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Banknote and Coin Decrees

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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. The currently effective Banknote Decree and the Coin Decree were promulgated on 13 May 2019 and – with the exception of certain provisions entering into force at a later date – they entered into force on 15 July 2019.

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 >>

The credit institution and post office cash counters handling an average daily cash turnover in excess of HUF 5 million that do not have banknote handling machines that have successfully passed the quality control test of the MNB must be supplied with UV-A/C equipment to examine the forint banknotes' authenticity. As of 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: 

http://www.ecb.europa.eu/euro/cashprof/cashhand/recycling/html/index.en.html

List issued by the ECB:

 http://www.ecb.europa.eu/euro/cashprof/cashhand/recycling/html/tested.en.html

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

Denomination exchange: exchange of forint banknotes and coins to other denomination of forint banknotes and coins.

Credit institutions and the post are obliged to perform denomination exchange for their clients in their branches that have a cash office. Within the exchange of denominations, they are obliged to exchange not more than 50 pieces of banknotes and coins in circulation on each occasion.

Credit institutions and post offices are entitled to perform the denomination exchange subject to certain limitations and conditions, and to charge a fee for the service. The clients must be informed of the conditions and fees applicable to the denomination exchange in the form of an announcement displayed in the branches and on the home page in a clearly visible and easily accessible manner.

Exchange of banknotes and coins withdrawn from circulation and of hard to recognise and damaged banknotes and coins

Exchange of forint banknotes and coins:

  • exchange of forint banknotes and coins withdrawn from circulation to forint banknotes and coins of the same denomination by credit institutions and the post within the deadline stipulated in Article 23 (3) of the Central Bank Act and their depositing to accounts through banknote depositing and recycling machines in branches that do not have a cash office;
  • exchange of hard to recognise and damaged forint banknotes and coins by the credit institutions and the post office to forint banknotes and coins, fit for circulation, of the same denomination 

Pursuant to Article 23 (3) of the Central Bank Act, the credit institutions and the post offices are obliged to exchange – free of charge – the banknotes withdrawn from circulation to legal tender for 3 years and the coins for 1 year from the withdrawal date.  

All credit institution branches and post offices that have a cash counter must perform the exchange of forint banknotes and coins. In the branches that do not have a cash counter, but have a banknote depositing or recycling machine, the possibility of exchanging banknotes withdrawn from circulation must be provided by receiving deposits to a bank account through the machine until the time set forth in Article 23 (3) of the Central Bank Act. The exchange (with the exception of accepting the depositing of banknotes withdrawn from circulation to an account through banknote depositing or recycling machines) must not be made conditional upon the existence of an account or the use of additional services, and no fee is allowed to be charged for the exchange. The clients must be informed about the possibility of the exchange through announcements displayed in the branches and the 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.

 

 

 

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