Issue and treasury 

Banco de Portugal was created by a royal decree on 19 November 1846, as an issuing bank, entrusted with the “exclusive power to issue banknotes or bearer bonds in mainland Portugal”. 

After more than 160 years, during which three distinct monetary currencies have been adopted (real, escudo and euro), Banco de Portugal continues to guarantee the issue and putting into circulation of the national economy’s legal tender currency, by means of its Treasury and Issue Department. It currently holds this function under the framework and operating regulations set out for the national central banks of the Eurosystem and the European System of Central Banks (ESCB).

Such regulations set out that central banks of the Member States which have adopted the euro, in conjunction with the European Central Bank (ECB), hold the exclusive power to issue euro banknotes. The Governing Council of the ECB shall have the exclusive right to authorise the issue of banknotes – Article 106 (1) of the Treaty which institutes the European Community and Article 16 of the ESCB and ECB Statute.

In a narrow sense, the banknote issue concept corresponds to the legal accounting act by which the issuing bank makes a commitment to the bearer of the issued banknote, equivalent to its face value in return for receipt of an asset of the same value.

However, in a broader sense (see diagram below), the power to issue banknotes is regarded as inclusive of all activities associated with their life cycle: production and putting in circulation (release from Central Bank treasuries through withdrawals), the reverse operation of banknote withdrawal (entry in Central Bank treasuries by means of deposits), sorting (authenticity verification, benchmarking and destruction of banknotes deemed unfit for re-circulation), storage and other support activities such as counterfeit analyses, training and communication.