Sunday, May 19, 2024

Unlocking the advantages of Polymer Banknotes


As the world continues to evolve, so too does the way we handle currency. In an interview with Capital’s Groum Abate, Andrew Bonnell, the Director of Business Development at CCL Secure, sheds light on the innovative concept of polymer banknotes and their significant impact on various aspects of the economy and the environment.

Andrew Bonnell began his experience in the security industry overseeing General Motor’s Brand Protection Strategy for the Asia Pacific region while based in Shanghai.  Andrew has lived and worked in China, South East Asia, the Middle East & Africa, Europe and North America, and progressed from brand protection strategy, to security technologies for high security printing and documents, into the arena of banknote substrates and security features. Excerpts;  

Capital: What is a polymer banknote?

Andrew Bonnell: Polymer banknotes were developed to address key shortcomings Central Banks were experiencing with traditional cotton-paper notes. Polymer notes are produced with bi-axially oriented polypropylene material. The first polymer banknote was issued in Australia in 1988.

Central Banks are necessarily risk adverse and many do not move to new technologies without assessing the certainty of the benefits. The benefits of polymer have been proven in circulation in all environments resulting in over 40 countries around the world replacing a paper banknotes with polymer.

The increasing replacement of cotton paper substrates by polymer is due to the advantages polymer notes offers over cotton-paper banknotes. Polymer banknotes are more difficult to counterfeit, far more durable, cleaner and greener.

Capital: What are the environmental benefits of using polymer banknotes compared to paper banknotes?

Andrew: Some people are surprised to hear that polymer banknotes have a significantly reduced impact on the environment in circulation and are 100% recyclable at their useful life! As all banknotes are in a closed loop system no banknotes enter the waste stream. The Central Bank collects   all unfit cotton paper and polymer banknotes back at their Cash centres for shredding.  

After they shred cotton paper banknotes, Banks commonly decide on one of two disposal options for traditional cotton-paper banknotes: send these notes to be buried as landfill, or incinerate. Both options are very harmful to the environment.

In contrast, unfit polymer banknotes are recycled into polymer pellets and reused in the production of various plastic goods including buckets, trays, industrial components and furniture. For example, the Banco Central de Chile uses its end of life polymer notes to produce plastic wood. The plastic wood has offered the country many advantages. It doesn’t rot, splinter or oxidize.

The Central Banks in Canada, Mexico and the UK engaged independent experts to conduct Lifecycle Assessment studies for their banknotes. The experts all found that polymer banknotes performed significantly better than cotton paper banknotes in all environmental impact areas categories in all 3 countries. Due to their longer life polymer banknotes are more environmentally friendly than cotton paper banknotes – recycling further increases these environmental benefits

Capital: How does the durability of polymer banknotes contribute to cost savings for a country?

Andrew: The increased longevity that polymer notes provide means less production (about 75% less) and far less transportation requirements. There are generally about 75% less reprint orders, less unfit notes being transported for checking during circulation and less processing of unfit notes.  This longer life saves the country costs to supply banknotes, with the added benefit of much lower impact on the environment. 

The Reserve Bank of Australia (RBA) has estimates savings of over one Billion Australian Dollars in currency costs because of the change from cotton paper to polymer banknotes.  The RBA circulates polymer banknotes and attributed the savings to polymer banknotes durability. Similar results are found in every major Bank that has issued polymer banknotes and undertaken the cost benefit analysis.

Capital: In what ways are polymer banknotes more secure than paper banknotes?

Andrew: The banknote design can incorporate a combination of unique substrate security features and traditional printed features making it difficult, time consuming and costly to counterfeit, yet easy for the public and retailers to quickly authenticate.

Generally the first thing people will notice when looking at a polymer banknote is a transparent area, which is called a window. The foundation of polymer banknotes, before any inks are added, is a robust transparent film. This window is intrinsic to a polymer banknote and is one of the major differences between polymer and cotton paper banknotes. Paper notes do not have any intrinsic windows although due to the success of polymer there have been some attempts to copy insert a window in a paper substrate. The clear window on a polymer banknote adds a level of complexity that is difficult to counterfeit. The transparency of the window results in the security features applied in the window being prominent and visible on both sides of the polymer banknote. This effectively doubles the challenge for a counterfeiter trying to copy the banknote.  

Additionally, there are many security features that are available on polymer banknotes that are not possible on paper notes.

A notable example of polymer banknotes counterfeit resilience is Canada. At the end of 2022, the counterfeiting rate was 6 parts per million (ppm), well below the performance of the prior cotton paper banknotes- 45 ppm in 2009 – and their target of 30 ppm. There are similar successes in Australia, England and New Zealand.  

Capital: Can you explain why polymer banknotes last at least three times longer than paper banknotes?

Andrew: As mentioned the core of every polymer banknote is a biaxially-oriented polypropylene (BOPP) transparent film. This BOPP is a robust film with excellent printing and handling properties.

Polypropylene is a long lasting extremely tough polymer with excellent resistance to oils, chemicals and rough handling conditions. It is suitable in all climatic conditions. Polymer banknotes circulate successfully in some of the coldest, hottest, driest and most humid regions in the world.

Polypropylene is used to manufacture numerous long life products including car parts, clothing, housewares and toys.

Capital: How do the cost savings from using polymer banknotes translate into significant financial benefits for a country?

Andrew: The savings from circulation polymer banknotes in place of cotton paper banknotes can be used to fund public needs e.g. schools, healthcare, infrastructure. Saving are mainly achieved through the much longer life of polymer banknotes. Polymer banknotes are proven to last 3 to 5 times longer than cotton paper banknotes. Most Central Banks reduce their banknote procurement costs by well over 50% over the life of a banknote series when circulating polymer banknotes compared to cotton paper banknotes. In addition to the reduction in the costs of procurement over the circulation life of polymer banknotes there is significant reduction in the costs of handing banknotes in circulation. This is primarily because polymer notes stay in good condition and as a result are not returned to commercial and Central Banks as frequently.

If counterfeiting has been a problem in a country the reduction in counterfeiting from polymer banknotes will also have an impact on reducing costs as managing a counterfeit problem can be very expensive for a Central Bank

Capital: Are there any potential drawbacks or disadvantages to switching to polymer banknotes? If so, what are they?

Andrew: In some countries unfit polymer banknotes process slightly slower than unfit paper notes (if both are fit then the processing speed is the same for both). However, due to polymer’s durability, there are far less polymer banknotes (generally about 75% less) that need to be processed that the overall efficiency is actually much better than traditional paper banknotes.

ATM’s and cash handling machines that accept and dispense banknotes must be adapted in some way for any new series whether on cotton paper op polymer. All ATMs are now suited to both paper and polymer and many countries circulate both banknote substrates. Hardware modifications like tray size are required if the banknote size changes whether paper or polymer. Beyond that software changes to money-handling equipment are required anytime the banknote design is updated – it doesn’t matter if it’s printed on paper or polymer, modifications will be necessary regardless.

Capital: How do polymer banknotes contribute to reducing the need for frequent note purchases?

Andrew: Basically polymer banknotes don’t wear out as quickly.  In all environments from the extreme cold of Canada to the extreme heat of Mexico, Egypt, Papua New Guinea and Mozambique – polymer banknotes last at least 3-5 longer than their paper counterparts.

Capital: Can you provide examples of countries that have successfully transitioned to using polymer banknotes and the benefits they have experienced?

Andrew: Over 40 counties have successfully converted to polymer including Australia, Canada, Mozambique, England, Romania, Papua New Guinea, Brunei, and Mexico. Not all banks publicise all their available data for security reasons. All banks that have converted to large scale circulation of polymer banknotes and that measure data on cost savings, counterfeiting and the environment have achieved significant gains.

Banks that publically report include:

·       Cost savings: Costa Rica, Australia, the UK

·       Counterfeits: England, NZ and Canada reported significant reductions in counterfeit activities thanks to their polymer banknotes notes.

·       Recycling: Mexico, Chile, Australia and Egypt found tremendous success with their polymer recycling initiatives.

·       Public Acceptance: Banks that measure and report public acceptance generally find that the public prefer polymer banknotes to paper once they have experienced polymer banknotes. Reasons include cleanliness, banknotes not becoming limp and the technically advanced appearance.

There are many, many more examples in different parts of the world.

CCL Secure supplied over 90% of the polymer banknotes that have circulated worldwide.

Capital: What are some of the long-term implications of adopting polymer banknotes, both economically and environmentally?

Andrew: Simply put – the benefits to the country are significant cost savings, better counterfeit protection, cleaner notes in better condition in circulation, and environmental gains .

Good Governance – saving the Public purse – and ALL the savings are in foreign currency – good for IMF relations as well!

Capital: How do polymer banknotes enhance security measures compared to paper banknotes?

Andrew: In addition to the increased security provided by the windows the fact that polymer banknotes stay in good condition for much longer and do not soil is a barrier to counterfeiting. Its relatively common for counterfeiters to soil paper banknotes to camouflage counterfeit security features in countries where soiled notes circulate. This practice is not feasible with polymer banknotes

Capital: Have you ever tried to talk to authorities in Ethiopia about the use of Polymer banknotes? If so, what was their reaction?

Andrew: We’ve had some preliminary talk with members of the National Bank of Ethiopia, and the early signs look promising. Though it may be a bit premature to expect any changes any time soon, the Bank members we talked to appreciate the benefits the NBE can expect from a switch to polymer banknotes, which again include savings in the procurement of cash that may be allocated to other areas in Ethiopia at the discretion of the Bank (be it in education, healthcare, etc. or other development projects). The Bank is professional and we are certain that once they have assessed the benefits they will act in the best interests of Ethiopia.

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