The Bank of Finland has the exclusive right, based on law, to issue euro banknotes and coins in Finland. The Bank is also responsible for controlling banknote quality and detecting counterfeit notes. It is the sole Finnish authority which may issue new cash or destroying mutilated banknotes.
The Bank of Finland maintains the currency supply in cooperation with banks and other professional cash handlers. The central bank is responsible for the provision of wholesale services in the area of currency supply. Monetary financial institutions and shops – and cash-in-transit specialists employed by them –ensure provision of retail services.
The central bank takes care of cash-in-transit between its regional branch offices. In contrast, cash-in-transit specialists undertake transportation of cash between their customers and cash depots and between cash depots and the Bank of Finland's regional branch offices.
Banks rely on Automatia Pankkiautomaatit Ltd (ATM network) to provide currency supply services to their customers. Automatia has outsourced cash depot and transportation services to cash-in-transit specialists. About 80% of cash is distributed to the public via ATMs, maintained by Automatia.
The majority of banknotes are sorted at the cash-in-transit specialists' cash depots. They have the right to return fit banknotes back to circulation. If necessary, cash-in-transit specialists may collect more cash for their customers directly from the regional branch offices of the Bank of Finland. Similarly, cash-in-transit specialists return part of the cash held in custody by banks and retailers to the central bank's regional branch offices. The Bank of Finland sorts the banknotes, monitors banknotes for possible counterfeits and withdraws unfit banknotes from circulation.
Cash yields no interest to its holder. If a private person deposits money with a bank, he/she will receive interest on the deposited funds. When he/she withdraws cash, there will be less money on the account and interest income will fall. The same applies to banks all over the world. The central bank – in Finland the Bank of Finland – is the bank of banks. All banks each hold an account with the Bank of Finland, who pays interest on these accounts. When a bank withdraws cash from the Bank of Finland, there will be less money on the account and interest income will fall. When the bank returns cash back to the central bank, the account balance will be higher and interest income will increase. Therefore, customers want to minimise interest-income losses due to holding cash and return extra funds to the regional branch offices of the central bank.
On the basis of the banknotes it issues, the central bank receives ‘monetary income’. Monetary income is generated when the central bank uses the funds received from non-interest-bearing banknotes and deposited on accounts in its books, investing them in interest-bearing foreign reserves and other financial assets. However, the Bank of Finland does not receive monetary income directly from the banknotes it has issued; rather it is allocated a share of Eurosystem joint monetary income from the total amount of euro cash in circulation. The monetary income received by the Bank of Finland increases its annual financial results. In connection with the distribution of profits, the Bank will credit the monetary income to the state in so far it is not needed to cover the Bank's expenses or to maintain its solvency level.
The Bank of Finland has five regional branch offices. They are located in Vantaa, Kuopio, Oulu, Tampere and Turku. The branch network was downsized in 1992–1994 with the closure of eight offices. In order to ensure the maintenance of currency supply and reduce the number of transportations, storage facilities for banknotes have been introduced on a limited scale. They enable banks to avoid some of the interest-income losses caused by cash held in custody.
In recent years, branch networks of central banks have been dismantled in other Nordic countries more extensively than in Finland, and they have increasingly changed over to using storage systems. In Denmark and Norway there are no regional branch offices, in Sweden only two remain. In most euro area countries, central banks' branch networks are still dense, but plans to downsize also exist.