Eesti Pank has identified two companies that had received 60 large euro coin starter kits with a total value of 11,880 euro in the course of sub-frontloading, but were unable to show any of them to Eesti Pank during the check carried out on Tuesday.
So far a very small number of companies has received sets of Estonian euro coins and sub-frontloading has been done by SEB Pank only.
According to preliminary investigation info, ten kits of new euro coins were offered for sale at the gathering of numismatists in Riga on 14 November.
On Tuesday, Eesti Pank checked four companies that had received coin starter kits. Two of them were able to present all the sets they had got, whereas two enterprises were unable to present any coin kits.
Frontloading contracts that Eesti Pank has signed with commercial banks state that the euro cash commercial banks receive must be deposited separately from other cash and in conditions that prevent theft, loss or damage. In addition, the contracts prescribe that the euro cash frontloaded to commercial banks will be sub-frontloaded to retail companies, cash handlers or other companies entitled to receive euro cash in advance.
Contracts concluded between Eesti Pank and commercial banks also state that sub-frontloading contracts commercial banks sign with companies must prescribe that the euro cash companies receive must be deposited separately from other cash and in conditions that prevent theft, loss or damage.
A very important condition of both frontloading and sub-frontloading contracts is that the euro cash received must not be released into circulation before the €-day.
Eesti Pank’s authorised persons must be allowed access to commercial banks’ and companies’ euro cash deopsitories to check whether the storage and depositing conditions are followed. In case of breach of contract by commercial banks or companies, contractual penalties will apply.
Eesti Pank intends to treat the cases of euro cash mishandling very strictly.
Eesti Pank has been carrying out random checks of commercal banks and enterprises that have received euro cash and continues to do so. So far there have been no problems with depositing conditions and the amounts of cash distributed are still there.
The coins that were offered for sale in Riga are no longer on sale.
The producer of Estonia’s euro coins is Mint of Finland, where a cash theft was uncovered this autumn. The company has officially stated that no Estonian euro coins were taken.
An additional check carried out at Eesti Pank confirmed that all euro coins are accounted for and comply with documents. The cash handler G4S performed an internal check and confirmed that the euro coins Eesti Pank has given to the company for handling are accounted for and comply with documents.
Euro cash frontloading means the central bank distributes euro cash to commercial banks and sub-frontloading means commercial banks distribute euro cash to companies. Both cases include contracts and cash is given out against security, that is, bought out.
The euro coin sets intended for companies reach them as follows: the central bank hands euro cash over to the cash handler G4S, who prepares starter kits for enterprises. Then G4S transports the kits to commercial banks that have signed contracts with the central bank. Commercial banks, in turn, distribute the sets to companies that have concluded sub-frontloading contracts with commercial banks. The large starter kit contains coins in the value of 198 euro and the small kit in the value of 111 euro.
The distribution of euro cash prior to the €-day is necessary to ensure a smooth changeover to the euro. Frontloading makes sure banks will be ready to exchange kroons for euro and sub-frontloading allows companies to return change in euro. Other countries that have adopted the euro have used the same system.
Source: Bank of Estonia
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