ECB begins post-Brexit contingencies with banknote rule change

DUBLIN —The European Central Bank (ECB) does not just determine monetary policy. The bank has provided a list of “other decisions” taken by its governing council at its most recent meetings, and while most of it is pretty dull, there was one line that seems to indicate that the bank is moving to make sure the United Kingdom will no longer have anything to do with manufacturing euro banknotes, should a so-called “hard Brexit” occur.

The bank amended its rules on banknote manufacture to introduce, among others, the following change: Banknotes: ECB Decision on the accreditation procedures for manufacturers. On Sept 21 this year, the Governing Council adopted Decision ECB/2016/25 amending Decision ECB/2013/54 on the accreditation procedures for manufacturers of euro secure items and euro items. The amending decision introduces the following changes: (i) An extension of the ongoing obligation imposed on manufacturers to immediately inform the ECB in writing of their intention to carry out certain acts that might affect their accreditation status; (ii) the imposition on manufacturers of an ongoing obligation to obtain the ECB’s written consent before carrying out acts that might affect their accreditation status; and (iii) the introduction of a discretionary power for the ECB to refuse to grant written consent if accreditation requirements have not been met or if an entity located in, or controlled by an entity located in, a third state which is not a Member State of the Union or of the European Free Trade Association is involved in an intended transaction.

While it seems reasonable that the ECB wants printers of its banknotes to be located in the European Union, the timing of this rule change can only be seen in the context of Brexit.

Among printing works listed on the ECB website for banknote production is De La Rue, a company based in Basingstoke in the UK. In the event of a hard Brexit, De La Rue would find itself outside the EU, outside the European Free Trade Association, and at the whim of the ECB’s new discretionary powers.

In the context of Brexit’s far-ranging economic implications, the location of a money-printing business is possibly of little consequence, but as debates about London’s role in clearing rage on, the move by the ECB does show European institutions are starting to lay the groundwork for a post-UK European Union. Bloomberg