Banknotes and Coins
In the period preceding the millennium change Danmarks Nationalbank undertook a series of extraordinary measures to ensure an ample supply of cash.
At the end of 1999 banknotes and coins in circulation amounted to kr. 46.4 billion, which represents an increase of kr. 5.4 billion against the previous year. The preparations for the millennium change led to an extraordinary increase in circulating banknotes of approximately kr. 3.4 billion. This can be attributed almost entirely to larger stocks of banknotes held at the cash depots and by the banks' branches. Around the turn of the year the increase in the cash holdings of the general public thus amounted to just under kr. 0.5 billion.
In 1999 the Nationalbank completed the issue of the new banknote series. The 50-krone note was issued on 7 May and the 100-krone note on 22 November.
The Cash Supply at the Year 2000
Extraordinary measures
In the period preceding the millennium change there was world-wide concern at the problems which might arise on the rollover to the year 2000, including in the area of cash supply. The Nationalbank stated on several occasions that there was no cause for concern since the financial sector had made exhaustive preparations for the millennium change. At the same time the Nationalbank warned against hoarding of cash. In order to prevent concern about a shortage of cash and a propensity for hoarding the Nationalbank refrained for a prolonged period from destroying banknotes returned to the Nationalbank for disposal. At year-end the reserve of banknotes amounted to approximately kr. 60 billion.
In December 1999 the Nationalbank undertook a series of special measures to guarantee an efficient cash supply should extraordinarily high demand for cash arise in the days immediately preceding the millennium change. These measures were related to the distribution of banknotes and applied to the period from 6 December 1999 to mid-January 2000. Besides delivery to the cash depots during this period the Nationalbank also made available banknote delivery to all banks. Furthermore, the Nationalbank's Cash Department was open to serve all banks during extended opening hours. The Nationalbank thus temporarily acted as cash depot to the banks. Since the beginning of 1999 all cash supply in Denmark has been undertaken by cash depots at the banks.
The principal consequence of the measures for the cash depots was a temporary raising of the overall limit on the cash stocks by kr. 2.2 billion to kr 6.8 billion. The increase began in early November and was phased out during January 2000. Furthermore, an agreement was concluded concerning access to more frequent banknote deliveries during the period from 6 December 1999 to end-January 2000.
Banknotes and coins in circulation at the millennium change
In recent years the annual increase in banknotes and coins in circulation has been 5-6 per cent. An equivalent increase was seen during most of 1999 since banknotes and coins in circulation were approximately kr. 2 billion above the level one year before, cf. Chart 30.
Chart 30 Total Banknotes and Coins in Circulation, Excluding the Cash Depots
| Note: | Including cancelled banknotes and banknotes in circulation in the Faroe Islands. |
This increase in banknotes and coins in circulation is due to a general increase in demand for cash as a consequence of a higher transaction volume and price increases in the economy. During December banknotes and coins in circulation rose strongly to a year-end level kr. 5.4 billion higher than the level at end-1998. The special measures and increased demand around the millennium change led to an extraordinary increase in banknotes in circulation by approximately kr. 3.4 billion. Most of this increase could be attributed to an expansion of the cash depots' banknote stocks by kr. 2.1 billion, cf. Chart 31.
Chart 31 Banknotes and Coins at the Cash Depots, 4th Quarter 1999
The remaining approximately kr. 1.3 billion is related to extraordinarily high stocks of banknotes held by the banks' branches, including ATMs, and the extraordinarily large holdings of private individuals.
On the basis of the banks' balance sheets at end-December 1999 the increase in the banks' cash stocks can be calculated at kr. 0.9 billion and the extra cash holdings of private individuals at just below kr. 0.5 billion. Private individuals thus only withdrew very limited amounts of extra cash in connection with the transition to the year 2000. This was also the situation in the other EU member states.
The preparations for the millennium change entailed a particularly strong increase in the circulation of the large banknote denominations, cf. Chart 32. The special course of the circulation of 50- and 100-krone notes can be attributed to the issue of the new banknotes in respectively May and November. The total circulation is presented in Table 2, p. 166.
Chart 32 Circulation of Individual Banknotes in 1999
In 1999 the circulation of coins rose by 3.6 per cent, against 5.1 per cent in 1998. The total coin circulation and output of The Royal Mint are shown in Table 3a, on p. 167.
Pursuant to the Nationalbank Act of 1936 the circulation of banknotes must be covered by the Nationalbank's reserves of gold and other assets. Since 1939 an exception has been made from the gold-coverage provision.
The New Banknote Series
The Nationalbank issued two new banknotes in 1999. On 7 May the new 50-krone note was issued, and on 22 November the new 100-krone note was issued. This completed the new banknote series. The old series was replaced because advances in graphic technology had created a need to protect banknotes better against counterfeiting. The timetable for the introduction of the new banknotes, Series 1997, is presented in Box 2.
Box 2 Timetable for the Introduction of Series 1997
| 50-krone note | 7 May 1999 |
| 100-krone note | 22 November 1999 |
| 200-krone note | 10 March 1997 |
| 500-krone note | 12 September 1997 |
| 1,000-krone note | 18 September 1998 |
The old banknotes have been withdrawn relatively quickly. Approximately 90 per cent of the old 500- and 1,000-krone notes had thus been withdrawn by the end of 1999. The equivalent withdrawal rates for the 50- and 100-krone notes are 69 per cent and 46 per cent respectively, cf. The Introduction of the 1997 Banknote Series, Monetary Review, 1st Quarter 2000, p. 19.
The portraits on the new banknotes are all of people who have made a significant contribution to Danish art and culture. Literature is represented by Karen Blixen on the new 50-krone note, while music is represented by Carl Nielsen on the new 100-krone note.
SERIEs 1997
| Note: | The overall artistic responsibility for the new banknote series was held by Johan Alkjær. Designer at the Note Printing Works. |
All of the motifs on the reverse of the banknotes are inspired by stone reliefs from Danish churches from the time just after the introduction of Christianity. The 50-krone note depicts a centaur and the 100-krone note shows a basilisk. The centaur relief is from Landet Church on the island of Tåsinge and the basilisk relief is from Tømmerby Church in Hanherred, Jutland.
Information campaigns were used to introduce both of the new banknotes. As for the previous banknote issues, a press conference was held for each banknote, a pamphlet was distributed to all households and information was given via the Internet and in television spots. As an innovation free postcards, Go cards, were available at cafés, cinemas, etc. during the period around the issue dates.
The costs of presenting the new banknote series to the general public total approximately kr. 25 million, or approximately kr. 5 million per banknote.
To mark the completion of the replacement of first coins and then banknotes over a 10-year period the Nationalbank issued a publication entitled The Coins and Banknotes of Denmark. It presents the full series of banknotes and coins, as well as their production. This publication is available in Danish and English and can be ordered from the Nationalbank's Information Desk. In addition, an exhibition in the Nationalbank's lobby in the period 16 November-3 December 1999 presented the creation of the new banknote series.
Counterfeiting
During the period from 1993 to 1998 the number of counterfeit banknotes found in circulation increased from 133 to 695. However, in 1999 the number was slightly lower than in 1998, i.e. 673, cf. Chart 33. The number of counterfeit banknotes confiscated before they are put into circulation varies considerably from year to year. In 1999 162 banknotes were confiscated, which is an increase of 73 from 1998. In 1999 approximately 6 counterfeit banknotes for each one million genuine banknotes were discovered in circulation. The incidence of counterfeiting is very limited in Denmark compared to other countries.
Chart 33 Number of Counterfeit Banknotes
Counterfeiting, attempted counterfeiting, or conspiring to counterfeit, are serious crimes 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.
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Version 1.0 April 2000 Nationalbanken.
Published by Danmarks Nationalbank April 2000, http://www.nationalbanken.dk