I am informed by the Central Bank that the Bank continues to redeem Irish pound banknotes, which ceased to be legal tender on 9 February 2002. As of 31 December 2002, notes to the value of €299.7 million were outstanding. With the approval of the Board of the Bank, a provision of €60 million was created in respect of future redemptions. The balance of €239.7 million, which it was estimated would not be presented for redemption, was accounted for through the Profit and Loss account. This windfall gain then formed part of the payment of Surplus Income to the Exchequer for 2002, as proposed by the Minister for Finance in December 2001.
Since 2002, the Bank has continued to redeem Irish pound banknotes which have been charged against the provision of €60 million. The provision was exhausted on 30 April 2010 and in November 2010 the Commission of the Bank approved a transfer of a further €10.0 million to the provision. Irish pounds to the value of €2.4 million were redeemed during 2011 leaving €235 million in Irish banknotes still outstanding and a balance of €5.7 million in the provision at end-December 2011. The balance in the provision at 31 May 2012 was €4.9 million. The provision relates only to Irish pound banknotes.
In respect of coin, as of 2002, the net proceeds from the issue of coin are passed directly to the Exchequer on an annual basis (section 137 of the Finance Act 2002). Irish pound coin to the value of €125 million is still in circulation and is redeemed by the Bank on behalf of the Minister for Finance. Should the Government decide to cease redemption of Irish pound coin, the Exchequer could be expected to benefit over time to the value of the amount outstanding (by way of a higher net proceeds of coin transfer to the Exchequer because the proceeds received from the issue of euro coin would no longer be reduced by the value of Irish pound coin redeemed). However, even assuming that all the outstanding coin will eventually be redeemed, this could not realistically be described as a windfall as the amount redeemed each year is relatively low (€0.4m in both 2011 and 2010).
The value of the amount outstanding in respect of Irish pound banknotes and coin as at 31 May 2012 was as follows:
Irish pound banknotes —€234 million
Irish pound coin —€125 million.
