The Banknote Decree and the Coin Decree stipulate the rules pertaining to the cash distribution, cash processing and recycling activities, as well as the management of the operational risks related to cash distribution, and also includes regulations with regard to the handling of suspected counterfeit banknotes and coins. Available from Related Documents
the MNB Decree No. 1/2023. (VI 17.) on the processing and distribution of banknotes, and on technical tasks relating to the protection of banknotes against counterfeiting (hereinafter: Banknote Decree)
the MNB Decree No. 20/2019. (V. 13.) on the processing and distribution of coins, and on technical tasks relating to the protection of coins against counterfeiting and its amendment [MNB Decree No. 39/2020. (X. 21.)] with effect from 1 March 2021 (hereinafter together: Coin Decree)
Basic infrastructural conditions of banknote distribution
Credit institutions are obliged to operate a network comprising of ATMs and customer-operated machines (collectively: self-service cash machine), complying with the conditions specified in Banknote Decree.
The regulation sets the number of self-service cash machines to be operated by credit institutions primarily on the basis of the number of payment cards with cash functionality issued by the given credit institution. On the basis of this indicator, the MNB has defined four categories, and for each of these four categories it sets an expected average number of self-service cash machines available per three groups of settlements (districts of the capital, county seats, other settlements in the county). In addition, the regulation also provides that major card-issuing credit institutions must mandatorily operate self-service cash machines in a certain proportion of urban settlements.
According to the turnover-based condition, average annual cash withdrawal turnover per self-service cash machine and average annual deposit turnover per self-service cash machine with a deposit function must not exceed the benchmark values set by the MNB. If the average turnover exceeds the benchmark value, the self-service cash machine network must be expanded.
The Banknote Decree also defines the conditions under which the credit institution may close cash desks in its branches (cash turnover trends, expansion of the self-service cash machine network, obligation to inform customers).
Main rules of cash distribution, processing and recycling
In order to ensure the proper quality of the recycled banknotes and coins, and to preserve the confidence in the Hungarian legal tender, the MNB determines the basic conditions of cash recycling, and the criteria pertaining to the examination of the banknotes and coins in terms of authenticity and fitness for circulation. The entities coming under the ruling of the Banknote Decree and the Coin Decree (credit institutions, post office, cash processing organisations, currency exchange offices, other economic agents operating machines suitable for cash deposit and withdrawal) may only recycle the banknotes and coins, if they examined them in terms of authenticity and fitness for circulation and found them authentic and fit for circulation. The examination in terms of authenticity and fitness for circulation may be performed by machine or manually. In the case of banknotes, manual examination may only be applied to a limited extent.
Cash processing organisations may perform the examination of the banknotes in terms of authenticity and fitness for circulation only by banknote handling machines that have successfully passed the quality control test of the MNB.
Forint banknotes may only be put in circulation via automated teller machines (ATM), if the banknote has been examined in terms of authenticity and fitness for circulation by a banknote handling machine that passed the quality control test of the MNB.
The MNB checks the suitability of the banknote handling machines for examining the forint banknotes' authenticity and fitness for circulation within the framework of a separate procedure (so-called quality control test). The MNB registers the data of the machines that passed the quality control test in a so-called MNB register and publishes it on its home page. (See the description of the quality control test process for the banknote handling machines and the MNB register here >>)
The operators must report the deployment of the banknote handling machines to the MNB in advance. The companies that manufacture and distribute banknote handling machines must provide the MNB with quarterly data supply on the machines deployed. (See the detailed information with regard to the reporting of the deployment and the fulfilment of the quarterly data supply here >>)
From 1 January 2021, all credit institution and post office cash counters where banknote handling machines are not available must have UV-A/C equipment to examine the authenticity of forint banknotes.
As regards the foreign banknotes and coins, the sorting requirements applicable to the fitness for circulation, prescribed by the issuing country, must be followed. In the case of foreign banknotes and coins unfit for recycling, the foreign institution that issued the given currency should be contacted for further information.
All of the cash handling machine types included in the list of tested and approved machines published by the ECB meet the criteria of mechanical processing of euro banknotes. The framework of conditions regarding the recycling of euro banknotes is available at:
List issued by the ECB:
All of the cash handling machine types included in the list of tested and approved machines published by the Commission meet the criteria of mechanical processing of euro coins. The list is available on the page of the Commission (link to the page: https://ec.europa.eu/info/business-economy-euro/euro-area/euro/anti-counterfeiting/european-technical-and-scientific-centre-etsc_hu#authentication-of-euro-coinscoin-processing-machines)
Handling of the operational risks of cash distribution
Credit institutions (save the specialised credit institutions and the credit unions) and the post must regularly assess the operational risks jeopardising their cash distribution, specify the critical elements of the infrastructure network (branches, ATMs, banknote depositing and recycling machines) set up for performing their cash distribution, and develop a business contingency plan for the management of extraordinary situations. The credit institutions designated by the MNB and the post must revise the scope of the critical elements of the infrastructure and the contingency plan every year, and send the list of critical elements and the contingency plan to the MNB before 30 June of the given year. Credit institutions not designated by the MNB must perform the revision every three years.
Denomination exchange and exchange of forint banknotes and coins
Denomination exchange: exchange of forint banknotes and coins to other denomination of forint banknotes and coins.
Exchange of forint banknotes and coins:
a) replacement of forint banknotes withdrawn from circulation before the deadline specified in Article 23 (3) of the MNB Act
- for forint banknotes of the same denomination and fit for circulation,
- acceptance for payment, including deposits to the customer’s own payment account,
- accepting deposits via cash-in or cash-recycling machines,
b) replacement of forint banknotes that are difficult to recognize, along with damaged banknotes
- for forint banknotes of the same denominations and fit for circulation,
- acceptance for payment, including deposits to the customer’s own payment account
Pursuant to Article 23 (3) of the Central Bank Act, the credit institutions and the post offices are obliged to exchange the banknotes withdrawn from circulation to legal tender for 3 years and the coins for 1 year from the withdrawal date.
Credit institutions with retail customers and the postal service are obliged to carry out the denomination exchange and the exchange of forint banknotes and coins in all their branches, with the exceptions listed in the Banknote and Coin Decrees. A contributor may also be used to fulfil the obligation to carry out the denomination exchange and the exchange of forint banknotes and coins under the conditions specified in the Banknote and Coin Decrees. If the credit institution and the postal service operate cash-in or cash-recycling machines, they are also obliged to fulfil their obligation to exchange forint banknotes withdrawn from circulation by accepting payment via the machines.
Within the denomination exchange, credit institutions and the postal service are obliged to exchange not more than 50 pieces of banknotes and coins in circulation on each occasion. Credit institutions and the postal service are entitled to perform the denomination exchange subject to certain limitations and conditions, and to charge a fee for the service.
There is no quantitative restriction on the exchange of forint banknotes. No quantitative restriction can be applied to the exchange of forint coins in a branch with a cash counter; in a branch without a cash counter, a maximum of 100 forint coins must be exchanged or accepted for payment at a time within the framework of the exchange of forint coins. The exchange of more than 10 pieces forint banknotes and the exchange of more than 50 pieces forint coins (in the case of a branch without a cash counter, also the denomination exchange) may be subject to prior notification, but credit institutions and the postal service shall perform the exchange within two days of the receipt of the customer’s request for exchange.
The exchange of forint banknotes and coins must not be made conditional upon the existence of an account or the use of additional services (unless the exchange is made by payment to a bank account). If the exchange is made by replacement for forint banknotes/coins of the same denomination, no fee is allowed to be charged for the exchange.
The clients must be informed about the possibility of the denomination exchange and the exchange of forint banknotes and coins, as well as the terms and conditions, fees and other relevant information, in the case of using a contributor the name of the contributor and the address of its given branch in the form of an announcement displayed in the branches and on the home page in a clearly visible and easily accessible manner.
Credit institutions and the post shall accept an incomplete forint banknote for exchange if more than 50% of such incomplete forint banknote is handed over. Credit institutions and the post are obliged to take over from their clients and forward to the MNB for expert examination the incomplete forint banknotes where it cannot clearly be established whether the size of the submitted forint banknote part(s) exceed 50%. Credit institutions and the post are obliged to take over from their clients free of charge and forward to the MNB for destroying the incomplete forint banknotes whose surface clearly does not exceed 50%.
Handling of suspected counterfeit banknotes and coins
In order to prevent and reduce the counterfeiting of cash the MNB performs the expert examination of the Hungarian and foreign legal tenders. In the interest of providing protection against counterfeiting
- natural persons and legal entities as well as other entities without legal personality are obliged to hand over the suspected counterfeit banknotes and coins to a credit institution, post office or the MNB for the purpose of expert examination;
- other economic agents operating ATMs or banknote handling machines operated by clients are obliged to handover the suspected counterfeit banknotes found by them to their contracted cash processing organisation or – in the absence thereof – to a credit institution or the MNB for the purpose of expert examination;
- the credit institutions and post offices are obliged to take over the suspected counterfeit banknotes and coins from private clients and record it in minutes, check the authenticity of these coins and forward them to the MNB within 20 working days, together with the minutes about the takeover;
- the cash processing organisations and cash distributors are obliged to hand over or send to the MNB the suspected counterfeit banknotes and coins found during the authenticity and fitness for circulation examination, which they as well classified as suspected counterfeit based on the authenticity check performed by them, together with the minutes of takeover within 20 working days following the date of finding or the deposit to the machine managed by the client.
Simultaneously with a notification about the result, the MNB returns the countervalue of the forint banknote and coin identified as genuine by the central bank’s expert examination or the genuine foreign banknote and coin to the initiator of the expert examination or his proxy.