CNB decides 20 Kč banknote will no longer be legal tender

At its meeting on 31 January 2008, the CNB Bank Board decided that the 20 Kč banknote will cease to be legal tender on 31 August 2008. “The main reason for this decision is that the 20 Kč note no longer fulfils the function of currency in circulation”, said Pavel Řežábek, Chief Executive Director and Member of the CNB Bank Board.

In connection with this decision, the Czech National Bank has drafted a decree which will be circulated for comments from other government departments in the next few days. The draft decree assumes that the said notes will be exchangeable between 1 September 2008 and 31 August 2009 at the Czech National Bank and at all banks performing cash operations. Between 1 September 2009 and 31 August 2014, the banknotes will only be exchangeable at the Czech National Bank. Exchange will be possible either in cash or by the crediting of an account maintained by the relevant bank.

The 20 Kč banknote was first issued into circulation on 20 April 1994. A new version was issued on 1 February 1996. The numbers of 20 Kč notes in circulation are shown in the following table:

	1994	1996	2000	2002	2004	2005	2006	2007
Thousands of banknotes	25 942	43 043	6 799	5 772	5 475	5 405	5 347	5 314

The number of 20 Kč notes in circulation peaked (at 43,633,000) on 13 January 1997. It then started to fall sharply (see Chart 1).

This was because the 20 Kč banknote was last produced in 1996 and – due to its short useful life (1–1.5 years on average) – was soon replaced by coins. The CNB still issued/received almost 370,000 of these notes through its branches in 2002, but by 2007 the figure had fallen to just 51,000 (see Chart 2). The annual turnover of banknotes of other denominations at CNB branches is in the tens to hundreds of millions.

Since 2004, the number of 20 Kč banknotes returning from circulation has been very low and constantly declining. Compared to the 1997 peak, about 12% of the banknotes remain in circulation. This means that the number of 20 Kč banknotes in circulation has decreased through a natural process by 88% in 10 years. (For comparison – the federal Czechoslovak 20 Kč banknotes submitted for exchange during the currency separation process accounted for 86% of the number of banknotes in circulation at the time).

Overview of banknotes in circulation on 31 December 2007

Denomination	No. of notes	%	in CZK	%
5 000	22 262 300	6,53	111 311 500 000	31,47
2 000	37 750 300	11,08	75 500 600 000	21,35
1 000	131 900 500	38,71	131 900 500 000	37,29
500	21 217 100	6,23	10 608 550 000	3,00
200	47 434 800	13,92	9 486 960 000	2,68
100	45 616 600	13,39	4 561 660 000	1,29
50	29 209 900	8,57	1 460 495 000	0,41
20	5 313 900	1,56	106 278 000	0,03
Total	340 705 400	100,00	344 936 543 000	97,52