PRESS KIT

2

Table of Contents

Introduction 3

€ in Slovenia 4

What do euro banknotes look like? 6

What do euro coins look like? 8

Production of euro banknotes and coins 9

Euro banknote security features / distribution 11

Euro banknote distribution 12

Euro cash changeover in 2002 and subsequent developments 13

Organisation of banknote production 14

Stock and circulation management 15

Banknote recycling framework 17

Counterfeit situation 19

3

Introduction

On 1 January 2007, the people ofSlovenia began to use the euro. To mark this historic event, theEuropean Central Bank (ECB) andBanka Slovenije have produced thispress kit about the changeover and theeuro banknotes – how they came to be,how they are produced and how theyended up in wallets in Slovenia, fiveyears after they were introduced in 12 other countries in Europe.

This press kit also provides someinformation on the euro coins andshows the banknotes’ security features.

Should you need further information,please do not hesitate to contact BankaSlovenije or the ECB.

European Central Bank

Eszter Miltényi

Press Officer

Kaiserstrasse 29 60311 Frankfurt am Main

Germany

Tel.: +49 69 1344 8304 Fax: +49 69 1344 7404

E-mail: eszter.miltenyi@ecb.int

Internet: http://www.ecb.int

Banka Slovenije

Gordana Pipan

Adviser to the Governor

Slovenska 35 1505 Ljubljana

Slovenia

Tel.: +386 1 4719770 Fax: +386 1 2515516

E-mail: gordana.pipan@bsi.si

Internet: http://www.bsi.si

Additional information can be obtained from:

4

Changeover

On 1 January 2007, the euro becamelegal tender in Slovenia and all bankaccounts in tolar were automaticallyconverted into euro, free of charge.Henceforth, only the euro will be usedin electronic payments. The dual circulation period was from1–14 January 2007, which meant thatduring this time people could pay eitherwith tolar (SIT) banknotes and coins orin euro cash.

The national central banks of the Member States that have adopted the euro will exchange Slovenian tolar (SIT) banknotes against euro at par value free of chargefrom 1 January to 28 February 2007. This exchange is limited to €1,000 for any givenparty/transaction on any one day and can be performed at any of the locations listedat www.ecb.int.1

Commercial banks will exchange tolarbanknotes and coins at the irrevocablyfixed conversion rate of SIT 239.640 =€1 free of charge until 1 March 2007.Banks are entitled to ask for one day’snotification for any exchanges worthmore than €1,500. Without thisnotification, banks may charge forexchanging such amounts. After 1 March 2007 it will still be possible toexchange tolar banknotes for euro freeof charge at Banka Slovenije for anindefinite period of time, and tolarcoins for a ten-year period, i.e. until 31 December 2016.

€ in Slovenia

! Banka Slovenije will exchangetolar banknotes for euro freeof charge for an indefinite period of time

! Tolar banknotes can be exchanged for euro in all thenational central banks of theEurosystem until 28 February 2007

1 http://www.ecb.int/bc/euro/changeover/slovenia/html/index.en.html

5

€ in Slovenia

Dual display of prices

On 11 July 2006, the conversion ratewas irrevocably fixed. The dual display

of prices started on 1 March 2006 andwill end six months after theintroduction of the euro in Slovenia.Sales prices of goods and services must

be displayed in both currencies. Pricesin SIT are for information only and willmake it easy for consumers to compare.

! €1 = SIT 239.640Key changeover dates Date

Distribution of euro coin starter kits to companies 1 December 2006

Sales of euro coin starter kits to the public 15 December 2006

Account conversions 1 January 2007

Last day on which tolar banknotes and coins were legal tender 14 January 2007

Last day of free-of-charge exchange by banks 1 March 2007

Deadline for exchange of tolar coins by Banka Slovenije 31 December 2016

Deadline for exchange of tolar banknotes by Banka Slovenije Unlimited

6

Design competition and public survey

The conceptual phase of the eurobanknotes began in February 1996 whenthe European Monetary Institute (EMI),the forerunner of the ECB, launched adesign competition.Altogether 44 design proposals weresubmitted2 and, in September 1996, ajury of independent experts in marketing,advertising, design and art judged thedesigns. The jury drew up two shortlists:one of five design series on the “Agesand styles of Europe” theme and anotherof five design series on a“modern/abstract” theme. A Europeanmarket and opinion researchorganisation was then commissioned tocarry out a survey of public acceptanceof the shortlisted designs. Around 2,000individuals participated throughoutEurope.3 Taking account of the advicegiven by the jury and the results of thepublic consultation, the EMI Councilselected, in December 1996, the seriessubmitted by Robert Kalina, a banknotedesigner at OesterreichischeNationalbank.His design was inspired by the theme“Ages and styles of Europe” and depictedthe architectural styles of seven periodsin Europe’s cultural history. These stylesare shown on the seven euro banknotes:• Classical for the €5• Romanesque for the €10• Gothic for the €20• Renaissance for the €50• Baroque and rococo for the €100• Iron and glass architecture

for the €200• Modern 20th century architecture

for the €500

What do euro banknotes look like?

2 To see the design proposals, visit www.ecb.int/bc/pdf/banknotes/euro_catalogue.pdf3 To see the results of the survey, visit www.ecb.int/bc/history/issue/html/index.en.html

7

What do euro banknotes look like?

On 1 January 2002, seven banknoteswere introduced in 12 Member Statesof the European Union. On the front of the banknotes,windows and doorways symbolise theEuropean spirit of openness andcooperation. The 12 stars of theEuropean Union represent thedynamism and harmony betweenEuropean nations. To complement these designs, thereverse of each banknote features abridge. The bridges symbolise the closecooperation and communicationbetween Europe and the rest of theworld. The images are based on thetypical architectural style of eachperiod, rather than on specificstructures. These designs, and thefollowing features, are presented inmore detail in the euro banknotepictures opposite: • the name of the currency – euro –

in both the Latin (EURO) and theGreek (EYPΩ) alphabets;

• the initials of the European CentralBank in five linguistic variants – BCE,ECB, EZB, EKT and EKP – coveringthe then 11 official languages of theEuropean Union;

• the symbol © indicating copyrightprotection;

• the signature of the President of theEuropean Central Bank;

• the flag of the European Union.

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What do euro coins look like?

The “European” sides of the coins weredesigned by Luc Luycx of the RoyalBelgian Mint. They show images of theEuropean Union or of Europe and symbolise the unity of the EU.

9

Production of euro banknotes and coins

From cotton fields to paper mills

Perhaps symbolic of the euro’s growingstatus as a major international currency,the raw material for the banknotescomes from different regions of theworld. Cotton grown in the AmericanSouth, Africa or on the steppes ofCentral Asia is the basic ingredient ineuro banknote “paper”, which is in factmade from pure cotton fibres. Thefibres cannot be used by the textileindustry as they are too short forweaving, so they are bought by papermills, which turn them into cottonpaper. This is what gives eurobanknotes their special “feel” andcrispness, as well as durability. They aremore robust and better withstand acertain amount of rough treatment thanmost other types of paper. The cottonfibres are bleached in water at highpressure and high temperature.

example, is obtained by varying thepaper thickness during the paper-making process; some parts becomemore transparent or lighter than thesurrounding paper, while other parts become darker.

The paper pulp is then fed into a papermachine. Security paper forms thesubstrate or basis for producingbanknotes, and certain securityfeatures, such as watermarks orembedded threads, are integrated intothe paper itself. The watermark, for

! Did you know that …

… the euro banknotes inSlovenia come from theEurosystem’s4 banknotestocks and the country’seuro coins are produced by the Mint of Finland?

4 The Eurosystem comprises the ECB and the

national central banks of those countries that

have adopted the euro.

Turning banknote paper into banknotes

Banknote paper is distributed to the 14high-security printing works in Europethat produce euro banknotes. Thereare two main processes: offset andintaglio printing. Different types ofplates and special inks have to be usedfor these processes. Each plate isgenerally used to print over half amillion sheets, and these in turn are cutinto around 25 million banknotes.Approximately 40,000 sheets can beproduced in an eight-hour shift, i.e.around 2 million banknotes. Both sidesof a banknote can be simultaneouslyprinted using offset printing machines.Intaglio printing gives euro banknotestheir special “feel”: users can checkthey are genuine by running theirfingers across the large numerals or thewindows and doorways on the front. In order to print in relief, intaglio plateswith special inks are applied to thepaper with a force of some 30 tonnes.Apart from these traditional banknoteprinting techniques, a hot stampingprocess is used to apply a hologram foil.A colour-changing number on the backof the higher denominations is appliedby silk screen printing. Each banknotereceives a unique serial numberconsisting of one letter and 11 digits. Many additional features are included to help the public as well as professionalcash handlers and central banks todetermine if a banknote is genuine orcounterfeit.

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Production of euro banknotes and coins

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Extensive testing prior to circulation

To ensure the consistent quality ofeuro banknotes, the ECB has devised acommon quality management systemfor all the banknote printing works.Throughout the production process,hundreds of manual and automatedtests are performed to ensure that thebanknotes meet the ECB’s standards.For example, the banknotes aresubjected to tearing, soiling and evenwashing machine tests to measure their resistance.

Ready for distribution

Once the quality specifications havebeen met and the banknote sheets cutup, the individual banknotes arepackaged per denomination and storedin secure areas at the printing worksprior to distribution. They are firsttaken from the printing works to thenational central banks, which placethem in their vaults. Banka Slovenije hascovered its initial requirements of eurobanknotes by drawing on the stocks ofthe Eurosystem.

Euro banknote security features / distribution

! Did you know that …

… a total of 41.5 million euro banknotes (weighing almost 33tonnes) were in circulation at thetime of the cash changeover inSlovenia, worth approximately€772 million?

… a total of 250 million coinswent into circulation, weighingaround 1,131 tonnes and worth€83 million?

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In the years to come, Banka Slovenijewill “pay back” these banknotes.Therefore, euro banknotes circulating inSlovenia in 2007 carry the country code(a letter) of the national central banks(NCBs) which supplied the notes.As of 2008, euro banknotes producedon behalf of Banka Slovenije will bearthe code letter “G”.

To ensure a smooth and rapid changeoverto the euro, Banka Slovenije begandistributing euro banknotes tocommercial banks on 29 November2006 and coins on 25 September 2006;these were passed on to retailers attheir request. On 1 January 2007, eurobanknotes were available from virtuallyall cash dispensers in Slovenia.

Euro banknote distribution

NCB Code Letter

Belgium Z

Greece Y

Germany X

Spain V

France U

Ireland T

Italy S

Luxembourg (*)

Netherlands P

Austria N

Portugal M

Slovenia G

Finland L

(*) Uncirculated euro banknotes issued by the

Banque centrale du Luxembourg currently bear the

code letter of the NCB of those countries in which

the banknotes for Luxembourg are produced.

13

Euro cash changeover in 2002 and subsequent developments

The euro came into existence with theirrevocable fixing of exchange rates on1 January 1999. However, it was initiallythe currency of the financial and foreignexchange markets. In the eyes of manypeople, the euro only arrived with theintroduction of euro banknotes andcoins. This huge logistical undertakingtook place in the run-up to 1 January2002. Altogether some 15 billion banknotes were produced, enough tocover 15,000 football pitches, whilearound 52 billion coins, the equivalentof 10,000 truckloads, were minted.These volumes had to meet both theinitial demand and provide stocks forthe national central banks of the euroarea. Banks and shops, security carriersand the cash-operated machine industrywere well prepared: the successfuladaptation of their businessescontributed significantly to the smoothintroduction of the new cash.

So did the swift acceptance of eurobanknotes and coins by the more than300 million people in the euro area atthe time. Ever since their introduction,the number of banknotes in circulationhas been growing steadily. At the end of2006, some 11 billion banknotes, worthroughly €600 billion, were in circulation(compared with close to 8 billionbanknotes, worth €221 billion, at thebeginning of 2002). Euro banknotes andcoins are legal tender throughout the

euro area, regardless of where theywere produced. They freely crossborders in Europe as a result of tourismand business transactions. The euro hasbecome a popular currency worldwide.It is estimated that, in value terms,between 10% and 20% of eurobanknotes in circulation are held byindividuals and businesses outside theeuro area, who are using the euro eitheras a store of value or as a parallelcurrency.

! Did you know that ...

... by mid-January 2002 over 90%of all cash transactions were beingdone in euro, although twomonths had been envisaged forthe transition? This is why most ofthe future members of the euroarea might opt for a shorter dualcirculation period.

Total number of euro banknotes between 2002 and 2006

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Prior to the introduction of euro casheach central bank was responsible forproducing its national banknotes. Since2002, banknote production has beenreorganised in a “pooling scenario”.Under this arrangement, each centralbank is responsible for producing alimited number of denominations. But itdoes so to meet the need for thoseparticular denominations throughoutthe euro area. This division of labourenables the Eurosystem to benefit from

Organisation of banknote production

5 For further information on the production scenario, see www.ecb.int/bc/faqbc/printing/html/index.en.html

economies of scale. It also helps tooperate a Quality Management Systemefficiently as there are fewerproduction sites for each denominationthan there would be without anypooling.5 Each year the ECB and thenational central banks forecast thelikely overall banknote demand, takinginto account the estimated growth incirculation and the replacement of“unfit” banknotes, which are too wornor dirty for circulation. The banknote

production shares are then allocated tothe NCBs according to a key. In 2006, 7 billion banknotes were produced. The production requirements for 2007have been fixed at 6.3 billion banknotes.Only printing works which are bothquality and security-accredited by theECB can contribute to the output.Currently, euro banknotes are beingproduced at 14 banknote printingworks throughout Europe.

15

Stock and circulation management

The NCBs ensure a smooth andefficient supply of euro banknotes.Potential demand from the market forany denomination can be met at anytime and in the desired quantity sincethe NCBs hold banknote stocks. Theyhold these stocks for three reasons:firstly, to replace “unfit” banknotes, secondly, to accommodate increases indemand, such as seasonal fluctuations(e.g. the increased use of cash aroundChristmas) and, thirdly, to meet any unexpected demand. A Eurosystemdatabase, administered by the ECB,makes it possible to monitor changes in

circulation figures and stocks. Themigration of banknotes betweendifferent countries leads to imbalancesin the NCBs’ stocks. If one NCB isabout to run short of a specificbanknote denomination, another NCBwith a surplus of that denominationtransports the required number ofbanknotes by road and/or air in amatter of days. This flexibility hasbrought efficiency gains as it allowsNCBs to hold smaller stocks. When thebanknotes leave the printing works theyare of identical quality. But their quality deteriorates during

circulation: €5 banknotes, for example,get worn and crumpled more quicklythan €50 banknotes as they are generallytreated with less care and pass fromhand to hand more often. A €5 banknotelasts for, on average, 15 months beforebeing withdrawn from circulation anddestroyed, while a €50 banknotecirculates for nearly four years.NCBs use high-speed sorting machinesto process banknotes deposited bycommercial banks and security carriers.

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These machines can check thegenuineness and condition of a banknotein a fraction of a second. Banknoteswhich are no longer fit for circulationbecause they are dirty or limp or havefragments missing, etc., are immediatelyshredded. Only clean banknotes arereissued. If banknotes deteriorate inquality during circulation, for example by wear or soiling, they could becomemore difficult to use, say in vendingmachines. The resulting lack of publictrust in the banknotes could lead to

them becoming less widely used as ameans of payment. Also, securityfeatures on clean banknotes are easierto check than those on soiledbanknotes. To this extent, commonminimum sorting standards contributeto the integrity of the euro. In caseswhere banknotes do not often return tothe NCBs, maintaining the quality levelof banknotes in circulation is achallenging task. In particular, €5banknotes, which typically pass fromconsumers to retailers and back again,

instead of being deposited, have a ratherlow return frequency. Some NCBs havetherefore created incentives for thedepositing of €5 banknotes morefrequently or have temporarily onlyissued freshly printed banknotes. TheECB monitors the quality of banknotesin circulation by annual sample surveys.Over the longer term, the Eurosystem isworking on projects which aim toenhance the durability of eurobanknotes.

Stock and circulation management

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The cash cycle can be shortened ifbanks recirculate (“recycle”) banknoteswhich they receive from theircustomers. This avoids thetransportation of banknotes back to thecentral bank and their withdrawal againby that bank. Back in 2002, the ECBestablished terms of reference for theoperation of stand-alone, customer-operated machines that can receive,process and dispense banknotes, so-called “cash-recycling machines”. Onlycash-recycling machines which candetect banknote counterfeits and sortbanknotes according to their qualityshould be used by banks and otherprofessional cash handlers.

Banknote recycling framework

! Did you know that ...

... banks can only reissuebanknotes via their cashdispensers if the notes have beenchecked by machines whichdetect counterfeits and unfitbanknotes?

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Banknote recycling framework

The terms of reference have meanwhilebeen extended to all forms of banknoterecycling. These machines must be ableto detect counterfeit banknotes and tophysically separate the banknotes intoeither fit or unfit for circulation. Only fitbanknotes will be disbursed, while unfitbanknotes have to be forwarded to thenational central bank. Counterfeits arereported to the local police.On its website, the ECB has published alist of those cash-handling and cash-recycling machines which have qualifiedfor banknote recycling6. Prior to beingadmitted to the euro area market, eachmachine has to pass a standardised testat an NCB showing that it can reliablydetect and segregate counterfeits andunfit banknotes. The tests need to berepeated annually to ensure that eachmachine is performing properly.After a transitional period, all banks andother professional cash handlers in theeuro area will either need to complywith the regulations for banknoterecycling or, alternatively, use theirNCBs for banknote deposits/withdrawals.

6 http://www.ecb.int/bc/cashhand/recycling/tested/html/index.en.html

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Euro banknotes can be used forinternational payments. This makes them attractive for counterfeiters. Still, theprobability of encountering a counterfeitis very low. In 2006, less than 600,000counterfeit euro banknotes werewithdrawn from circulation. This is avery small proportion of the 11 billionor so banknotes currently in circulation.

Virtually all euro counterfeits can beeasily distinguished from genuine eurobanknotes by simply checking severalsecurity features; no special devices areneeded. This method has provedeffective as counterfeiters concentrateon specific security features, but do notimitate all of these features.Since the introduction of euro cash, theECB and the NCBs have beenmonitoring the counterfeit situation veryclosely. The ECB’s Counterfeit AnalysisCentre coordinates the work of thenational analysis centres in each EUMember State, which are either locatedat the NCBs or attached to nationalpolice forces. All analysis centres haveaccess to a comprehensive technical,statistical and geographical database oncounterfeits, the Counterfeit Monitoring

System. This system is located at theECB and provides real-time information,such as information on the techniquesused by counterfeiters to imitatesecurity features. This knowledge istaken into account in the developmentof the next generation of eurobanknotes, due to be introducedgradually in a few years’ time.The ECB cooperates closely with theEuropean Commission (which isresponsible for providing informationabout counterfeit euro coins), as well asnational police forces, Europol andInterpol, all of which compare data fromthe Counterfeit Monitoring System withtheir own crime record data in order totackle crime.

Counterfeit situation

! Did you know that …

… the ECB works closely withEuropol and Interpol to detereuro banknote counterfeiting?

… it has established a counterfeitanalysis centre to categorise eurobanknote counterfeits whereverthey appear worldwide?

www.ecb.int www.bsi.si