The coinage prerogative
The German Federation, represented by the Federal Ministry of Finance, has the sole right, even after the introduction of the euro, to issue coins in Germany (coinage prerogative). It receives the profit resulting from the difference between the nominal value of the coins and their material and production costs. This profit goes into the Federal budget. The Bundesbank is responsible for putting coins – and also banknotes – into circulation in Germany.
Until 31 December 2001, the denominations of Deutsche Mark (DM) coins were laid down in section 1 of the German Coinage Act (Münzgesetz). Up to December 1986, the upper limit of the nominal values was fixed at DM 5. Thereafter, coins with a nominal value of DM 10 could also be minted. This option was exercised from 1987 when the first DM 10 commemorative coins were issued.
Since 2001, the Coinage Act has referred to section 1 of Council Regulation (EC) No 975/98 of 3 May 1998 on denominations and technical specifications of euro coins intended for circulation, as amended. In addition to the technical details, this regulation sets out the nominal values for European coins intended for circulation (1 cent to €2 coins).
The nominal values of commemorative and collector coins, however, are not governed by this regulation. These values are determined autonomously for each individual issue by the holder of the respective coinage prerogative. In Germany, this function is carried out by the Federal Ministry of Finance pursuant to section 5 of the Coinage Act. This means that it is also possible to issue higher-value collector coins (in nominal values of €5, €10, €20, €20, €100 and €200).
Prior to the establishment of the ECB and the transfer of monetary policy decision-making powers on 1 January 1999, each commemorative and collector coin series which the Federal Ministry of Finance intended to issue, as well as the regular annual minting volumes, required approval by the Bundesbank. This prevented excessive volumes of coins being minted with the intention of generating additional income from seigniorage and also prevented the uncontrolled growth of the money stock – even if the nominal value is negligible in relation to the total volume. Once the total volume had been approved, a corresponding order was placed with the mints. Subsequently, the mints delivered the commemorative and collector coins to the Bundesbank’s branches, where they were kept in safe custody until the date of issue. On the date of issue, the total nominal value of the coins was booked and credited to the Federal Ministry of Finance. Commemorative and collector coins which could not be sold were occasionally redeemed by the Federal Government with the nominal value being redeemed to its account.
In preparation for monetary union, central bank lending to government bodies was prohibited (Article 123 (1) of the TFEU). This also includes the unrestricted crediting of central bank coin holdings. On the basis of this provision, all of the Bundesbank’s coin holdings, which exceed 10% of the current volume of coins in circulation, are redebited to the Federal Ministry of Finance. This is in line with Council Regulation (EC) No 3603/93, which complements the provisions of Articles 123 and 124 of the TFEU. The holdings are recredited as soon as they fall below this threshold.
The coin sector
Responsibility of Member States and European coordination
The annual issue volume of each participating Member State has been subject to approval by the ECB since 1999. In this context, only the total amount is determined for the respective Member State, not the distribution among individual denominations. To this extent, each individual Member State is allowed to issue circulation coins as well as commemorative and collector coins.
Since responsibility for the coin sector still lies with the national governments and is merely coordinated across the euro area, all coins are minted and put into circulation, as previously the case, by the individual Member States. Whereas circulation coins, despite their varying national sides, are legal tender in all participating Member States, collector coins issued by individual Member States have to be accepted for payment purposes in the Member State of issue only. This point is clearly specified by the Coinage Act which states that German euro commemorative coins (ie “German collector coins” in the sense defined in EU law) are valid as legal tender in Germany only (section 2 (2) of the Coinage Act).
In addition to this restriction on the acceptance of collector coins, there are also general provisions which govern the acceptance of circulation coins for payment purposes. Pursuant to Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro, no party other than the issuing authority and persons specifically named in national legislation is obliged to accept more than 50 circulation coins in any single payment transaction. The regulation does not specify a value and it applies to all participating Member States.
The Coinage Act complements this provision with respect to German commemorative coins and also defines the persons to be named (section 3 (1) and (2) of the Coinage Act). The obligation to accept German commemorative coins denominated in euro is limited to 200 euro per payment. In addition, the acceptance limit of a maximum of 50 coins also applies to single payments in both euro circulation coins and commemorative coins (section 3 (1)). In section 3 (2), the Bundesbank is required to accept as payment mediums an unlimited number of euro coins and German euro-denominated commemorative coins, regardless of the sum, or to replace these coins with other legal tender.
The national responsibility is also reflected in the design of euro coins. Whereas the European side of euro circulation coins, which was designed by the Belgian coin designer Luc Luycx, has the same design in all the euro-area Member States, the body with responsibility for the coinage in each participating Member State has the right to determine the design on the national side of the coins. Generally speaking, the participating Member States are allowed to change the design of the national side. This is of particular significance for Member States which have chosen to feature the Member State’s head of state on their coins. If there is a change in the head of state, the Member State in question is then free to change the design on the national side of its coins. Furthermore, participating Member States may only modify the designs used on the national sides of its circulation coins once every 15 years. The new design has to be announced to the respective national authorities and published in the Official Journal of the European Union. In accordance with section 4 (2) of the Coinage Act, the design of the national side of German euro coins must be announced in the Federal Law Gazette.
Excursus: Various definitions of terms in Germany and at the European level
Owing to historical developments, terms which are used in national law, on the one hand, and in EU law, on the other, are not consistent. Both legal systems refer to 1 cent to €2 coins as “circulation coins”, but differ in their definitions of the terms “commemorative coins” and “collector coins”.
According to the terminology used in the German Coinage Act (Münzgesetz), the German Federal Government is permitted to issue “German euro commemorative coins” and “German special issue euro coins”, which are encompassed in the Act by the generic term “collector coins”. In this sense, “euro commemorative coins” are €5, €10, €20, €25, €100 and €200 coins, and “collector coins” are regular issue €2 coins with a commemorative design, such as the German federal state series.
By contrast, EU law refers to commemorative coins as “collector coins” and €2 circulation coins with a commemorative design as “commemorative coins”. For reasons of simplicity, the terms should primarily be used here as defined in EU law.