It was its last big decision before the launch of euro notes and coins.

In a scarcely noticed press release on December 9, the European Central Bank unveiled details of how it planned to allocate the estimated E13bn (£8bn, $11.6bn) that central banks annually earn on the issue of their national currencies, once the single currency is in place.

In the understated comments of one central banker: "It's fair to say this has been an extremely complex and long-drawn-out negotiation."

Neil Courtis of Central Banking Publications, a specialist publisher in London, said: "We knew this was a really contentious political issue. The fact they only reached an agreement at the 11th hour underlines that."

Under the deal, whose outlines were originally agreed as far back as 1992 ahead of the Maastricht treaty, monetary income - or seigniorage, as it is more commonly known - will be pooled and re-allocated among national central banks according to each bank's share in the capital of the ECB - the so-called capital key.

Until now, national central banks in respective member states have issued their own currency, which has been used by and large in their own national territories and withdrawn by their national authorities. The profits arise as each note issued by a central bank is backed by an interest-bearing security. The more bank notes issued, the higher the profits.

However, with the euro system, seigniorage calculations will not be a measure of note issuance, but will be based on the GDP and population of each country, the basis for calculating the capital of the ECB.

"With the euro, the whole notion of national issuance breaks down," says a central banker.

Euro notes can be issued in one country, used in another, and withdrawn in a third. Given their identical features, there is no way of telling their origin. The capital key formula does not account for the migration of bank notes within or beyond the eurozone.

Because of its economic size and population, France will be the big winner, with an estimated 20 per cent share under the capital key, although the franc accounts for only 12 per cent of issuance across the euro area.

The political trade-offs that led to this decision are unknown, but it is clear the new system is being phased in over five years largely to allay the concerns of the Germans, the big losers.

The Bundesbank, which reports annual profits of around E8bn (£5bn, $7.1bn), has traditionally enjoyed the greatest share of seigniorage income of all the EU central banks, largely because of the use of the D-Mark in eastern Europe and Russia. Germany's monetary base accounts for around 36 per cent of the current currency in issue in the euro area at the end of 2000, according to Central Banking. But its share of monetary income under the capital key would be around 30 per cent.

Bank officials estimate that as many as 40 per cent of D-Marks outstanding are held outside Germany, a trend that has accelerated with the collapse of the Comecon Soviet economic bloc.

Even within Germany, economists point out there is more propensity to hold cash. Analysts put down to its turbulent recent history, and the low inflation record of the D-Mark.

But in southern Europe too, there could be an impact from this change in the system.

An official at the Greek Central Bank in Athens said: "To the extent that tourists will carry bank notes with them, we will be affected."

Current bank note issuance in some southern European countries - and thus seigniorage income - may be slightly higher than in other parts, as national central banks have to produce enough notes to satisfy tourists who buy a small quantity of foreign currency before going on holiday.

Spain is estimated to be the main loser here. An official at the Banco de Espana quipped, only half jokingly, that if the foreigners arriving from other parts of the eurozone brought sufficient euros with them, the time might come when the country would not even need to print any additional euros.

Given the small size of annual issuance, as notes are withdrawn because they have become too tatty, some bankers believe this is a very real possibility in Spain.

"But even if there is no migration of bank notes, applying the capital key to pooled income already generates a change because of the different level of bank note usage in different economies," said an official at the Central Bank of Ireland.

Interestingly, Portugal, although an economy dependent on tourism flows, expects it will be one of the beneficiaries of the new system. An official at the Banco de Portugal in Lisbon said: "The reason is that we have a much higher use of credit and other electronic payments than other countries."

Over time, most bankers believe the level of seigniorage income will fall, as consumers adopt electronic payments systems.

But one imponderable that could reverse this trend is the possibility that the euro may become widely held outside the zone.