The EU Commission has said it will make it compulsory for all banks throughout the EU to ensure the authenticity of notes and particularly coins before they put them back into circulation.

As part of its crackdown on coin counterfeiting, the Commission revealed a number of scams including Vatican World Cup 2006 commemorative medals passed off as 2 coins.

The move comes after new figures showed that euro coin counterfeiting increased substantially last year, with particular problems detected in Italy, Spain and France.

Almost 164,000 euro counterfeit coins were removed from circulation in 2006 . . . a two-third increase on the 100,500 coins removed in 2005. Nearly 75,000 counterfeit coins were removed in 2004, meaning that the problem has more than doubled in two years.

The Commission is particularly concerned that counterfeiters are concentrating on the highest value 2 coins.

Of the 164,000 counterfeit coins detected last year, over 141,000 were 2 coins.

The Commission now insists that each EU state must inform it of any problem with privately produced medals or tokens that may bear a resemblance, intended or otherwise, to euro coins.

In the 'Protection of Euro Coins' report published last month, the Italian Mint told the Commission of a set of Vatican medals with the former Pope depicted on the national side and a "very similar" euro figure on the other side. The Commission agreed that there was "a general visual resemblance" to the 2 coin. But the Commission told the Italian authorities that the medals were not usable in vending machines and were "unlikely to be used in hand-to-hand transactions".

The German Bundesbank also told the Commission about World Cup 2006 commemorative 'medals' which again were similar to 2 coins. The Commission noted that these medals were being sold over the internet as 2 coins "which emphasises the producers' efforts to achieve similarity".