SEC 028 IPCA English 0105 - Polymer Bank Notes of the World

T H E N E W P A R A D I G M I N C U R R E N C YFEBRUARY 2005Malaysia issuesRM5 polymer banknoteOn 26 October 2004, Bank Negara Malaysia (BNM) introduced RM5 polymer banknotes, the first circulatingpolymer banknote to be issued in Malaysia.The RM5 polymer banknotes are similar to theexisting RM5 paper banknotes in design,colour and size. Some of the existing securityfeatures in the RM5 paper banknotes havebeen retained, but a few significant changeswere made to incorporate security featuresthat are unique to polymer banknotes.The new security features incorporated inRM5 polymer banknotes are:• A clear window with the shadow image ofthe Prime Minister's Office at Putrajaya andan embossed printing of the numeral “5”,both of which are visible from either sideof the note.• Bank Negara Malaysia's logo the Kijang,printed in white and visible on either sideof the note. On the back of the banknote,it will appear as a non-transparent window,with the Kijang Logo seen clearly.The security features in the existing RM5paper banknotes retained in the new RM5polymer banknotes are:• See through feature is a stylised hibiscuswhich is perfectly registered on the frontand back of the banknotes and visiblewhen held up to the light.• Intaglio printing of a multi layered specialink on the portrait of the first Seri PadukaBaginda Yang DiPertuan Agong.• Micro lettering of “RM5” which can beviewed under magnifying glass.BNM adopted durable polymer banknotetechnology to ensure a high quality standardof banknotes while in circulation. AssistantGovernor of Malaysia, Dato’ Mohamad DaudDol Moin, in his speech at the launch of RM5,commented that the notes “should havea significantly extended lifetime as the RM5polymer banknotes do not absorb dirt orliquids, stay clean and are hygienic to handle.The over-coating varnish should also add tocleanliness, protect the printing, reduce inkrub-off or ink wear, and ink dust, under a normalcondition of usage and handling.”Enhanced machine processability of RM5polymer banknotes will add to significantproductivity and efficiency gains as highMalaysia’s RM5 Polymer Banknotequality notes facilitate manual and machineassistednotes processing.With the introduction of the RM5 polymerbanknote, BNM will discontinue the issuanceof RM5 paper banknotes, however paper RM5will continue to be legal tender until the paperbanknotes are fully withdrawn over time.Malaysia joins the growing list of 23 countriesaround the world that have adopted thepolymer banknote technology.Maimon Mohd Top, Senior Manager (BankNegara Malaysia) at the RM5 banknote launch

Polymer banknotes in New ZeaIt is now five years since the first polymer notes were introduced intocirculation in New Zealand in May 1999 with all denominationsconverted to polymer by March 2000.Brian Lang, Head of Currency at the ReserveBank of New Zealand, has recently completedthe “Five Year Report” for polymer notes inNew Zealand and IPCA spoke to him aboutthe New Zealand experience.What were the key driversfor the decision to adopt thepolymer note technology?In 1996/97 we had a significant increase ingood quality paper counterfeits. Our concernwas that the key public security features forpaper notes at that time required the notes%9080706050403020100to be held up to the light for verification(watermark and thread) and this is anuncommon practice in New Zealand.The window area in a polymer note enableseasier verification.We also had continual public concern beingexpressed with the quality of our paper $5 and$10 notes with soiling and limpness affectingthese denominations quite badly. The publicsees the cleanliness of the notes as the keybenefit of polymer. Lower cost of issue is anindirect benefit that helps justify the conversionbut is not of particular relevance to the public.Notes destroyed as a percentage of notes in circulation1001997/98 Paper2003/04 Polymer$5 $10 $20 $50 $100 TOTALDenominationBrian Lang (Currency Manager,Reserve Bank of New Zealand, 2004)What are the key benefits ofthe polymer notes for thecommunity?The key benefit of polymer notes to thecommunity in New Zealand is the ability ofthe notes to retain their structure and remainrelatively clean. People see this as THEmajor benefit of polymer. There has alsobeen a very significant drop in the number ofcounterfeits to the extent that very few aredetected at the Central Bank (0.27counterfeits per million notes in circulation in2003/04).What have been the otherbenefits of the polymer notesin New Zealand?The key focus is to provide currency to thepublic as efficiently and effectively as possible.From a cost/benefit point of view we have18Counterfeitsseen significant savings in the provision ofbanknotes and currency operations.Per millionnotes incirculation16141210864201997 1998 1999 2000 2001 2002 2003 2004YearNote issue costs have been reduced by 54%in the past four years, saving NZ$7.7 million.We believe that we have now offset all ourconversion costs and will have ongoingsavings for the foreseeable future.The polymer notes are maintaining a highlevel of quality and durability in circulationwith average unfit note rates of 14% in2003/04 compared with 63% for paper notesin 1997/98.The counterfeits detected in 2000 and 2001 were all paper notes (mainly $10 and $50 noteswhich were the last denominations to be converted to polymer). To date we have detected nocounterfeits reproduced on polymer; all have been produced on paper. In the year ending 30June 2004 we machine processed 66 million notes and detected just 28 counterfeits.We have been able to considerablydownsize Central Bank cash operations inNew Zealand and I believe that the success

land “The Five Year Report”and speed with which this was achievedin 2000/01 was directly attributable to thepolymer conversion. This was partly dueto the fact that we had a complete “refresh”of notes in circulation, but the ongoing abilityof polymer notes to retain their structure,significantly reduces the need for the CentralBank to continually machine process tomaintain quality.The very low counterfeit rate of polymernotes has also reduced our need to monitorrigorously for validity. We have reducedannual cash operation costs by 55%between 1997/98 and 2003/04.In view of your experience,what would be yourrecommendation to otherCentral Banks considering thepolymer note technology?In my view the key benefits of the polymernotes for the public (cleanliness, structure,more effective security features) are readilytransferable to other countries even thoughthe cost of issue results may differ. Havingexperience issuing both paper and polymernotes, it is now more important than ever forissuers to properly assess these verysignificant benefits of polymer notes.Cost per notein circulation(NZ cents)Issue Cost per Banknote in Circulation10864201997 1998 1999 2000 2001 2002 2003 2004YearFor the years ending 30 June 1997 and 1998 only paper notes were issued. In 1999 and 2000 all papernotes were withdrawn and replaced with polymer. In 2001 to 2004 only polymer notes were issued.Cents pernote inCirculation(NZ cents)Functional Cost per Banknote in Circulation3025201510501997 1998 1999 2000 2001 2002 2003 2004YearThe above graph illustrates the very significant reduction in total operating expenses, includingnote issue, since 2001 after the Bank introduced polymer banknotes, closed its branches andscaled down its note processing role. The higher cost in 1999 was attributable to the completeconversion of paper banknotes to polymer and Y2K contingencies.Romania announces Polymer RedenominationThe National Bank of Romania(NBR) has announced that asof 1 July 2005, Romania's currencywill be subject to a redenomination.From that dateRomania’scurrency (leu)will be dropping4 zeroes.The reason for the redenomination is tosignify the end of a long period post 1989typified by relatively high inflation, to pricestability. The big advantage for the publicwill be the simplification in handling andcalculating monetary amounts. Double pricingof goods will start from 1 March, enablingthe public to become familiar prior to theofficial introduction.Romania started issuing Guardian ® polymerbanknotes in 1999 and has since replaced allits circulating banknotes with polymer.Currently 5 denominations are in circulation.Guardian ® has again been chosen for the newbanknote series, confirming the excellentexperience of NBR with polymer, and theircommitment to its continuing future benefits.The Bank states on its website theadvantages of polymer as “improved security,increased resistance in circulation, betterprocessing in all types of equipment,cleanliness (fewer bacteria) and recyclability”.Further details on the new banknotes will bemade public in the next months.

Polymer.Your questions answeredQ.What is the difference betweenintaglio plate making for paperbanknotes and intaglio plate makingfor polymer banknotes?A. The actual intaglio plate making process forpolymer banknotes can be identical to thatused for paper notes. For example handengraving or photopolymer originationmethods work just as well for bothsubstrates. Hence a security print works canmaintain their existing plate makingprocesses and equipment when they moveto polymer. The critical difference whenmaking intaglio plates for printing onpolymer is at the design stage and in thegeometry of engraving.To reduce the possibility of splurging,certain line shapes should be avoided, forexample “V” shaped or arrow shapedfeatures in the wiping direction should notbe used.Because polymer substrate has a highercompressive and tensile strength than paper,it requires more pressure in the intaglio nip todeform and make contact with the ink in theengraving. Therefore we recommend reducingthe depth of wide lines slightly.Q.When polymer notes reach theend of their circulating life, how arethey destroyed and disposed of?A. Polymer notes are deemed to be unfit due to:• Mechanical wear and tears (includingsticky tape), holes, both physical holesthrough the entire note and removal ofthe coatings on both sides of the noteand heat damage where the note hasbecome deformed or is partly destroyeddue to excessive heat.• Ink wear where the abrasion of thenote has rendered the note’s printed indiciadifferent to the mint quality note.These notes are either outsortedmanually by cash handlers such as banktellers or cash transport companyemployees, or by detectors throughmechanical note processing. Theoutsorted unfit notes are then granulatedinto small pieces. These are taken byrecyclers who feed them into extruderswhich produce pellets. The pellets canthen be used in any polypropyleneextruder to create a range of usefulproducts such as garden equipment andother durable products.Polymer notes can be recycled into a range ofproducts including compost bins, wheelbarrows,and a range of other useful productsInternational eventsConference Location Date Website20055th Security Printing & Alternative Solutions Moscow, Russia January 26-27 www.security-printing.comin Central/Eastern Europe & Russia/CIS 2005Banknote 2005 Washington DC, USA February 20-23 www.banknote2005.comAsian Banker Summit 2005 Singapore March 15-17 www.theasianbanker.com2nd Pan-European High Security Kiev, Ukraine April 20-21 www.cross-conferences.comPrinting Conference2005 Annual Meeting of the World Bank Group Washington DC, USA September 26-27 www.imf.org& International Monetary FundCurrency Conference Montréal Québec, Canada October 2-5 www.currencyconference.comFor more industry news, polymer facts and currencyhot topics, look out for the next issue of IPCA Bulletin.Enquiries www.ipca.au.comBack issues of IPCA Bulletin can be foundon the IPCA website: www.ipca.au.com© Copyright 2005 International Polymer Currency Association. No partof this bulletin may be reproduced without prior consent from IPCA.ORIGINATION CRM SEC 028 0105