Banknotes and Coins

Danmarks Nationalbank issued a new 1,000-krone note in 1998. A new 50-krone note is issued on 7 May 1999. The new banknote series will be completed with a new 100-krone note at the end of 1999.

In 1998 notes in circulation increased by 6.1 per cent. The 200- and 500-krone notes account for the greatest increase.

Four cash depots were established in the Copenhagen area in 1998.

The new banknote series

On 18 September 1998 Danmarks Nationalbank issued a new 1,000-krone note. It is the third note in the new series. The 200-krone and 500-krone notes were issued in 1997, cf. the 1997 Annual Report, p. 60. Old 1,000-krone notes will continue to be legal tender, but are withdrawn as they are returned to the Nationalbank.

For the first time on a Danish banknote, the face of the 1,000-krone note features a double portrait. It shows the Skagen (Skaw) painters Anna and Michael Ancher. They are both recognised for their works depicting e.g. everyday life at Skagen. The double portrait is inspired by two paintings by P.S. Krøyer in 1884. The tournament scene on the reverse is inspired by a Roman stone relief from a stone monument at Bislev Church near Nibe.

The old banknote series is being replaced because advances in graphic technology have created a need to protect banknotes better against counterfeiting. The new banknote series incorporates a number of new security features, e.g. a window thread with colour change, a hidden image and strong colours, as well as improved versions of traditional security features such as a watermark and a hidden security thread.

Ontheissueofthenew1,000-kronenote,asonpreviousoccasionsa press conference was held, a folder was distributed to all households, and information spots were broadcast on television. A new feature was that the banknote was presented on the Nationalbank's Internet website.

So far the costs of presenting the new banknote series to the general public total approximately kr. 15 million. The 50-krone note is issued on 7 May 1999 and the series concludes with the 100-krone note at the end of 1999.

The designer of the Note Printing Works, Johan Alkjær, created the overall design together width the Originals Department of the Note Printing Works.

Counterfeiting of banknotes and coins

Each year from 1993 to 1996 approximately 100 counterfeit banknotes were found to be in circulation, but in 1997 the number increased to 365, and in 1998 to 695. Nonetheless, counterfeiting is not widespread in Denmark. The number of counterfeit banknotes confiscated before they get into circulation varies considerably from year to year. The old banknote series is being replaced, as described above, in order to protect banknotes better against counterfeiting.

Counterfeiting of notes and coins, or attempted counterfeiting, is a serious crime which can incur a penalty under the Danish Penal Code. The maximum penalty is a prison sentence of 12 years, which is one of the most severe maximum penalties stipulated in the Danish Penal Code. Photocopying banknotes for innocent purposes may also be a breach of the Penal Code.

Banknotes and coins in circulation

Note circulation
In 1998 notes in circulation increased by kr. 2.1 billion to kr. 36.8 billion, or by 6.1 per cent. The rate of increase is generally equivalent to the previous years. The number of banknotes in circulation rose by 4.8 million, cf. Table 6.

Part of the increase in the note circulation can be attributed to the reorganisation of the cash supply system, whereby four cash depots were established in Copenhagen in the spring of 1998. Later in the year their operating scope was extended to include Zealand, cf. p. 71f.

The circulation of 200- and 500-krone notes accounts for the greatest increase. The circulation of 100-krone notes continued to decline in 1998 after the introduction of the 200-krone note in 1997. Nonetheless, in quantitative terms 100-krone notes account for the largest share of the note circulation, i.e. 48 per cent. On the other hand, the value of circulating 100-krone notes constitutes only 16 per cent of the note circulation, against 54 per cent in the case of 1,000-krone notes.

The lifetime of a banknote normally increases with the note's denomination because the turnover rate for lower note denominations exceeds that for the higher denominations, so that the lower denominations wear out more quickly. The lifetime of a 50-krone note is typically around one year, whereas the lifetime of a 1,000-krone note is approximately three years. The lifetime of the banknotes is affected by the introduction of the new banknote series, however. In the period up to the issue of the new series of banknotes the production of the banknotes to be replaced is reduced. Instead, old banknotes of a slightly poorer quality than normal are put back into circulation. The average lifetime of the banknotes is thus extended. After the issue of a new banknote series the old notes are withdrawn as they are returned to the Nationalbank. This also applies to banknotes of good quality, thereby shortening the average lifetime of the banknotes.

Pursuant to the Nationalbank Act of 1936 the circulation of banknotes must be covered by the Nationalbank's reserves of gold and other assets. Since1939anexemptionhasbeenmadefromthegold-coverageprovision.

Coin circulation
In 1998 the coin circulation increased by 5.1 per cent to kr. 3,816 million. The 20-krone coin accounted for the largest increase by value, whereas the 25-øre coin showed the largest increase in quantitative terms.

Table 7 shows the distribution of the coin circulation and coin production on the various coin denominations.

Reorganisation of the cash supply system

In 1990 the first cash depots were established with the purpose of supplying the local banks and post offices with cash or taking back their surplus cash holdings. Cash was supplied from 18 depots all over Denmark, except Copenhagen/Zealand where the Nationalbank has administered the cash supply directly.

A number of adjustments to the cash supply system began in 1998. The background was certain issues of principle concerning the distribution of tasks between the Nationalbank and the banks. A further consideration was to continuously ensure effective planning of the cash supply and to limit the number of cash transports, cf. Monetary Review - 3rd Quarter 1998, p. 18.

In March 1998 four cash depots were therefore established in Greater Copenhagen. From October they also took over the supply of banknotes to all banks on Zealand. Up to the end of 1998 the banks could still order notes from and deposit notes with the Nationalbank.

As of 1 January 1999 the Nationalbank's role in the cash supply system is by and large limited to paying out new banknotes and receiving banknotes for destruction. The Nationalbank now only supplies the cash depots with banknotes, while until further the banks may order coins from and deposit coins with the Nationalbank. The sorting and recirculation of reusable banknotes is thus transferred from the Nationalbank to the banks.

The Nationalbank monitors the development in the quality of the circulating banknotes, by sorting banknotes for destruction and by random control of the notes stored in the cash depots, where quality control of notes for both recirculation and destruction is performed.

In order to create an incentive for the coin circulation also to be taken over by the cash depots a charge per coin roll (coins are packaged in rolls) has been introduced. The charge is the same for the cash depots and the Nationalbank.