The Eurosystem's roadmap for more convergence of cash services offered by national central banks
The 15.7 billion euro banknotes and 102 billion euro coins which are in circulation, are regularly used across national borders, regardless of where they have been produced or issued. Despite such free migration of cash, commercial banks and cash-in-transit (CIT) companies have been conducting cash transactions virtually exclusively with their domestic national central bank (NCB). To foster the integration of the common currency area and to make better use of the synergies deriving from it, the Governing Council of the European Central Bank (ECB) adopted, in 2007, the so-called 'roadmap for more convergence of cash services offered by the national central banks of the Eurosystem'. The roadmap complements the European Union (EU) 'Regulation (EU) No 1214/2011 on the professional cross-border transport of euro cash by road between euro-area Member States' (see 'related links' below), which entered into force in November 2012 and removes major technical and legislative hurdles to cross-border cash operations.
Borderless electronic data communication
The introduction of secure electronic applications for communicating cash transaction data between NCBs and their professional clients - commercial banks and CIT-companies1 - is one important objective of the ECB roadmap for more convergence of cash services. This has been achieved with go live of the 'Data Exchange for Cash Services' (DECS), a communication interface for cash transactions hosted by the ECB. The DECS routes and converts electronic cash messages (cash orders and lodgement notifications) between commercial banks and CIT companies located in one euro area country and NCBs located in another (non-domestic NCBs). It enhances the efficiency, traceability - and thus security - of cash transactions. Implementation of the DECS platform is the result of a major IT project which was rolled out over several years. Since 1 October 2012, the simplified exchange of cash messages is in place in nine euro area countries: Belgium, the Netherlands, Austria, Germany, Ireland, Cyprus, Luxembourg, Malta, and Finland. This is especially important as according to the European Commission's impact assessment issued prior to adoption of the EU regulation on cross-border transportation of euro cash by road, the first three above-mentioned countries were considered to have the greatest potential for growth in cross-border euro cash operations. Most of the eight other euro area NCBs plan to follow suit in 2013; it is expected that all euro area NCBs will be connected to the DECS platform by 2014.
Professional clients can continue using their established communication means when sending cash orders and lodgement notifications to their domestic NCB or a non-domestic NCB connected to the DECS. It is therefore no longer required to use two different applications for the electronic notification of either domestic or cross-border transactions. To give an example: a bank in Luxembourg which would like to withdraw cash at the Deutsche Bundesbank, sends a cash order message to the portal of its domestic NCB, the Banque centrale du Luxembourg. The message file is then routed via the DECS interface to the Deutsche Bundesbank. The DECS translates from one communication format for the exchange of cash transaction data (the Banque centrale du Luxembourg uses the Cash Single Shared Platform format) to another (the Deutsche Bundesbank uses the Global Standards 1 format). It must be noted that, prior to transacting with a non-domestic NCB, a bank or CIT company has to establish the relevant relationships with the NCBs to define the operational requirements including the debiting / crediting procedure and packaging requirements.
The scope of DECS is set out in the 'Guideline of the European Central Bank on the Data Exchange for Cash Services' (see 'related links' below). It pertains to all messages which concern cash withdrawals or lodgements of standard cash packages (such as mono-denomination bundles of 1,000 banknotes).
Convergence of banknote packaging
The ECB roadmap also foresees the convergence of banknote packaging: upon request by a professional client, a domestic or non-domestic NCB shall use the 'Eurosystem packaging' types for free-of-charge transactions. Those are: ECB cardboard box (only for withdrawals), re-usable box, safebag and sealbag2. Each NCB determines which type of the Eurosystem packaging - at least one of the four - it will use. Should a client however, see no need to use the Eurosystem packaging, each NCB is free to offer diverging packaging standards for its cash services, both to national and international clients.
Olivier Strube has been working at the ECB's Directorate Banknotes since 2001. Holding a position as Senior Banknote Issue Expert, he is mainly responsible for matters related to banknote logistics. Cécile Bécuwe is Senior Banknote Issue Expert at the ECB and is the ECB observer at the Cash Working Group.
Related articles in previous issues:
1 An NCB might restrict access to the cash application to banks only.
2 While safebags are closed with tamper-evident sealing tape and not re-usable once opened, sealbags are closed with a straplock seal and may be re-used.
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