Ch Financial Control Protection of the euro against counterfeiting – The case of Iceland, 2 February 2011

2 Overview Cash-little society Counterfeiting in Iceland Geneva Convention Penal law Central Office Questions

3 Cash-little society In Western Europe cash in circulation as a proportion of GDP is 2-10%. The use of cash in Iceland is low by Western European standards. For decades cash in circulation as a proportion of GDP remained close to 1%. It rose after the banking crisis in October 2008 and has been around 2% since then.

4 Cash-little society This increase is explained by hoarding of cash rather than increased cash use for transactions purposes. Most payments for goods and services are done by debit cards, credit cards, internet banking, etc. –Active online banking users equal the population of Iceland –75% of financial transactions are executed through online banking –The number of debit and credit card transactions in Iceland are the highest in the world per capita

5 Cash-little society

6 Counterfeiting in Iceland Counterfeiting of notes and coins is not a big problem in Iceland. The number of counterfeit notes is low and their quality is poor. In the year 2003 Iceland began upgrading its family of notes by adding new security features. Since then the number of counterfeits has gone down.

Counterfeiting in Iceland In the last years around 8-12 counterfeit notes have been found in circulation each year. Counterfeit banknotes per million notes in circulation in Iceland have been around 2. 7

8 Counterfeiting in Iceland In Denmark counterfeit banknotes per million notes in circulation in recent years have been 2-3. Danmarks Nationalbank believes that in an international context, counterfeiting of their banknotes is limited. In Norway and Sweden counterfeit banknotes per million notes in circulation in recent years have been 3-5.

9 Counterfeiting in Iceland Counterfeit banknotes per million notes in circulation in Euroland are around 60. There are many reasons why Iceland has few counterfeits: –Iceland is a small economy and its currency is not “convertible” –Iceland is not a cash oriented society –The cash cycle in Iceland is small and “fast” –…

10 Counterfeiting in Iceland The euro is well protected in Iceland. Since the euro was put into circulation no euro counterfeits have been found in Iceland. The reasons are: –Iceland is a small island far away from places where the euro is counterfeited by “professionals” and put into circulation –Most color copiers, PC-computers and scanners in Iceland are equipped with the Counterfeit Deterrence System to prevent personal computers and digital imaging tools from capturing the image of the euro and some other notes –…

11 Geneva Convention The International Convention for the Suppression of Counterfeiting Currency was held in Geneva in the year Denmark became a member in (In 1931 Iceland was a part of Denmark.) In the year 1944 Iceland became a independent republic.

12 Geneva Convention Iceland has not ratified the Geneva convention. Iceland has not had reason to ratify the agreement so far. It is my opinion that Iceland has fulfilled the two main pillars of the Geneva Convention: The penal code (articles 3-5) and the National Central Office (article 12).

13 Geneva Convention Georgia ratified in the year Sweden ratified in the year Belarus ratified in the year Luxembourg ratified in the year Croatia ratified in the year Lithuania ratified in the year Kazakhstan ratified in the year 2010.

14 Penal law The Icelandic General Penal Code (Act no. 19/1940) includes provisions on forgery of money and other crimes related to currency. The Icelandic Penal Code is mostly based on Danish law. It is my opinion that Iceland has fulfilled the penal code pillar of the Geneva Convention.

15 National Central Office The name of the National Central Office in Finland is the National Bureau of Investigation and it is inside the Finnish police organization. In Norway the tasks of the National Central Office are done by the police. They have not created a special institution for these tasks.

16 National Central Office In Sweden it is the Swedish Police who performs the tasks of the National Central Office. They have not created a special institution for these tasks.

17 National Central Office The Icelandic police investigates cases of counterfeited currency, does forensic work, gathers and distributes information on counterfeiting, works with Interpol and Europol, works with the Central Bank of Iceland and etc. It is my opinion that Iceland has fulfilled the National Central Office pillar of the Geneva Convention.

18 Questions