I. The Legal Status of the Single Currency

The international law fully recognises the monetary sovereignty of the States and their exclusive competence to define their currency. This definition is binding on any person who chooses to use a specific currency, under the terms of the “lex monetae” or monetary law. The jurisprudence of the international jurisdictions (in particular, the Permanent Court of International Justice in The Hague,¹ in a judgement of 12 July 1929,² allows conclusion of the universal principle that a State is entitled to regulate its own currency. This is also reflected in recital 8 of Council Regulation (EC) No 1103/97.³ “Whereas the introduction of the euro constitutes a change in the monetary law of each participating Member State; whereas the recognition of the monetary law of a state is a universally accepted principle”.

Council Regulation (EC) No 974/98 concerning the introduction of the euro⁴, establishes the principles that underlie any monetary law, i.e., (1) definition of the currency and the currency unit (Art. 2), (2) determination of the payment value of the currency (Art. 3), and (3) determination of the currency of payment (Arts. 10 and 11). Upon expiry of the transition period (31 December 2001), only banknotes issued by the European Central Bank and coins issued by the Member States were to have the status of legal tender⁵.

The Member States that have adopted the euro share monetary sovereignty, which reflects an in-depth policy of European integration. The euro is incorporated into the Community and inextricably bound to the European legal order. As a result, the euro is a single currency, not a common currency. Considering that each currency is defined by the State that issues it, the definition of the lex monetae of the euro is a competence of the political bodies of the European Union⁶. Community rules applied by Community institutions and bodies support the monetary policy as regards the euro. Furthermore, Art. 123 paragraph 4 of the EC Treaty provides for the adoption of non-penal Community legislation for the protection of the euro against counterfeiting; in this way, Member States retain their legislative powers in the penal field^7,8

II. Penal Protection of the euro

The replacement of national currencies with a single currency, together with the differences between the approaches to and structures for combating counterfeiting at the level of individual Member States, mean that the Community must take the necessary measures for effective coordination and cooperation. The Madrid European Council of 15 and 16 December 1995 and, subsequently, the Amsterdam Treaty considered equivalent protection to be an objective of the institutions and Member States.⁹

In order to assess the legitimacy of any punitive provision, it is useful to examine to what extent the penal protection of the euro constitutes a “protected interest” at the European level.¹⁰ Within the framework of European legislation, there are two fundamental groups of legal interests: “institutional” interests and “functional” interests. The first group includes the interests that are essential for the existence of the Community, while the second one includes the interests related to the scope of activities of the EC institutions and, especially, to the four fundamental freedoms of the Treaties¹¹. Euro protection does not seem to belong to the institutional interests but it is linked more to the Community’s activities. From another point of view, the European legal interests could also be qualified as genuine if they are related to the political existence of the European Union. Thus, the authenticity of currency constitutes a purely social interest whose protection serves the interest of the individuals.¹² Another consideration put forward by academics concludes that the circulation of a single currency constitutes a new legal interest of a supranational nature and not merely a social interest.¹³ Notwithstanding these analyses, the European Union is entitled to adopt penal provisions against euro counterfeiting on the basis of Art. 31 EU Treaty.

On 29 March 2000, the Council of Ministers adopted the first Framework Decision on the protection of the euro by criminal penalties.¹⁴ The purpose of the Framework Decision is to supplement the provisions and facilitate the application of the International Convention on the Suppression of Counterfeiting Currency of 20 April 1929 (Geneva Convention)¹⁵ by the Member States. While the Geneva Convention is considered a minimum standard for the protection by criminal law of the euro against counterfeiting, the Framework Decision completes its criminal provisions by establishing rules relating to the constituent elements of acts in the field of currency counterfeiting. Thus, the fraudulent making, receiving, obtaining or possession of instruments, articles, computer programs, and any other means particularly adapted for the counterfeiting or altering of currency, or holograms or other components of currency that serve to protect against counterfeiting, are made punishable.¹⁶ Furthermore, the unlawful use of legal installations is assimilated to counterfeiting¹⁷ and legal persons can be held liable for offences that constitute counterfeiting committed for their benefit by any person, acting either individually or as part of an organ of the legal person, who has a leading position within the legal person.¹⁸ Finally, each Member State shall recognise, for the purpose of establishing habitual criminality, final sentences handed down in another Member State.¹⁹

In accordance with Art. 11 of the Framework Decision, the Commission adopted three reports on its implementation which set out in detail the various transposal requirements and the way in which each Member State complied with those requirements.²⁰ In its conclusions, the third report recognises that the Framework Decision has achieved its objectives in the most crucial areas. Although the penalties vary, they punish these criminal acts in compliance with the criteria laid down in the Framework Decision. Most Member States have introduced the principle of the liability of legal persons.

III. Council Regulation for the Protection of the euro against Counterfeiting

Even though the establishment of common European rules on protection of the euro against counterfeiting by criminal penalties is crucial, consideration should be given to organising cooperation between national police forces in the field of the forgery of money. In the framework of the first pillar, the development of investigative powers given to police authorities is necessary. On the basis of a Commission proposal, the Council adopted on 28 June 2001 Regulation 1338/2001 laying down measures necessary for the protection of the euro against counterfeiting.²¹ It establishes procedures for the collection, storage, and exchange of information on counterfeits; requires that the credit institutions withdraw from circulation any suspected counterfeit and hand them over to the competent national authorities; and organises the cooperation at the national level or at the level of the European Union, third countries, and the international organisations in the field of the protection against counterfeiting.²² The detection and identification of counterfeits is an essential part of the Regulation. Therefore, Art. 6 (in its initial form) required that credit institutions and any other related institutions withdraw from circulation all euro notes and coins received by them which they know or have sufficient reason to believe to be counterfeit and hand them over to the competent authorities. Such an obligation relates to the due diligence of credit and other relevant institutions to ensure the authenticity of euro notes and coins that they put back into circulation or to the actual detection of counterfeits. In 2001, the obligation for these institutions to check for counterfeits was not adopted mainly due to the lack of agreed uniform and effective methods for large-scale authentication of euro notes and coins or for the detection of counterfeits.

Following research in the methods for authenticating euro notes and coins, the European Central Bank issued an advisory framework for the detection of counterfeit notes²³ and the Commission adopted a Recommendation for authentication of euro coins.²⁴ Consequently, state-of-the-art methods are now available for the credit and other related institutions to detect counterfeits by processing the notes and coins received by them before they put them back into circulation.

Against this background, Regulation 44/2009²⁵ amended (inter alia) the aforementioned Art. 6 of Regulation 1338/2001 in order to establish the obligation for credit institutions to ensure that euro notes and coins, which they have received and which they intend to put back into circulation, are checked for authenticity and that counterfeits are detected. The amended Regulation also broadens the field of the institutions subject to the obligation of authentication. Thus, payment service providers, within the limits of their payment activity, and any other institutions engaged in the processing and distribution to the public of notes and coins, are affected by the Regulation, including: (1) establishments whose activity consists in exchanging notes and coins of different currencies, such as bureaux de change, (2) transporters of funds, and (3) other economic agents such as traders and casinos engaged on a secondary basis in the processing and distribution to the public of notes via automated teller machines (cash dispensers), within the limit of these secondary activities.²⁶

IV. European Technical and Scientific Centre

According to Art. 6 of Regulation 1338/2001, the European Technical and Scientific Centre (ETSC) shall analyse and classify each new type of counterfeit euro coin. In December 2003,²⁷ the Council invited the Commission to establish the ETSC in order to ensure the continuity and independence of the measures to protect euro coins. In October 2004,²⁸ the Commission decided to formally establish the ETSC in the European Anti-Fraud Office (OLAF). For the technical analyses, the ETSC uses the premises and equipment of the Laboratory of the French Mint. The analyses are carried out by European Commission staff. Thus, the Commission ensures the functioning of the ETSC and the coordination of the activities of the competent technical authorities to protect the euro coins against counterfeiting.

At the European level, the ETSC carries out technical analyses of newly stamped (industrial) types of counterfeit euro coins. They are sent to the ETSC by the national centres for analysis of counterfeit coins (CNACs). According to the results of these analyses, the ETSC classifies the counterfeits at a dedicated database, for use by the competent authorities established by the Member States according to Art. 2 of Regulation 1338/2001. In particular, counterfeit coins detected in the Member States are analysed by the CNACs. They are classified by reference to already identified counterfeit types. Counterfeits that cannot be classified to one of the already identified types are sent to the ETSC in order to create a new class or variant. A distinction is made between common classes and local classes. Local classes correspond to cast counterfeit coins, usually produced in smaller quantities. Common classes are counterfeits made using a stamping process, similar to the one used in official minting. With such processes, larger amounts of counterfeits can be produced, which is why these counterfeits are monitored at the EU level and called common (EU) classes. The ETSC identified approximately 100 families of counterfeit coins by December 2008.

Furthermore the coordination by the Commission of the measures taken by the competent technical authorities to protect euro coins against counterfeiting is takes place within the Advisory Committee for Coordination of the Fight against Fraud²⁹ in the Counterfeit Coin Experts Group, comprising, among others, the experts of the ETSC.

V. Medals and Tokens Similar to euro Coins

The issue of medals and tokens similar to euro coins was addressed by the European Community authorities long before the actual introduction of the euro coins in 2002. In January 1999 already, the Commission issued a Recommendation³⁰ where, among other things, it advised against the use, on medals or tokens, of the words “euro” or “euro cent” or a design similar to the ones on future euro coins.

This Recommendation was valid during the transitional period of the euro, i.e. until the end of 2001. As the need was perceived to continue protecting the public against medals and tokens similar to the euro coins in circulation, the Commission issued, in August 2002, a new Recommendation on this issue³¹. That Recommendation contained additional provisions concerning the non-use of the euro symbol and a general size restriction.

However, a rising number of incidents involving medals closely similar to the euro coins soon demonstrated the need for stricter and binding measures, aimed at creating a level playing field throughout the Community with regard to medals and tokens. Such incidents concerned, for example, cases of euro coin-like medals, some of which came into circulation instead of euro coins, as well as cases of coin-like objects fraudulently used in coin-operated machines. Consequently, the Commission/OLAF worked together with experts from Member States and the private sector and proposed a Regulation on “Medals and tokens similar to euro coins” adopted by the Council on 6 December 2004³². This Regulation was later streamlined with a further amendment upon an OLAF proposal adopted by the Council on 18 December 2008 in order to further clarify the protective provisions and the decision-making.³³

In terms of substance, the relevant risk to the public is twofold. Firstly, citizens could believe that metallic objects (medals and tokens) have legal tender status if they show the text or designs appearing on the euro coins or if they use the euro symbol. Secondly, medals or tokens could fraudulently be used in coin-operated machines if their size and metal properties are similar to those of the euro coins. Accordingly, the Regulation addresses both the visual and the machine-readable characteristics that must be banned in medals and tokens.

Visual characteristics prohibited on medals and tokens include: the terms “euro” or “euro cent” or the euro symbol or a design similar to any design or parts thereof appearing on the surface of euro coins. The parts in question refer to features such as the stars, geographical representations, numerals, the way they appear on the euro coins, as well as signs of sovereignty of the Member States depicted on euro coins, such as the effigies of the Heads of State, coats of arms, etc. Technical features enabling coin-operated equipment to identify euro coins are generally size and their electrical and magnetic properties. The problem the legislator faced in this respect is that these issues – notably the size of coins – are particularly significant for private sector companies producing tokens for use in electricity meters, vending machines, gaming machines, parking meters, etc. In order to avoid restrictions that might adversely affect such companies, a sophisticated system was specified in the Regulation. It consists of a broad area of combinations between coin diameters and coin edge heights, within which range medals and tokens are rejected unless they achieve specific combinations of size and metal properties that make them recognisably different from euro coins.

Finally, the Regulation assigns to the Commission the responsibility to interpret the Regulation in case of doubt and to provide derogations in cases where no risk of confusion exists. As a result, now, for the first time at European level, a complete mechanism exists that efficiently protects the public against objects that look like or can be used in the place of euro coins.

VI. Conclusion

The euro is a cornerstone of Community policy and constitutes a major interest that must be efficiently protected. Thanks to the transposition of the provisions of the Framework Decision of 29 May 2000, the penalisation of acts of counterfeiting as well as the sanctions provided were generally introduced into the legislations of the Member States; in this way, a homogeneous level of protection of the euro is achieved. As a result, the protection of the euro was established at the level of efficiency and effectiveness required by the Framework Decision. Regulation 1338/2001 sets up an efficient framework for cooperation between the competent national and European authorities in the field of counterfeiting. Furthermore, in order to protect public trust in the single currency, credit institutions are obliged to check for counterfeits, and the production and distribution of medals and tokens similar to euro coins are strictly legally monitored. The euro is currently protected by a comprehensive legal framework. However, the legal structure of the protection of the euro against counterfeiting continues to evolve in relation to newly identified needs.