution activity. The basis of the distribution is that the Magyar Nemzeti Bank keeps current accounts for credit institutions and the Hungarian Post, which – typically using the services of cash logistics intermediary enterprises – draw cash from the Central Bank debiting their respective accounts and pay cash, crediting their respective accounts.
Although not very often, it is necessary to modify the denomination scale. The latest measure like this was the elimination of the 1 and 2 forint denominations and the replacement of the 200 forint banknote with a coin. In both cases, the Central Bank made its decision taking into account the economy as a whole, and these decisions resulted in significant savings.
The Central Bank also holds cash reserves in order to ensure undisturbed cash circulation at all times and to be able to handle emergencies, if any.
2. In order to preserve the adequate quality of cash in circulation, the MNB – using state-of-the-art cash processing machines – processes the banknotes received by it, i.e. sorts them according to genuineness and fitness for circulation, following quantitative checking. The Central Bank continuously destroys the banknotes classified as unfit for circulation or defective as a part of the banknote processing, and returns the good-quality ones into circulation in accordance with the needs of economic agents. Statistically, all banknotes in circulation appear at least once a year at the Central Bank.
3. The Central Bank carries out the continuous development of the protective elements of legal tender, within the framework of research and development work it explores the cost-effective, up-to-date and internationally also proven solutions for banknote security features, and performs the expert examination of forint and foreign banknotes and coins suspected to be counterfeit. In terms of the fight against counterfeiting, the Central Bank co-operates with criminal investigation authorities and international organisations engaged in banknote protection technological development. This activity is of key importance from the aspect of the confidence in cash.
4. The Central Bank participates in the regulation and control of domestic cash circulation: the MNB issues decrees, formulates recommendations and performs educational activity. In 2008, the MNB renewed its cash strategy. Within its framework, comprehensive changes started in several fields, leading to a cash supply that is more efficient from a whole-economy aspect, but more reliable at the same time, and to a regulatory environment that better matches the operation of the cash sector. Therefore, in addition to the afore-mentioned rationalization of the denomination structure, in view of the characteristics of the domestic practice of the cash sector the renewal of the current regulatory environment also became timely: in Hungary, credit institutions, the post and the cash logistics service providers (cash processing organisations) commissioned by them are entitled to control the quality of banknotes and coins and to return the ones with adequate quality into circulation. In order to ensure the adequate quality of cash, the MNB revised the regulatory environment regarding banknote recycling: in its decrees – using European models – the earlier, typically administrative regulations were replaced by strict professional and technological criteria.
The MNB provides technical and professional assistance for the organisations involved in cash recycling, and maintains a permanent consultative forum for credit institutions and cash processing organisations where issues related to cash are discussed, and the sector can express its opinion on individual central bank measures.