The case for auditing the ECB: seigniorage fraud on banknotes

(From: COUNCIL OF THE EUROPEAN UNION
Brussels, 5 January 2007
5068/07
UEM 2
ECOFIN 4
COVER NOTE
from: Secretary-General of the European Commission,
signed by Mr Jordi AYET PUIGARNAU, Director
date of receipt: 3 January 2007
to: Mr Javier SOLANA, Secretary-General/High Representative Subject: Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee, the Committee of the Regions and the European Central Bank
- Five years of euro banknotes and coins)

Monetary income from euro banknotes and coins

Cash in circulation constitutes a source of income (generally called monetary income or seigniorage) for the issuing authority. In the case of euro banknotes, this income is pooled and subsequently distributed among euro-area national central banks according to a specific key based on each country’s GDP and population. The situation differs with respect to euro coins, as the income (which roughly corresponds to the face value of the coin minus the costs for production and putting into circulation) is collected by the country issuing the coin. This approach should be equally satisfactory provided that there are no strong "net" migratory flows of euro coins between Member States (e.g. systematic inflows to, or outflow from, certain countries), in which case certain (specific or general) adjustments to the present system will need to be envisaged.

Question: why the seigniorage coming from euro banknotes IS NOT collected by the countries? It is too much a sum of money for them?