Making money
August 19, 2010![Euro banknotes](https://static.dw.com/image/5721391_800.webp)
Plans by Germany's central bank, the Bundesbank, to shift most production of its euro notes to foreign firms has angered domestic printers, who say hundreds of jobs could be lost due to a system that is inherently unfair.
Some 250 protesters demonstrated in Frankfurt on Tuesday, saying that the Bundesbank's decision to give the majority of its 2011 print order to firms in France and the Netherlands endangers up to 400 jobs at the Bundesdruckerei, Germany's federal printing agency, and Giesecke & Devrient, a private Munich-based firm that has been printing money since 1854.
The print order in question is for some 1.6 billion euro banknotes, of which, according to media reports, only one-fifth will be printed domestically. In general, Germany commissions the printing of just under 30 percent of the euro notes in the 16-member euro currency zone.
The services union Verdi said that while Berlin puts out an EU-wide tender for the printing of euro notes, most other European nations - including big players France, Italy and Spain - do not. Their currency printers are an integral part of their central banks, which means they keep perform printing operations in-house.
"As long as not all central banks tender the printing internationally, I don't see why we should have to do it," Verdi spokesman Andreas Froehlich told Reuters news agency.
Currency competition
The world of currency printing is a complex one. Large countries such as the US, Russia and China have their own national currency printers. Around 100 nations, most of whom have populations of less than 40 million, outsource their currency printing to foreign firms. There are some 15 printers who vie for these lucrative contracts, half of which are state-owned.
In the eurozone, 63 percent of euro notes printed annually are printed by state players, that is, printers that belong to central banks (eg. France, Italy, Belgium, etc.). Besides the 30 percent commissioned by Germany, another 7 percent are tendered by smaller European countries.
It is this partially closed market that upsets Giesecke & Devrient (G&D), which says it is forced to compete on an uneven playing field.
"For decades, G&D has seen itself as a currency printer which competes in a free market. We are happy to enter into competition if that competition is really fair," Heiko Witzke, the head of media relations for the company, told Deutsche Welle.
"But an equal playing field is a prerequisite, and that does not exist in Europe as long as the printing orders for only 37 percent of all euro notes are put to bid internationally," he added. G&D says that it prints banknotes for 60 currencies around the world and its sales volume in this sector was 896 million euros in 2009.
Currency printers fall into three categories. The first group consists of private firms, such as G&D. The second is comprised of printers which are either wholly or partially state owned, but are separate from the central bank (such as the German Bundesdruckerei, which was privatized in 2000 but bought back by the government in 2008, partially due to security concerns). The third group consists of national printers that are fully incorporated into the central banks, such as in France and Italy, and are therefore awarded contracts directly without a tender process.
Just following the rules
But the Bundesbank defended its decision by pointing to European and national public procurement laws, including Germany's "Law against Restraints on Competition," which requires that the bank advertise for currency printing bids.
"I would not characterize this matter as fair or unfair, we simply have to abide by the existing directives," a Bundesbank spokesperson told Deutsche Welle.
In a statement, the bank said this is the third annual tender for currency printing, and that private and foreign firms were involved in the past. It hit back at accusations of unfair competition saying that no currency printer that bid on its tender ever received orders in its home market without also going through a bidding process.
Unions are highly critical that Germany is the only large EU country which puts its currency printing orders out to bid.
Cartel office investigation
Both the Bundesdruckerei and G&D have asked Germany's federal antitrust office to look into the matter, and a hearing by its allocation agency is scheduled for the end of this month.
The organization is investigating whether the foreign printers, Royal Joh. Enschede in the Netherlands and Oberthur in France, meet the Bundesbank's security requirements and whether they can deliver the notes on time.
"The manufacturing, distribution and management of banknotes is a serious responsibility that requires a high degree of security," union official Froehlich said. "We shouldn't destroy it through efforts to cut costs."
He and others complain that the printers in Germany have already invested millions in research and development, particularly in the area of security features, which are becoming more and more complex as producers try to stay one step ahead of counterfeiters.
The return on that substantial investment is only possible if the firms receive future orders from the Bundesbank. But that way things are going, according to one person close to the matter, it appears that that expenditure could well be money down the drain.
Author: Kyle James
Editor: Sam Edmonds