ANNUAL REPORT 2008 - Polymer Bank Notes of the World

3.3 BANKNOTE PRODUCTION AND ISSUANCEPRODUCTION ARRANGEMENTSA total of 6.4 billion euro banknotes wereproduced in 2008, compared with 6.3 billion in2007.The allocation of euro banknote productioncontinued to be based on the decentralisedproduction scenario with pooling, adopted in2002. Under this arrangement, each euro areaNCB is responsible for the procurement ofan allocated share of the total requirement forcertain denominations. Table 12 summarises the2008 production allocation.THE EXTENDED CUSTODIAL INVENTORY PILOTPROGRAMMEIn 2008 the Extended Custodial Inventory(ECI) pilot programme for euro banknotes inAsia, which had been established in 2007, wassuccessfully operated by two large commercialbanks active in the wholesale market forbanknotes. An ECI is a cash depot maintainedby a commercial bank that holds currency on acustodial basis. ECIs facilitate the internationaldistribution of euro banknotes and providestatistical data on euro banknote circulationoutside the euro area, as well as information oncounterfeits found in their region. In view of thesuccess of the pilot programme, the GoverningCouncil decided in March 2008 to launch a threeyearECI programme based on the experiencewith the pilot. Following a negotiated tenderTable 12 Allocation of euro banknoteproduction in 2008DenominationNumber (millionsof banknotes)NCB commissioningproduction€5 1,370.0 DE, ES, FR, PT€10 2,130.0 DE, GR, FR, AT€20 1,755.0 ES, FR, IE, IT, LU,NL, SI, FI€50 1,060.0 BE, DE, ES, IT, NL€100 130.0 IT€200 - -€500 - -Total 6,445.0Source: ECB.procedure, three wholesale banknote banksapplied for the three-year ECI programme. Onestarted operations in Hong Kong and another inSingapore in February 2009, and it is foreseenthat the third will start ECI operations in HongKong in mid-2009. These are the main logisticalhubs for trading euro banknotes in the EastAsian region, which has the highest turnover ofeuro banknotes outside Europe. The DeutscheBundesbank is the logistical and administrativecounterpart for the ECI banks. Before the end ofthe three-year term, the Eurosystem will assesswhether and where the ECI programme shouldbe continued.ROADMAP FOR GREATER CONVERGENCE OF NCBCASH SERVICESFollowing the Governing Council’s adoptionin 2007 of a roadmap which aimed to achieve,in the medium term, greater convergence of thecash services offered by euro area NCBs, theEurosystem continued its work in this area in2008. Greater convergence is important becauseit will allow stakeholders – in particular thosewith significant cross-border cash activities – tofully reap the benefits of the single currency,and will ensure fair competitive treatment. Inview of the different national economic andgeographical environments, the Eurosystemdoes not envisage a “one-size-fits-all” cashsupply system. The process of convergencewill require some flexibility regarding customerrequirements, the cash infrastructure andtransitional periods for implementation.The Eurosystem has also been working on anumber of further steps, including an electronicdata exchange with credit institutions for cashlodgements and withdrawals and banknotepackaging standards for the free-of-charge NCBcash services. Consultations with stakeholdershave been conducted at both the national andthe European level, in particular with regardto the issue of common banknote packaging,in view of the possible operational and costimplications.Technological developments with regard tobanknote processing machines now allowECBAnnual Report2008121