Polymer banknotes--a viable alternative to paper banknotes.
Bank notes are made of dense 80 to 90 grams per square meter of 100% cotton paper (also known as ragged paper) which is superior in strength and durability in comparison to wood pulp based papers. The cotton paper is sometimes mixed with linen, abaca, or other textile fibres to make it more resilient, resistance to wear and tear. Early Chinese banknotes were printed on paper made of mulberry bark and this fibre is used in Japanese banknote paper today. Most banknotes are made using the mould made process in which a watermark and thread (security component) is incorporated during the paper forming process. It is however often rather complex in construction comprising fluorescent, magnetic, metallic and micro print elements. One version of this technology is also known as windowed thread which makes it counterfeit resistance. Few new features of this technology includes Cornerstone, Platinum and Optiks.
With constant threats of reducing the impact of counterfeiting techniques / technologies, such as color photocopiers and scanners, countries have started thinking of a better material for printing notes. Cost Rica, Haiti, and Isle of Man issued polymer bank notes in 1983. These bank notes were printed by the American Bank note Company and were developed by DuPoint. During the same period CSIRO and Note Printing Australia, a subsidiary of the Reserve Bank of Australia, began work in 1980s to develop processes and technology for polymer bank notes. In the process many security features had been incorporated in polymer bank notes. Some of these are (i) transparent window (ii) optically variable devices (iii) shadow images (iv) embossed printing (v) use of metallic, metameric or metachromic inks etc.
According to Menzies (2004) Australia, New Zealand and Romania have all fully adopted polymer (plastic) banknotes, and another 18 countries have issued at least one polymer note. As per other statistics, today, 33 countries have issued polymer plastic notes. It include four countries those have issued hybrid polymer banknotes. To name these 33 countries are Australia, Bangladesh, Brazil, Brunei, Chile, China/Peoples Republic, China/Taiwan, Guatemala, Hong Kong, Indonesia, North Ireland, Kuwait, Malaysia, Mexico, Nepal, New Zealand, Nigeria, Papua New Guinea, Romania, Singapore, Solomon Islands, Sri Lanka, Thailand, Vietnam, Western Samoa, Kazakhstan, Northern Ireland, Bulgaria, Fiji, Malta, and Zambia.
The article presents an analysis of pros and cons of polymer banknotes with respect to enhanced security, reduction in the cost of production, increased self life of banknotes, ease of use through various automated processes etc. In addition, article analyzes the factors which are holding its reach to biggest economies of the world. The analysis is mainly based on secondary data available from Internet and other printed secondary sources.
What is a polymer banknote and a hybrid polymer banknote?
The polymer banknotes are made from the polymer biaxially-oriented polypropylene (BOPP). The printed security features such as intaglio, offset and letterpress printing, latent images, micro-printing, and intricate background patterns of paper can be applied to polymer banknote also. Polymer banknotes can have different colours on the obverse and reverse sides and can incorporate a watermark (an optically variable 'shadow image') in the polymer substrate. Shadow images can be created by the application of Optically Variable Ink (OVI), enhancing its fidelity and colour shift characteristics. Magnetic, fluorescent, phosphorescent, microprinted, and clear text security threads can also be embedded in the polymer banknote. Like paper, the polymer can also be embossed and windowed. The transparent wiondow where optically variable device (OVD), is located is a key security feature of the polymer banknotes.
Hybrid Polymer Banknote
A hybrid polymer banknote is essentially a paper note with a polymer band. They are printed on a paper substrate with a polymer patch. A polymer patch/band is applied vertically over the entire height of the paper note, thus creating a clear window. The polymer patch measures 74 mm (the height of the note) x 16 mm and its thickness is 25 microns generally. Bulgaria issued the world's first hybrid polymer in 2005 with a 20 Leva note. Kazakhstan was the second country to issue a hybrid note in 2006 with a 10,000 Tenge hybrid polymer banknote. Fiji is the third country to issue hybrid polymer banknotes in 2007 with Fiji $100 denomination. Latvia is the fourth country in the world to issue a hybrid bank note of 100 Latu denominations.
Positive side of polymer banknotes
The major security features of bank notes (paper or polymer) are (i) WM (Watermark) (ii) ST(Security Thread) (iii) IP (Intaglio Printing) (iv) PMD(Perfect Matching Drawing) (v) HOL (Holograms) / Kinegrams (vi) HI (Hidden Images) (vii) UV (Ultraviolet Rays--Observation under ultra Violet Rays) (viii) IR (Infra Red) glowing used by Russian Rubble and Euro (ix) MI (Micro-Inscriptions) (x) CCI (Color Changing Ink) (xi) Clear Window (xii) Non-Transparent Window (xiii) Shadow Image (xiv) Micro-Printing (xv) See Through Element (xvi) Raised Printing (xvii) Watermark Portrait (xviii) Security Thread (xix) Security Fiber (xx) Lateral Images (xxi) Braille feature (xxii) STRAP (xxiii) Crisp Sound (xxiv) Background Decoration (xxv) Gradient Coloring (xxvi) Kipp Effect or Latent Images (xxvii) Signatures (xxviii) Metallographics (xxix) Hair (xxx) Protection Ornaments, (xxxi) Marks for the blind (xxxii) Novel numbering (Jorge and Miguel (2007)). It has been reported repeatedly that polymer banknotes are difficult to counterfeit in comparison to paper notes (Gration (2008)). Australia saw the number of fake banknotes down by 63%, while New Zealand scored a 96% fall after introducing polymer banknotes. The statement of issuing authorities of polymer banknotes in different countries and researchers with respect to better security features of polymer banknotes are listed in very brief in table 1.
Cost of Production
The actual data as reported in the literature with respect to cost of production of polymer bank notes is compiled in Table 2. (It can be seen from the data that cost of production of polymer banknotes is much less than the paper bank notes). The issue and functional cost of the banknote in circulation in New Zealand has been present in Fig. 1 & Fig. 2 respectively.
[FIGURE 1 OMITTED]
[FIGURE 2 OMITTED]
Quality & Other Features
The statements with respect to quality and other features of polymer bank notes are listed in Table 3. One can easily infer from these statements that polymer bank notes have some advantages over paper bank notes.
Negative side of polymer banknotes
There are reports from many countries wherein negative side of the polymer banknotes is reported. Few of negative statements are listed in the following:
General: The uptake of polymer banknotes has been comparatively slow with an estimated 1.5% of the Worlds banknotes now using this material. The major problems are (i) print durability (ii) bulky nature of creased polymer banknotes (iii) Counting machines have difficulty in processing notes rapidly (iv) the ink on the face of the banknotes being lost when two banknotes rubbed against each other (v) many polymer bills just after one or two years of circulation were faded or suffered the deformity of the major patterns while this never happened to cotton paper notes.
Specific: Experiences of some specific countries are listed in the following:
Thailand: Thailand has reverted to paper after testing polymer notes in circulation
Zambia: The Zambian banknotes suffered from problems like easily rubbed off serial numbers and premature fading. Another set of problems include (i) removal of unfit polymer notes, (ii) mutilation (Zambia: Mulomba, M. (2007).
Vietnam: Many polymer bills just after one or two years of circulation were faded or suffered the deformity of the major patterns while this never happened to cotton paper notes (Thanh Nien's News (2006)).
Mexico: They get dirty slowly and last longer in circulation until tearing is seen. They are particularly vulnerable to staples and sharp cutting objects. Handling the notes may sometimes be more complicated: They can be sticky when come into contact with some liquid other than water. Folds in these banknotes tend to be permanent, which can be an inconvenience (Bancodemaxico (2005).
Polymer Banknotes and India
During 2002 Reserve Bank of India (RBI) in its communication said that there is no immediate plan to issue polymer banknotes in the country (Prasad (2002) and Bureau (2002)). After five years, it is reported again in media that Reserve Bank of India plans to start a pilot project to print currency notes made of polymer instead of paper. RBI is planning to experiment with a million 10 Rupee notes each based on plastic bank note technology. The new currency is expected to come into circulation shortly in India (Sidhartha (2007)).
Polymer banknote technology is being adopted in more than 33 countries across the world. There are many positive sides of the technology and it has provided solution to certain extends for counterfeiting threats. It has increased self life for the banknotes and other additional features as can be seen from the statistics presented in section 3. Still it is not popular technology for largest economies of the world. The reason could be investment from the scratch, faith in existing technology and product, risk of venturing in the new technology, acceptability of the paper banknotes among the all users etc. Additional reasons could be as reported in the domain experts from time to time (i) paper brings integral substrate security (ii) paper does not need to be treated to get good print quality (iii) paper does not need to be over coated (iv) paper is designed for machine handling (v) paper is the public's choice (vi) genuine banknote paper cannot legally be obtained by criminals (vii) paper is environmentally friendly (viii) paper specification can be tailored to an individual countries needs easily (ix) paper supply is competitive (x) paper has a past, a present and a future.
On the other hand, polymer bank note has certainly provided two very important directions to the banknote printing industry including paper banknote printing industry that is (i) there is a way to increase life of currency notes, (ii) hybrid banknotes which incorporate positive features related to security in paper banknotes. Further, expansion of polymer banknote technology will depends on solving technological problems faced by some of the user countries.
Adesida, S. (2007), "Towards Cleaner Naira Notes", Daily Sun, Thursday, January,18,http://www.sunnewsonline.com/webpages/ featuresmoney/2007/jan/18/money-18-01-2007004.htm.
Azom.com (2004), "Zambia Will Not Withdraw Polymer Banknotes from Circulation", http://www.azom.com/news.asp?newsID=1389
Badar, R. (2005), "Polymer Banknotes Brunei Experience", Regional Polymer Banknote Symposium, Hanoi, Vietnam, 15-16th December. http://www.securency.com.au /e/pdf/2005_%20Polymer%20Banknotes%20%20Brun ei%20experience%20%20Mrs%20Rokiah%20%20Bad ar.pdf http://www.securency.com.au /e/pdf/2005_%20Polymer%20Banknotes%20%20Brun ei%20experience%20%20Mrs%20Rokiah%20%20Bad ar.pdf Banco Central do Brasil (2003), "Polymer Banknote: Two years of Brazilian Experience" www.polymernotes.org/other_country/BRA_experienc e2.pdf
Bancodemaxico (2005), "Polymer banknote manufacturing", http://www.banxico.org.mx/ sitioingles/billetesymonedas/didactico/notesManufactF eaturesHistory/polymerNotesManufacturing.html
Bureau (2002), "Polymer notes not now", RBI, The Hindu Business Line, Internet Edition, Wednesday, October 9, http://www.thehindubusinessline.com/bline/2002/10/09 /stories/ 2002100902101000.htm
Coventry, L. (2001), "Cost-Effectiveness of Polymer Currency Notes--Australia's Experience", Paper presented at the XV Pacific Rim Banknote Printers' Conference, Thailand-November 2001.
Conventry, L. (2001), "Life of polymer currency notesA study", Paper Presented at the XV Pacific Rim, Banknote Printers' Conference, Thailand-November 2001.
Gration, R.G. (2008), "A paradigm shift in banknote security. Security features in Polymer Banknotes", http://www.noteprinting.com/report_001.html
Jorge Eduardo Galan Camacho and Miguel Sarmiento Paipilla (2007), "Banknote Printing at Modern Central banking; Trends, Costs, and Efficiency", http://www.banrep.gov.co/docum/ftp/borra476.pdf
Lang, B. and John Barry (2000), "Polymer Banknotes", Reserve Bank of New Zealand: Bulletin, Vol. 62 (2), pp. 44-46.
Lang, B. (2002), "Polymer Banknotes--the New Zealand experience", RESERVE BANK OF NEW ZEALAND: Bulletin, Vol. 65 (1), pp. 53-57.
Lang, B. (2004), "Polymer banknotes in New Zealand" "the five year report", Reserve Bank of New Zealand.
Maria Carlsen and Johanne Dinesen Riishoj (2004), "Counterfeit Banknotes", http://www.nationalbanken.dk/C1256BE9004F6416/si de/Monetary_Review_2004_3_Quarter/$file/kap04.html
Menzies, Gordon (2004), "Money to burn, or to melt"? A cost-benefit analysis of Australian polymer banknotes, North American Journal of Economics and Finance December, 15 (3), pp. 355.
Mansor, Lokman (2000), "Money comes, money goes, polymer stays", Business Times. July 7, pp. 03.
Mulomba, M. (2007), "Bank of Zambia Experience with Polymer Bank Notes", http://www.securency.com.au/e/pdf/2007_Bank%20of %20Zambia%20Experience%20with%20Polymer%20 Banknotes_Morris%20Mulomba.pdf.
Prasad, A. (2002), "No plan to introduce polymer/plastic notes: RBI", Press Release, 20022003/370, http://www.rbi.org.in/currency/press/rbi0370-2002.html
Sidhartha, TNN (2007), "Government plans to try out real plastic money", 30th June, 2007, http://timesofindia.indiatimes.com/ Govt_plans_to_try_out_real_plastic_money/articleshow/2162698.cms
Sayeda, Khanam (2000), "Not Paper, Now Polymer Banknote", Daily Manavzamin, http://www.noteprinting.com/f/BDESH-2.pdf.
Thanh Nien's News (2006), "Errors on Vietnam's polymer banknotes 'common': State Bank", 11 October, http://www.thanhniennews.com/features/?catid=10&ne wsid=21024.
VietNam Net Bridge (2006), 2% of counterfeit money is polymer note: SBV, http://english.vietnamnet.vn/biz/2006/08/603687/
N.P. Singh, Management Development Institute, Mehrauli Road, Gurgaon--12201, India, E-mail: firstname.lastname@example.org, email@example.com
Table 1: Statements of Security Issues of Polymer Banknotes S.N. Statements Source & Country 1 "Polymer banknotes are more difficult Australia: The New to counterfeit because you cannot Paradigm In photocopy or scan a clear window, and Currency, IPCA toners don't contain white inks. New Bulletin, security features such as the International Diffractive Optical Element (DOE[TM]) Polymer Currency are extremely difficult to Association, counterfeit". October, 2004 2 "Difficult, time consuming and costly Malaysia: (Bank to counterfeit" Malaysian RM 5 bank Negara note has six security features that is Malaysia--Central a clear window, non-transparent Bank of Malaysia) window, shadow image, micro-printing, see through element, and raised printing. 3 The data given in Fig 2 is an evidence New Zealand: for increased security in polymer ((Lang and Barry banknotes. In comparison to 2000 (2000), Lang counterfeited notes per million has (2002), Lang reduced to nil in the subsequent (2004)). years. 4 There is a reduction in counterfeiting Australia: notes in Australia after introduction (Conventry of polymer notes. It can be seen from (2001)). the data of Fig.1 that counterfeits passed per million notes in circulation is reduced after 1995/96 considerably. 5 "Increased security: Safer against Brunei: (Badar counterfeiting. The polymer substrate (2005). allows the use of security features such as: clear window, see-through registration of a flower". 6 "Plastic bills last longer and are Nigeria: (Adesida more difficult to counterfeit than (2007)). paper bills. Check for authenticity and fitness are reduced in comparison to paper notes." 7 "The polymer notes were designed to Kelly's Computer help deter counterfeiting; they offer Shop & Coins more security features that regular paper can offer." 8 "It is printed on synthetic material, Chile : August, has two clear windows which are 2004, News Item. difficult to copy, as well as other security measures, such as external and internal micro--printing and a "Shadow" image which can only be seen against the light and which will replace the current watermark". 9 "Polymer notes also enable new Financial Advisor security features unavailable on paper banknotes, such as transparent windows, and diffraction grating". 10 According to the State Bank of Vietnam Vietnam: (Thanh (SBV), polymer is an advanced Nien's News material, which allows the application (2006)), VietNam of many anti-counterfeit money Net Bridge (2006). technologies. According to another news "Nguyen Quoc Toan, deputy head of the Vault and Issuance Department under SBV, maintained that polymer notes had a higher security level than any other kind of bank note, and only 0.02 of counterfeit money discovered now is polymer--a very low percentage". 11 In a survey, 61% of respondents rank Brazil: Banco polymer bill/bank notes as more Central do Brasil difficult to falsify due to plastic (2003). material. According to Central Bank Brazil, during a period of 32 months 8099 events of falsification were recorded. It is 0.003% of total of 253 million bills. 12 Zambia is first African country to Zambia: Mulomba, introduce polymer notes. M. (2007). Counterfeiting of the two polymer denominations was not a major problem. 13 The index of banknote counterfeiting Mexico: in this denomination has been reduced Bancodemaxico from 18 counterfeit paper banknotes (2005). per million notes in circulation at the end of 2002 to 0.6 counterfeit banknotes per million notes in circulation at the end of 2004. Table 2: Statements with respect to Cost of Production of Polymer Banknotes 1 "Within 10 years of the introduction Australia, Menzies of polymer notes, the net benefit was (2004) around $A 90 million ($U.S. 65 million)". 2 "More cost-effective". It may not be Hong Kong (Yam, due to cost of production but due to chief executive, increased life of polymer bank note. Hong Kong Monetary Authority) 3 "Production of Notes in Australia had Australia declined after the introduction of (Conventry polymer banknotes. In the long run it (2001)). has resulted in the reduction of cost of production". 4 "Polymer notes last four times longer Brunei (Badar than paper notes. The greater (2005)). durability more than offsets the high cost of production". 5 "Enhanced durability has resulted in Nigeria (Adesida a big reduction in the number of (2007)). notes required and therefore, resulted in note printing costs. It also means less waste, compared with paper notes". 6 "Increased durability, both the Chile: With Central Bank and the financial system respect to new will save on printing and processing 2000 Peso note costs". 7 It is evident from the data presented New Zealand (Lang in Fig 4 and Fig 5 that overall cost and Barry (2000), of polymer bank notes is reducing on Lang (2002), Lang continuous basis due to durability of (2004)), polymer banknotes. 8 "In terms of cost, the K2 polymer Papua New Guinea note is slightly dearer than the K2 (Statement of Bank paper note because of the type of of Papua New materials used to produce the note. Guinea Governor L. However, from the Central Bank's Wilson Kamit) point of view, the frequency of ordering new K2 notes has reduced markedly in the last 7 years. This has generated significant savings whilst providing a note with greater utility. It is more secure than paper note". 9 "The polymer denominations cost twice Vietnam (Thanh as much to print, but should last Nien's News four times as long". (2006)) 10 "Polymer banknotes are more durable State Bank of than cotton-paper banknotes, which Vietnam (Thanh help Vietnam save issuance costs". Nien's News (2006)). 11 "Expectation was to save nearly US$ Zambia: Mulomba, 3.4 million with two denominations. M. (2007). It s through increased durability". 12 "Due to longer life, in the case of Mexico: the 20-peso polymer banknote, a Bancodemaxico savings of 42% vis-a-vis the (2005). continued manufacture of the banknote with paper has been estimated". Table 3: Statements of Quality & Other Features of Polymer Banknotes SN Statements Source & Country 1 "People seem to agree that the new Hong Kong (Joseph notes are clean and durable, do not Yam, chief get dirty easily and have a 'crisp' executive, Hong Kong feel. Because polymer notes are Monetary Authority) sturdier and last longer than paper notes, and can be recycled when they are no longer useable, they should also be kinder to the environment" 2 "In New Zealand paper notes need to New Zeeland (Lang be counted and verified for and Barry (2000), authenticity and quality by machine Lang (2002), Lang processing. Around 92% of these (2004)). notes, on average, are then re-issued back into circulation. With polymer notes, because of the likelihood of fewer forgeries and the enhanced durability qualities, the case for continually processing notes through expensive sophisticated machines is less compelling". It will result in reduction of bank branches also. The notes are also difficult to tear without the aid of a cutting tool, but will tear more easily than the paper notes if a tear is started. 3 "It is stronger and more durable than Hong Kong (Yam, paper banknote. It does not absorb chief executive, dirt or liquid. It is cleaner and Hong Kong Monetary more hygienic as it minimizes growth Authority) of bacteria." 4 Mrs. Foo-Yap Siew Hong, Assistant Singapore Managing Director said, "Polymer notes are cleaner and last longer than paper notes. MAS received favorable feedback from the public, banks and retailers 5 "The average life term of polymer Russia note is several years (unlike 8 months of a paper note)". 6 It has the positive public reaction Australia to cleaner and more hygienic notes; environmental gains over the life cycle of notes; improved machine processing efficiencies 7 "Strong and vibrant design element. Brunei (Badar Maintain the quality and integrity of (2005)). the currency. Polymer banknote last four times more than paper banknotes. Polymer notes can be recycled products". 8 "Polymer notes last about four times Nigeria (Adesida longer than paper notes. Polymer (2007)). substrate is more robust and resistant to damage from moisture, dirt, oils and household chemicals". 9 "RM5 (polymer bank note) should have Malaysia, Speech of a significantly extended lifetime as Assistant Governor the RM5 polymer banknotes do not Dato' Mohamad Daud absorb dirt or liquids, stay clean Dol Moin (2004) and hygienic to handle. The over-coating varnish should also add to cleanliness, protect the printing, reduced ink rub- off or ink wear, and ink dust, under a normal condition of usage and handling." 10 "It is more resilient, and prevents Chile liquid from being absorbed and dirt from adhering to the note, all of which results in a longer useful life expectancy for the new note". 11 "Polymer notes were more durable and Papua New Guinea lasted longer. Banknotes in paper (Bank of Papua New form could only last for at least Guinea Governor L. four months from introduction to Wilson Kamit) public before it is withdrawn from circulation for destruction". 12 "The notes are claimed to be 10 times Bangla (2000), durable than the paper money". Sayeda, Khanam (2000). 13 "Polymer versions of each Australia--Conventry denomination last four times as long (2001) as the paper version of the same denomination, i.e. the life of each note is (i) D1--Paper 6 months-- polymer 2 years, (ii) D2--Paper 1 year--polymer 4 years, (iii) D3-- Paper 2 years--polymer 8 years, and (iv) D4--Paper 4 years--polymer 16 years. D1 is smaller denomination D4 is higher denomination". 14 "It has more resistance to tear. It Brazil: Banco is more resistance to Central do Brasil moist/wear/fading & durable". This (2003). perception has increased in 2001 survey in comparison to 2000 survey. 15 Bank has achieved "Clean Note Policy" Zambia: Mulomba, M. by introducing polymer banknotes. (2007) Polymer notes circulation life span is twelve months as compared to three months of paper notes. 16 "Even though they last 3.5 times Mexico: longer than paper banknotes, Bancodemaxico (2005) banknotes made from polymer come back to the central bank much cleaner".
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|Publication:||Asia-Pacific Business Review|
|Date:||Apr 1, 2008|
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