PN Futura » Artikel » The Future of Banknotes - Polymer notes point the way forward

The Bank of England’s high-profile decision to introduce a polymer £5 in 2016 and £10 in 2017 has arguably put polymer banknotes firmly on the agenda for many central banks across the world. Exchange looks at the reasons why central banks, including the Bank of England, are taking the decision to move to polymer and the implications that polymer banknotes have for the cash processing industry.

Prior to its announcement the Bank of England carried out a three-year study into banknote substrates as well as holding a public consultation exercise in 2013 with 13,000 people giving their feedback on the potential introduction of plastic banknotes.

The Bank of England’s research concluded that polymer notes were cleaner, more durable and more secure than paper banknotes. Announcing the decision to go with polymer, Bank of England Governor Mark Carney said: “Ensuring trust and confidence in money is at the heart of what central banks do. Polymer notes are the next step in the evolution of banknote design to meet that objective. The quality of polymer notes is higher (than paper), they are more secure from counterfeiting, and they can be produced at a lower cost to the taxpayer and the environment.” De La Rue has looked at the key factors that might be driving central banks to polymer.

Security

One of the strengths of polymer banknotesis that they enable central banks to stay one step ahead of counterfeiters. It’s the combination of substrate and print features that makes them hard to copy successfully.

Polymer substrate provides a platform for layered and sophisticated security features, including intricate and complex windows; a security feature in their own right but that can also incorporate other features. For example, blind emboss and holographic foils can be applied over windows and are visible from both sides of the note, maximising their effectiveness as a security feature. Experience from the countries that have introduced polymer notes so far shows just how secure they are. Australia was the first country to introduce polymer banknotes for some of its currency in 1988 and since 1996 all its banknotes have been on polymer.

The level of counterfeit notes in circulation in Australia since they went wholly to polymer has been low, with around 12 parts per million on average in the past five years. The majority of these were poor counterfeits on paper but recently there have been examples of counterfeiters attempting touse a polymer substrate. Perhaps the best testament to the security of Australia’s banknotes is that the Reserve Bank of Australia has not felt the need to introduce a new series for the last 20 years. However in 2012 they did announce that they were actively researching new technologies for their next series.

Durability

Increased banknote longevity was another key factor in the Bank of England’s decision. As with security, the evidence from those countries with polymer is compelling. For example, the Reserve Bank of New Zealand has stated that its polymer notes last on average four times longer than paper notes, and the Bank of Canada expects a 2.5 times increase in note life. The Bank of England’s research found that the low denominations that were most frequently handled would last 3.8 times longer than paper notes in the same denominations. One of the reasons for this is that polymer banknotes are not porous and so are cleaner than their paper counterparts. The nature of the polymer material means they will not absorb moisture or dirt and can be easily wiped clean to remain cleaner for longer.

Environmental benefit

Based on studies carried out on behalf of the Bank of England and the Bank of Canada using ISO standards for Environmental Management (ISO14040: 2006 Methods and ISO14044: 2006: Standards), polymer notes have been shown to have a lower overall environmental impact than paper. Their increased longevity leads to fewer notes being manufactured and transported, and fewer unfit notes being sent back for destruction. According to a report by the Bank of Canada, polymer notes are transported 2.5 fewer times than paper banknotes. In addition polymer notes weigh less than paper ones which reduces the amount of fuel required to transport them. It is worth noting, however, that the environmental impact of any banknote varies depending on the circulating environment.

Cash processing

If the benefits of polymer notes seem clear cut, the operational and financial implications for the cash processing industry are significant but well understood. A move to polymer combined with changes to banknote size will necessitate changes that include ATM cassette sizes, software modifications and

potentially hardware upgrades. Machines that weigh, count, sort, accept, dispense or recycle banknotes will need to be adapted and recalibrated. Another area that needs to be addressed is static build-up during the processing of polymer notes. This is well known and is managed with anti-static equipment.

During the period when new notes are being introduced and the old notes are being phased out, detectors may need to be set up in cash processing equipment to manage the new notes and the new note fitness standards. This is also true, of course, if introducing new paper notes. These changes will, of course, involve additional initial investment from the cash industry compared to changing to paperbased notes. Ultimately, however, cash machines will need less frequent replenishing, which in turn will lead to reduced transit and storage costs. Over the longer term the benefits of polymer notes should outweigh any additional outlay.

For any country introducing polymer banknotes, prior to their introduction the central bank and cash handling industry should work together and factor in time for upgrades to be implemented and tested prior to launch. Banks, businesses and retailers will all require training on the features of the new notes and of course the public will need to be fully educated on their introduction. It’s too early to say whether the Bank of England’s high-profile decision to choose polymer represents a tipping point for plastic banknotes. However, the positive experiences to date in countries like Australia and Canada, the increased security of polymer notes allied with their enhanced longevity and cleanliness, mean that central banks across the world will be watching the launch of the UK’s new PST 5 and PST 10 polymer notes with keen interest before deciding on their own next generation of banknotes.

World of possibilities

As well as being more secure and durable, polymer banknotes also have different aesthetic possibilities, allowing total design integration between substrate and print. For De La Rue’s design team, working on polymer opens up a new world of possibilities, as Substrate Designer, Natalie Turner explains: “It allows us to incorporate clean vector shapes as well as finely detailed an graduated drawings, and for the first time we can bring elements of colour into the substrate. By bringing in these three aspects of design we can be incredibly creative and inventive, allowing us to create some truly striking an beautiful designs.”