VOLUME 17 – NO 10 / OCTOBER 2019 Glory Buys Majority Stake WW1 Coin Heads Winners in Virtual ATM Company at IACA Awards A new coin issued to mark the 100th anniversary of the end of the 1st World War has won top awards at the IACA (International Association of Currency Affairs) Excellence in Currency Awards for Coins, which were announced at the Coin Conference in Rome earlier this month.

Berlin-based Cash Payment Solutions, The completion of this transaction is subject which operates under the brands to clearance from the relevant regulatory Barzahlen in Germany and Austria authorities in accordance with applicable and Viacash in Switzerland, is selling laws and regulations. 53% of its shares to Japanese cash According to Glory, it has been investing management specialist Glory. actively in a business model to realise Cash Payment Solutions is a bank- the ‘new management system of cash independent cash settlement platform circulation’ in line with our ‘Long-term that turns retailers into ‘virtual ATMs’ (see Vision 2028’. Issued by the Reserve Bank of New CN October 2017). It enables users to Behind this is its view that one of the factors Zealand, the Armistice Day coin won deposit and withdraw cash and make cash for the global trend towards cashless, or both the ‘Best New Commemorative payments for e-commerce and utility bills at less-cash, payments has been the high or Test Circulating Coin Issued at Face nearby supermarkets, drugstores and other costs of handling cash, even though Value’ and ‘Best New Circulating Coin- retail outlets by just showing a barcode, cash still remains an important means related Public Education Campaign, without the need to visit an ATM or a shop of payment. Hence it is intensifying the Website, or App’ categories at of the service provider. CPS has more provision of solutions for industries to make the event. than 16,000 partners offering the service, their operations more efficient, stating: mainly retailers. ‘we believe that, by realising efficient cash The coin commemorates the history, The retailers enjoy benefits such as circulation across society beyond the service, and sacrifice made by service reducing cash collection costs, attracting border between bank branches and retail personnel and their families to bring more shoppers, receiving commissions, shops, we can make the cost of cash peace to New Zealand and the world. etc. The associated banks can provide handling even lower.’ Judges highlighted the coin’s striking use of colour and praised its strong cash deposit and withdrawal services CPS's business model will contribute to educational role in an Armistice Day more cost effectively than via ATMs or that realisation. bank branches. E-commerce providers public awareness campaign, which The same rationale was behind a $6 million can attract consumers who prefer invited people to ‘SPEND IT. KEEP IT. round of funding for Singapore-based cash settlement. REMEMBER’. It was produced by the SoCash, which Glory led in July. It provides Royal Canadian Mint. CPS was founded in 2011. Its management s similar service to CPS, and is now being Continued on page 11 > will continue to manage the company, rolled out to neighbouring Indonesia, focusing on expanding the business and Malaysia and Hong Kong. network in Europe. www.currency-news.com Coins v Banknotes, or Coins and Banknotes? It sometimes appears that coins and There are significant differences – the denomination coins are not needed was banknotes are troubled siblings, with products themselves, the issuers (in some discussed, particularly by the ECB and the all the friction that implies. Conflict is countries the central bank produces US, both of which face significant negative normally sparked around the coin-note banknotes and coins whereas in others seigniorage on these coins. In the Euro boundary and, despite sharing so many the treasury is responsible for the latter), area research shows public demand in of the same challenges, sometimes they and the seigniorage system that generates favour of this, but ultimately such decisions appear to operate in parallel but almost value for the central bank and/or state (not have big implications for mints and are entirely separate universes. least because coins last around 20-25 politically sensitive. years and are not recirculated to any great Similar to ‘payment’ and ‘market’ notes extent). The cost, value, lifecycle, handling for banknotes, the concept of transaction Inside this Issue systems and recirculation models are also and settlement coins was introduced by very different. Jon Cameron, latterly Associate Director 1 Glory Buys Majority Stake The Coin Conference has just taken place of the US Mint, with the differentiator ‘can in Virtual ATM Company in Rome and, while highlighting these you buy a cup of coffee with two coins?’ 1 WW1 Coin Heads Winners differences, it also highlighted what coins The National Bank of Moldova explained at IACA Awards and banknotes have in common. This the D-Metric analysis they had done when started with the results of a number of planning their new series, the National 2 Coins v Banknotes, research projects into public attitudes to Bank of Kyrgyzstan explained why their or Coins and Banknotes? coins. As with banknotes, coins represent new series included a 3 som coin and something more to the public than just the Bankgo Sentral ng Pilipina why they 3 Bank of England Unveils being a payment token. had changed seven coins for six in their New £20 Banknote Beyond that, both coins and banknote new series, dropping the 10 sentimo. 3 Rising Costs of face some shared challenges. Declining Science and public research lay behind these changes. Currency in Nigeria usage driven by new alternative payments and changing public behaviour, currency There were some common themes 3 Successful Conclusion to that ‘disappears’ and does not circulate when presenters spoke about increasing Kenya’s New Currency (albeit for different reasons) and how to recirculation. The initiatives included 4 get currency to recirculate efficiently, mechanisms for commercial organisations News in Brief forecasting but with poor data and to work directly together to move surpluses 5 Banknote Survival changing payment landscapes. Despite to match deficits, new central bank hubs to Analysis this, both are investing in their products and facilitate coin issue and deposits organised cash cycles. on more commercial lines and commercial 6 People in the News Perhaps there is something to learn from and government measures to make coin 7 More than a Printer, a each other? machines accessible for the public to deposit coins. Spain, for example, had As with banknotes, the volume of coins in Partner for the Future run a very successful trial in Madrid with a circulation continues to rise at an apparently public coin deposit machine. 8 Historic Highs for healthy rate. However, the Dutch National Australian Banknotes Bank (DNB) demonstrated the difference The environment – shared goals 9 When Micro is Nano between the number of coins in circulation and challenges and issue rates with the number of coins Notes and coins also share an imperative to 10 Nanotech Launches issued in the Netherlands in 2019 – down ensure that their products and processes KolourDepth™ to 45 million compared with 104 million in are as environmentally-friendly as possible, 2016. India, Mexico, Spain and the US also and one of the sessions focused on 11 FNMT: Investment Leads reported on a significant build-up of coin this topic. With the ‘green agenda’ ever to Flesure stocks due to declining usage. more important – be this related to raw 11 HSP Asia – All Eyes on Forecasting coins was reckoned to be materials, energy consumption and emissions, or reducing pollution – both Yokohama! harder than for banknotes primarily due to poor data and the impact of structural sides of the industry share the same goals 12 Chatboxes Add a changes and fast moving innovation and challenges. New Dimension to WBS in payments. Mexico has put in place Lessons to learn? The power of research 12 measures to collect data from commercial along with the application of science, the MEA Cash Cycle (ICCOS) banks in response to their experience with importance of data and a willingness to Seminar over-stocking. ‘Passive’ coins (or even experiment and change in all areas. 12 Banknote Horizons 2020 ‘sleepy’ coins, as they are referred to in The Coin Conference happens every Germany), as with store of value notes, two years and took place in Rome 15-16 13 Orell Füssli Celebrates clearly create major challenges. October. A record number of countries, 500 Years Appropriate structures for 45, and organisations, 103, attended. A 14 Note and Coin news efficient usage full review of the event is enclosed in the The importance of having in place special supplement this month. The next 15 The Asia Cash Cycle appropriate denominational structures to Coin Conference will be in 2021 and the Seminar 2019 allow efficient coin usage was discussed. Mint Director Conference, where some of the issues will be explored in further depth, 15 Cash & Payment News The DNB’s research suggests that 60% of coins are only used once. Little wonder is 26-29 April 2020 in Cape Town. 16 Counterfeiters Defeated that rounding up prices so that the lowest by Technology

2 CURRENCY NEWS | COMMENT Bank of England Unveils Successful New £20 Banknote Conclusion The Bank of England has revealed the The artist JMW Turner replaces the new polymer £20 banknote design, economist Adam Smith. In addition to a to Kenya’s which will go into circulation on 20 self-portrait of Turner, the design includes February 2020. It will co-circulate the image of The Fighting Temeraire, New with the paper £20 during a transition voted Britain’s greatest painting in a BBC period. The £20 represents 53% of poll in 2005. The painting, according to the number of notes in circulation, the Bank, ‘exemplifies Turner’s innovative Currency 2.1 billion notes. As a result, the use of light, shade, colour and tone’ and The Central Bank of Kenya (CBK) has change-over period is likely to be the note includes Turner’s quote ‘light is won a court case on the design of its considerably longer than that of the therefore colour’. new banknotes, after the design was previous denominations. The security features on the note have accused of violating the constitution been upgraded compared with the £5 (which states that notes and coins and £10. The two main differences are a cannot carry images of past presidents). second window with a blind emboss and The controversy stemmed from an image a new two colour hologram in the main of a statue of Jomo Kenyatta, the first window. The hologram is blue and gold president of Kenya, in front of the Kenyatta on the front and silver on the back. The International Convention Centre (KICC), £20 is the most counterfeited note with which some (notably the activist Okiya 426,000 counterfeits in 2018, 90% of Omtatah, who has conducted a long- the total. running campaign of ‘lawfare’ against the The notes are printed at the Bank of new notes) argued constituted a ‘portrait’. England’s site by De La Rue. 75% of the The High Court, however, ruled that polymer substrate has been supplied by Kenyatta’s image portrait in the new CCL Secure and 25% by De La Rue. generation currency notes is part of the The Bank has already announced that KICC. The judges further ruled that the the £50 will be produced on polymer CBK reasonably involved the public in featuring the mathematician Alan Turing, the process. The new note is smaller than its but the design and issue date are yet to The ruling came shortly before the 30 predecessor but follows the same design be revealed. September deadline for the highest layout as the polymer £5 and £10. denomination in the older series, the Ks 1,000, to be demonetised and old notes to be returned. The demonetisation was designed as a crackdown on corruption and money laundering by flushing out illegally-acquired cash, and a number of Rising Costs of Currency in Nigeria measures were put in place by the CBK to According to the latest Central Bank 2017, indicating an increase of 33.83%. prevent their exchange by criminals (see CN of Nigeria (CBN) annual report, it The volume of the higher denomination June 2019). spent N 64 billion ($177 million) on notes in circulation increased from 42% Out of 217 million old 1,000 notes in the production of banknotes in 2018, to 44.3%. circulation, the CBK estimated that around compared with N 49.2 billion in 2017 119,663 counterfeit notes with a nominal 80% would be returned. In the event, nearly – an increase of 29%. The cumulative value of N 98.82 million was recorded, 210 million (just under 97%) were returned, increase between 2013 and 2018 an increase of 1.3% over the previous leading the Bank to call the exercise is 105%. year. The N 500 and N 1,000 notes a success. A total of 1.8 billion notes were destroyed were the most commonly counterfeited, Moreover, keen to avoid a repeat of the in 2018 by the Currency Operations accounting for 65.2% and 34.5% Indian demonetisation fiasco, which took Department at a cost of N 662.2 million, respectively of the total. The counterfeit place virtually overnight and caused compared with 2.5 billion notes in 2017. ratio was 18 ppm, compared with 16 significant hardship, riots and damage to Furthermore, a total of N 5.63 billion ppm the previous year. the Indian economy, the CBK believes was expended on air charter, compared According to the CBN’s Currency that it it has avoided any major disruption. with N 4 billion during the corresponding Department, it was confronted with a In particular, fears of a spike in inflation period in 2017. number of operational challenges in caused by people rushing to spend their old In total, the CBN spent N 73 billion on 2018, including the sale of newly-printed Ks 1,000 did not materialise either - in fact, currency operations, up by 29% over the naira notes, poor handling habits by inflation fell in the changeover period. previous year. the public, hoarding and the high cost Cash in circulation grew by 0.8% to N 2.3 of currency management. It also cited trillion. The total stock of currency in the rising incidents of counterfeiting of the CBN vaults as at the end of December higher denomination notes, public apathy 2018 stood at 1.71 trillion pieces, towards coins, and the disposal of compared with 1.28 trillion pieces in banknotes in eco-unfriendly manner.

VOLUME 17 – NO 9 | SEPTEMBER 2019 3 News in Brief Crypto ‘Banknotes’ Due to the confidential nature of the project, By contrast, it costs less than J$3 to make no details of the project status, timing, or each J$5 and J$10 coin, and less than Bitcoin Suisse, a Swiss-based financial financial terms are forthcoming. J$10 to make the J$20 coin. The cost of intermediary and pioneer in crypto-financial the J$1 coin, meanwhile, is $J2.30, but the services, has introduced crypto banknotes, ‘We consider this award a significant project Bank does not intend withdrawing it due to namely transferable paper wallets that offer milestone in designing a security feature for its heavy usage. It is, however, reviewing an offline medium of storage for blockchain- our customer’s future banknotes,’ said Troy the design with a view to using less based assets. They consist of an exposed Bullock, President and CEO. ‘This project is expensive materials. public address and the corresponding progressing well overall and we appreciate private key, which is hidden by physical the confidence this customer has shown in security measures and can only be our technology.’ Royal Mint Strikes Gold accessed by damaging the wallet. The notes The Royal Mint has launched Raris, a are of a similar quality to banknotes, says the South African Mint Engages somewhat curious combination of a digital company, and represent direct ownership of the Public payment tool and a piece of ‘bling’, made of solid 18K gold and issued in association tokens like BTC, ETH, and XTZ. The South African Mint is holding a with Mastercard and Accomplish Financial. competition for the design of a new R2 circulation coin which will be issued in The popularity, even before its official 2020. Following the success of the SA25 release date, of the physical titanium card coin series commemorating ‘25 Years of that Apple introduced this summer in South Africa’s Constitutional Democracy’, it partnership with Golden Sachs, is perhaps has invited designs for the reverse of a new an indication that some card users wish to R2 coin, depicting a right from the South have a real and tactile object in their wallet Africa’s Bill of Rights. in addition to the digital payment utility the card provides. Designers are free to choose a right from the remaining 22 Bill of Rights – which did The Raris card is the world’s first hallmarked Secure generation and printing of key not form part of the 2019 SA25 coin range. precious metals payment card, and the first pairs is in a secure offline environment payment card to be manufactured by the The SA25 coin series was the culmination under the supervision of two Swiss-based Royal Mint. Each card will be personalised of extensive public engagement sessions notaries. With the private key only existing for its owner, with their name and signature with South Africans. Young people born physically on the certificate, the assets are directly engraved into the precious metal. effectively stored 100% offline. The ‘notes’ in 1994 and after, colloquially referred includes several security features, among to as ‘born-frees’, were invited to give The card comes with a range of them a secure hologram with nano-optical their perspectives on the concepts of cardholders’ benefits, including a dedicated structures and microtext, guilloche and democracy, freedom and culture in South concierge service, an app to manage the spectral line patterns. Africa, many of which influenced the coin account and zero foreign exchange and themes, which in turn informed the designs transaction fees. It is almost superfluous to According to Bitcoin Suisse CEO of the five 2019 R2 circulation coins. mention that the Raris account comes with Nikolajsen, ‘the new series of Bitcoin a limitless spending threshold. Suisse Crypto Certificates have the look All submissions received will be shortlisted and feel of traditional paper banknotes and and tested against a range of criteria DLR Issues Profit Warning is, I dare say, a quite revolutionary paper to ensure the winning design can be As Currency News™ went to press, wallet design. While it may seem counter reproduced on metal. De La Rue issued what amounts to a intuitive and almost a step back in time to profit warning for both its first half and make physical representations of crypto- Redeem Your Reds, current year. currencies, they do serve a niche and have Jamaicans Are Urged various solid use cases, and if one wants The Bank of Jamaica has launched a The company, which has very recently physical crypto assets, this is in my view, campaign to retrieve up to J$100 million replaced its Chairman and CEO (see the best product available on the market.’ of 1, 20 and 25 cent coins (so-called ‘red page 6), stated that it expects its first half money’) which are still in circulation, despite adjusted operating profits to the end of $5 Million Contract being demonetised in February 2018. It September to be low-to-mid single digit for Nanotech has partnered with GK Money Services millions and that its full year 2019/20 adjusted operating profit will be significantly Nanotech Security Corp, which has in a recovery drive, urging Jamaicans in lower than market expectations. just launched its new banknote feature an advertising campaign to ‘Change Your KolourDepth™ (see page 10), has also Coins to Cash – for Free’. The statement also noted that the announced that it has been awarded a The coins can be exchanged at the Bank, company’s management, led by the new $5 million purchase order to advance a or via coin sorting and counting machines CEO, is conducting a detailed review of the confidential development contract to the at 11 GK Money Services locations island- business and will update the market further next stage. wide. Under the deal with GK, the Bank has when it reports its first half 2019/20 results on 26 November. Over the past four years, Nanotech has waived the 8% user fee for the transactions. generated revenue from the contract to The coins were demonetised because their The market reaction was immediate with design a unique security feature for a costs had exceeded their face value. It was the share price falling around to 20% to future banknote based on the company’s costing J$1.73 to make the 1 cent, J$1.54 149p in early trading. At the beginning of KolourOptik® technology. With this new $5 to make the 10 cent and nearly J$2 to the company’s financial year the share price million order, Nanotech says it has secured make the 25 cent. was around 400p and this time last year it its contract services revenue for fiscal 2020 was around 500p, a fall of around 62.5% at levels similar to fiscal 2019. and 70% respectively.

4 CURRENCY NEWS | NEWS IN BRIEF SURVIVAL ANALYSIS AND THE LIFE OF AUSTRALIAN BANKNOTES

changes in banknote processing policies. A slightly banknote life at the time, and then reverse this once more sophisticated method, again based on the contingency event had passed. In contrast, the turnover, is detailed in Feige (1989) and calculated policy change had little effect on our estimates of as the average number of outstanding banknotes banknote life. More recently, the Bank limited its divided by the average of old banknotes destroyed processing of the remaining stock of $20 NNS and new banknotes issued each year (hereafter the banknotes. This was an operational decision to ‘Feige’ method). Again, it says nothing about the ensure that the current stock of $20s would last distribution of banknote life and is still sensitive to until the new NGB series are issued in late 2019. This various idiosyncratic factors, albeit less so.[7] doubled the estimates of banknote life using the These turnover-based methods estimate banknote simple turnover-based measure, but had almost no life using a cross-section of data taken at a particular effect on the model-based survival estimates which Survival Analysispoint in time .and In doing so, the ythe implicitly assume use all of the available data. that whatever was happening at the time will continue to happen into the future. That is, the Conclusion Life of Australianprevailing conditions Banknotes, or the state, are assumed to In late 2016, 2017 and 2018 respectively, the Bank The Reserve Bank of Australia (RBA) remainAn additionalunchanged ,challenge and so these for methods using survivalare Thereleased study upg alsoraded looked $5, $10 at and a $50simple NGB steady banknot es, is nearing the end of its programme referanalysisred to as isst eadythat-stat polymere methods banknote. life stateand the model, existing the stock number of old NNSof outstanding series polymer SURVIVAL ANALYSIS AND THE LIFE OF AUSTRALIAN BANKNOTES banknotes were deemed unfit; the new $20 NGB is to replace its ‘New Note Series’, after Graphis determined 7 compares some primarily steady-stat by mechanicale estimates of notes divided by the number destroyed, SURVIVAL ANALYSIS AND THE LIFE OF AUSTRALIAN BANKNOTES due to be released in late 2019. This banknote 25 years in circulation, with its ‘Next averagedamage, banknot whiche life withis random; those from therefore the model the. and what is known as the Feige model, accumulates with use. If mechanical hazards were Generationor a policy change Banknote’ from the series.Bank that In tends its to chance of ‘death’ is the same whatever the theupg averagerade prog ram,number after rofoughly outstanding 25 years using the As can be seen, one issue with steady-state the only cause of death, then one might expect the Septemberincrease bank notBulletin,e life. For the example RBA’s, demand Shane for age, or ink wear, which accumulates and so notesprevious divided polymer by bank thenot averagee series , ofpr ooldvides notes a good methodsthough. is that Bank thenoty cane qualit be highlyy programs volatile, for example. This , bias can be explained when we recognise that the hazard rate to be constant, since the chance of a Avesbanknot tookes sig thenificantly opportunity increased toahead compare of Y2K, the whichnote seekdies to onlyreplace when a significant the allotted share of number destroyedmodeloppor prtunitedicy tsand t othe e valuat newage of e notesunfit how bank our issuednot bankes at noteach thees ha year.ve stems from the fact that the steady-state methods banknote becoming unfit would be the same no basicwhich rsteadyesulted in state each individual‘turnover’ bank modellingnote being of transactionsoutstanding wor isn bankcomplete.notes with The freshly importance printed Thesetimeworn of in prsteady useocessing. Ov erallstate, wher, I findeas models the that sample o vareer datatheir easy ar pere toforiod of are generally estimated based on a window of a matter how old a banknote was. If inkwear were the withused aless Survival and so higher Analysis banknot toe seelife, despit howe well an of wearones, initiallymeans slo wthat the destrucbanknotestion rat edo as nenotw age calculatebankuse, notthees a v stillbuterage in havecir lifculatione of shortcomings. old-ser whichies w ouldpolymer other They wise are: single year of data. The effects from temporary primary cause, then one might expect banknotes to theyoverall estimated increase in transacthe performancetion demand. of the and,bank asnot a esresult, are issued the in concept preparation of for ‘activity the habank Basedve livnotedes longeron incr averages.eases befor eas the they Neitherw denominationere retur approachned to thegets factors praroge magram. nifiedThe eff becauseect is then the revyersed are assumedonce to Bank. It is less clear why the models appear to be have similar lives and ‘die’ once they had been used New Note Series. time’ rather than age has to be used. Lost highershows: a littlethe odistributionver 5 years for of the note $5 and life; $10; a little The fit of the survival model improves with time, remain commerin placecial for banks the entir start eretur life ningof the their ser stiesock. Such of old slightly biased in regards to fit banknotes – either and hoarded notes, of course, complicate SURVIVAL ANALYSIS AND THE LIFE OF AUSTRALIAN BANKNOTES in their allotted number of transactions. Lost, Theparticular RBAly conducts post 2006 whena Commercial there were fCashewer o vNeither,er 10 years although for the $20; to anddiffering around extents,15 years forare facttheors bankusuallymodelling.not esha fvore prlittleocessing to do. with the structural the models are somewhat misspecified or the hoarded, or relatively unused banknotes further Samplingbanknote cleansing (CCS) programme, programs and wherebyother such the $50. This is consistent with lower-denomination integritWhiley of the the bank overallnot fite is, butencourag are moring,e the of tmodelen the assumptionssensitive usedto demand to calculat eshocks; the age of banknotes complicate the analysis. Rush takes a novel 10,000 notes are removed from circulation Apart from ensuring the model did not banknotes incurring higher wear through greater distortions. The model performs particularly well on resultchanges ofneeds the curtino capturbankrencynote issuer thee prentir’ocessings oewn distr policiesibution policies .if F itor. isA tslightlyo fr omTheybank the assumeCnotCS datae life ar atthate somethe thetimewhat past, andinaccurat thenpredictse .r Mevosterse the this once approach by separating out such banknotes from from retail deposits and tested for fitness allow time to run ‘backwards’ and tracking likuseely f,or both transac are truetions to .some extent. the $50 denomination. Australian $50 banknotes examplemorpre,o insophisticatvide 1999 valid the infed orBankmation method ceased be,y againond destr just basedo yingsimple onunfit future;the contingency event had passed. In contrast, the circulation. They are then locked away safely until relative to their date of manufacture. This the age of issuance, this study considered are thought to be primarily used as a store of value, bankturnotnomeasuresv erto, isesbuild detailed of central a contingenc in tendenc Feige y(1989)y. Onestock wa and fory t o Y2Kcalculat check. The ed Graph Usuallypolic 6 shoy changetheyws the are av haderage based little survival eff onec cur tsingle onve fouror eachyear estimat dataes of the end of the study period. We allow for the provided a check against which the different twowhether variables this is that the case affect is to comparthe ratee the of model wear’s denomination, taken from the time they were first while lower denominations are used more for effecast wasthe atoverage increase number the st ofeady-stat outstandinge estimat bankesnot of es wherebank nota changee life. Mor thate recently year, isthe assumed Bank limit edto its probability that individual banknotes can change models could[3] be assessed. – thepredic prevailingtions to data economic observed b yconditions the Bank in the and issued until the end of 2018. The dashed line at transactions. High levels of hoarding will tend to divided by the average of old banknotes destroyed extendprocessing into theof the future. remaining The st resultock of is$20 high NNS states. That is, banknotes can be temporarily changescourse ofto its the operations RBA’s. Graphs policies. 4 and 5 compare 50 per cent intersects with the median life for all Survivalsmooth out analysis the eff echast of itseconomic roots in ev predictingents on and new banknotes issued each year (hereafter the banknotes. This was an operational decision to predictions of the average age of fit banknotes in banklevelsnotes of in volatilitythat denomination. in the resultingGiven that ourgraph. hoarded before re-entering the cash economy at a thebank lifenot ofe liforganisms.e, given that theThe relativ paperely describeslow share of Inflation, for example,Graph 6can increase ‘Feigecirculation’ method). and Aunfitgain, bank it sanotyses nothing returned about for the data ensurare laregely that silent the on curGraph therent destruc st ock7 tion of $20sdate ofw ould last later date. Nonetheless, lost, hoarded, or less howbank notsurvivales that analysis are actively is cirusuallyculating used, are the only circulationEst ivelocity,mated Su ratviv leastal Cur vuntiles* supply distrpributionocessing of to bank infbyorDemationnotnomein alifti otaken anden fr isom still the sensitiv Bank’s e to long-livinguntil Athe, high-valueve rneagwe NGBBa denominationsnk sernoieste Larifee issuedE, sthetim tail aint eof lats e 2019. This frequently used banknotes are accommodated by along with the underlying formula used to catches up, causing greater wear. A[7] quality Model vs Simple Turnover and Feige Steady State Methods ones affected. The accumulated effects of transitory %variouscommer idiosyncraticcial$5 cash sampling factors (,C albeitCS)$ 1pr0 oglessram. so . % the $50doubled distribution the estimat in particulares of, shouldbanknot probablye life using the allowing for a fat-tailed survival distribution. calculate the time of destruction, the lifetime programme that leads to more notes Years $5 $10 Years 75 75 be igsimplenored.[6] tur nover-based measure, but had almost no distribution, the event density and the beingTheseIn par turwithdrawnticularnover, the-based Bank as methodsrunfitecords thewill estimat y initiallyear of e bank slownot e 10 10 The above considerations suggest that any 50 50 effect on the model-based survival estimates which hazard rate. destructionlife manufacusing a turcr oss-secduee of ar tooundtion more 10,000 of data new bank tak notesnotenes at that a being par areticular in candidate distribution will require a significant 25 25 Compar5 ison with Alternative 5 Graph 3 circulation,pointdeposit in timeed balthough. yIn r etailersdoing eachso this, the y earwilly implicitly and reverse. then sent assume High on to use all of the available data. degree of flexibility to allow for the full range of the Bank for analysis. It is important to note, Model Estimates Expected Quantity of Surviving Banknotes stocksthat what ofe $fit,v2er0 wasused happening notes also at$5 the0 tend time to will slow Generalised Gamma with Activity Time however, that the year of manufacture says little There are alternativ$20e ways to estimate bank$50 note life. possibilities. We use the Generalised Gamma (GG) 75 75 Conclusion $5 NNS circulationcontinue to velocity.happen into the future. That is, the distribution, which is the general form of a family of about when a banknote was actually issued to the The2 most0 common method is based purely on the 40 Recolour FED/VCH GFC Quality1 50 50 NNS Y2K prevailing conditions, or the state, are assumed to In late 2016, 2017 and 2018 respectively, the Bank distributions that include the Exponential, Weibull, Thepublic survival, and soanalysis to use these showed data to estimata notee holifew turnover of banknotes, and is simply the number of 2r5emain unchanged, and so these methods ar25e outstanding1r0eleased bank upgnotradedes divided $5, $10 by theand number $50 NGB of bank20 notes, Log Normal and Gamma.[2] More importantly, the of aboutlong a parfiveticular years bank notfore the has beenA$5 in andcirculation A$10 I r0eferneedred too makas steeady assumptions-state methods around the. timing0 of bankandnotes the destr existingoyed in st aock year of. This old method NNS ser ies polymer and 510-1510 15 years20 25 for the5 A$2010 15 2and0 25 A$50. 0 0 GG includes all four of the most common types of [5] issuancesYea. rs Years providesbank1 9an9not7 estimates2 w00er7e eof deemed central2017 t1endenc9 9unfit;7 ythe2 0but07 ne sawys2 0$2017 NGB is TheGraph life 7 ofcompar the A$100es some wassteady-stat not measurede estimates of hazard function used in survival modelling: * Average survival curves, from first issuance to November 2018 nothing about theM distrodel ibutionSimple T uofrn obankver notFeige life. The $10 NNS becauseOverall, itGraphs is used 4 and predominantly 5 suggest that the bankas anot storee due to be released in late 2019. This banknote monotonically increasing and decreasing, as well as NNS Y2K VCH Quality1 GFC average banknote life with those from the model. method is also sensitive to various idiosyncratic Quality2 of valuelife estimat note.es, while close, are slightly upwardly upgrade program, after roughly 25 years using the ‘U’ and arc-shaped hazards (Cox et al 2007). As can be seen, one issue with steady-state factors such as banknote demand shocks and biased overall. For unfit banknotes, the apparent previous polymer banknote series, provides a good Themethods CCS is program that they cansuggested be highly thatvolatile the. T his Without the full history of a banknote, the applicationopportunit ofy survival to evaluat analysise hoBULLEw ourTIN complements –bank SEPTEMBERnotes ha2019v e 61 Results survivalstems from analysis the fac tslightly that the overstated steady-state methodsnote life. steadywor staten in use modelling. Overall, I find to givethat oav ercredible their per iod of are generally estimatedGraph based 4 on a window of a Graph 5 Graph 3 shows the model’s overall fit for the $5 to $20 NNS NNS Y2K VCH Quality1 Age of Fit banknotes in Circulation pictureuse , ofthe note aAvgeragee olifef U nlifandfiet bofa nanold-serkn ounderstandingtesies polymer $50 NNS denominations. Because relatively few GFC single year ofE data.stimated Tanhed C CeffS secamptsles fr, 2om011 to t2emporar018 y Estimated and CCS Samples, 2011 to 2018 Years $5 $10 Years ofY ekeyarsbank variables.notes$5 incr easesAlthough as the polymer $denomination10 notesYears gets factors are magnified because they are assumed to $100 NNS banknotes have been returned to the degradehigher differently: a little over from5 years paper-based for the $5 and $10;notes, a little remain10 in place for the entire life of the series.1 0Such 10 10 Bank for processing, their expected life-span far this omethodologyver 10 years for wouldthe $20; transfer and around across 15 years for factors5 usually have little to do with the structural5 5 5 exceeds the available data. For this reason, withthe soiling $50. Treplacinghis is consist inkent wear. with lo wer-denomination $50 NNS integrity of the banknote, but are more often the $100 banknotes have been excluded from the NNS Y2K VCH GFC $20 $50 A samplingbanknotes $program,20 incurring highersuch $ asw50ear the thr RBA’sough g reater analysis. result of the currency issuer’s own policies. For 10 10 CSS10use program, for transac istions clearly. a valuable tool10 example, in 1999 the Bank ceased destroying unfit The blue shading on Graph 3 highlights targeted to give confidence in the end result. It will banknot5 es to build a contingency stock for Y2K5 . The 5 5 banknote quality programs and other be interesting to see whether the Next effect was0 to increase the steady-state estimat0 es of 0 0 denomination specific factors, while grey shading 1993 1998 2003 2008 2013 2018 2014 2018 2014 2018 Generation201 4Banknote2018 series2014 performs2018 Estimates CCS Sample Estimates CCS Sample indicates significant events that are expected to Actual Estimate as well as the New Note Series in year affect all denominations to some extent, like the to come. * NNS represents the introduction of NNS banknotes; Recolour is a Graph 6 Graph 7 GFC (see Appendix A for more information). Most Achange key inelement colour to the of $5 banka normalnotes; FED survival represents the analysis issuance of a Estimated Survival Curves* special edition ’Federation $5’ banknote; VCH relates to a change in 60 RESERVE BANK OF AUSTRALIAby Denomination Average Banknote Life Estimates Model vs Simple Turnover and Feige Steady State Methods highlighted episodes are associated with some is knowing when the organism was born % $5 $10 % distribution policy; Quality 1 and Quality 2 are various banknote Years $5 $10 Years increase in the public’s demand for banknotes and/ andcleansing when programs it died. See Appendix to estimate A for more thedetail . survival 75 75 10 10 function for the population. Central banks 50 50 who track serial numbers have this data. 25 25 5 5 58 RESERVE BANK OF AUSTRALIA Without it this study used aggregated issue $20 $50 and destruction data. The total quantity $20 $50 of the surviving banknotes in existence 75 75 20 40 is modelled as the sum of the surviving 50 50 banknotes from each issuance. Because all 25 25 10 20

banknotes are regarded as being identical, 0 0 5 10 15 20 25 5 10 15 20 25 0 0 it was assumed that the survival function Years Years 1997 2007 2017 1997 2007 2017 was identical for all. * Average survival curves, from first issuance to November 2018 Model Simple Turnover Feige

CURRENCY NEWS | NEWS IN BRIEF SPECIAL REPORT | VOLUME 17 – NO 10 |BULLE OCTOBERTIN – SEPTEMBER 2019 20195 61 People in the News Christine Lagarde, former Managing Clive Vacher has been appointed Chief Director of the IMF, has been appointed as Executive Officer, replacing Martin Jean-Pierre Savare President of the European Central Bank. Sutherland. He has more than 16 years’ Jean-Pierre Savare, the founder of She succeeds Mario Draghi, who is experience running global industrial modern-day Oberthur Fiduciaire, has stepping down after eight years in the post. companies in both the commercial and died at the age of 82. government/defence sectors, and in Although the history of the company particular has significant experience of Ahmed Obaid Al-Fadhli is the new dates back more than 175 years, it international business transformation and Governor of the Central Bank of Yemen, was its acquisition by Jean-Pierre in operational performance improvement. He one of two in the country, currently in a 1984 for the token sum of one franc was previously CEO and President of the state of civil war. He replaces Mohammed that began its transformation into Canadian listed company Dynex Power, Zammam. the world’s second largest banknote where he led a privatisation sale earlier this printer, and secured his reputation year. He has also held senior positions with as one of the industry’s key leaders Ali Hashim, a former Maldivian finance Pratt and Whitney, Rolls-Royce, General and entrepreneurs. minister, has been appointed the Governor Dynamics Corporation and B/E Aerospace. Under his leadership, the company of the Maldives Monetary Authority, Shortly before his appointment, Kevin expanded from banknote and security replacing Ahmed Naseer who resigned Loosemore took up the position of non- printing through scratch cards, in July. executive director and Chairman, replacing lotteries and cheques into ID and Philip Rogerson. He was formerly smart cards in the 1990s, as well as Susan Woods has been appointed by Chairman of Micro Focus International plc, a cash protection. It was listed in 2000, the Reserve Bank of Australia as the FTSE 100 multinational software business, but then delisted eight years later, and new Chair of the Board of Note Printing and has also held senior executive positions in 2010 sold its ID and card activities Australia (NPA), replacing Chris Aylmer with Cable & Wireless, Motorola and IBM. to the venture capital firm, Advent who will retire at the end of 2019 after a He was Managing Director of one of De La for just over €1 billion, in order to career spanning 40 years with the Bank. Rue’s businesses between 1997 and 1999. focus on currency. Since then, it has Susan joined the RBA in March last year as To complete the changes to the Board, more than doubled its capacity to five Assistant Governor (Corporate Services), Andy Stevens, Senior Independent billion banknotes a year. It has also overseeing the Bank’s Information Director, has stepped down. He is replaced expanded into threads and security Technology and Workplace (Facilities by Sabri Challah. features and, through the acquisition Management) departments. of the Dutch paper mill VHP, into De La Rue is also continuing apace with paper production as well. the reorganisation of the business into two divisions. The Currency Division will As the founder and President he be led by Ruth Euling as its Managing was the driving force behind the Directory (previously Global Sales Director company’s rapid development and for Currency), while Andrew Clint has remained closely involved up until his been appointed Managing Director for the death, even as he formally stepped Authentication Division (he was previously down from operational duties several Global Business Development Director for years ago. Product Authentication and Traceability). A lover and investor in Bordeaux wine The reorganisation is designed to enhance (Franc Mayne, a leading Bordeaux strategic focus and generate greater chateau, was the latest investment in efficiencies for the company. this area), Jean-Pierre Savare was also Susan Woods (second from left) together with the NPA Board team (L-R) Ross Pilling, Robert a keen rugby enthusiast, to the extent Middleton-Jones, retiring Chair Chris Aylmer, Greg Further to the recent Board election at the that he and the family saved the Stade Johnston, and Michelle McPhee. Francais, Paris’ professional rugby International Association of Currency Affairs club, from bankruptcy and brought it (IACA), four new members have joined its last French Championship title. the Board – Ron Arends (Canadian Bank Samson Yuen has been appointed Head Not Company), Ruth Euling (De La Rue), According to someone who worked of the Currency and Settlement Division at Stefan Hardt (Deutsche Bundesbank) and closely with him over many years, the Hong Kong Monetary Authority (HKMA), Neil Sanders (CCL Secure). They replace Jean-Pierre Savare was a truly replacing Lydia Chan who has retired. Richard Hird (De La Rue), Bernhard legendary figure – a visionary, an He joined the HKMA in 1998 and was Imbach (CCL Secure), Doug Mennie entrepreneur, a man who was so seconded to Hong Kong Note Printing in (Cummins Allison) and Michelle Bullock driven and so tough but also one of 2011 as its Director and General Manager (Reserve Bank of Australia). Antti Heinonen extraordinary sensitivity and kindness in 2011. (BnEI), Maureen Carroll (Bank of Canada) to his family and employees – a quite and Richard Wall (IACA Chairman) were all brilliant, charismatic man and a huge De La Rue has made a number of key re-elected. loss to our industry. appointments and provided further details His legacy is to leave a strong and of its reorganisation into two business units. growing company whose culture he developed and nurtured. The company is now owned by his three children and will continue to be run by his son Thomas.

6 CURRENCY NEWS | PEOPLE IN THE NEWS Bundesdruckerei – More than a Printer, a Partner for the Future Dieter Sauter rejoined the German state printer Bundesdruckerei (BDR) in April as Senior Vice President and General Manager of Value Printing, after a 17 year absence, with a mandate to take forward the business unit, which produces banknotes as well as postage stamps. He is also Chairman of Intergraf’s Committee of Experts, responsible for developing the programme for the SecurityPrinters Banknote+Identity conference. Currency News spoke to him about his new role at Bundesdruckerei and what he thinks the company has to offer to central banks and the industry. Q: Can you give a few details about your career prior to joining BDR. A: I trained and have a doctorate as a physicist at the Max Planck Institute for Metal Research in Stuttgart. I started my career in the security printing industry at Bundesdruckerei in Berlin within the Q: Apart from an interlude from 2000-2009 So just because we are owned by the R&D division, and then spent several under private ownership, BDR always been German government doesn’t mean that we years in R&D and sales with Giesecke + state-owned. Presumably you used to print can sit there and expect to receive orders. Devrient before joining Orell Füssli in 2011 the deutschmark, and now the euro? We have to go out and get them. as Head of Technology. In 2014 I took over the role of Chief Technology Officer A: Yes, we are euro qualified for the ECB Q: What determines whether you get those with responsibility for sales, marketing and have been ever since the beginning. orders or not? and technology and subsequently was We have invested in what has been A: It’s down to price. All euro suppliers appointed joint Managing Director. After a required to produce the new euro series, have to be qualified, and the accreditation 17 year absence, I joined Bundesdruckerei and we have also upgraded our security criteria, standards and specifications are all again this April. in line with new ECB requirements. So we set. So all things being equal, the difference continue to be capable of mastering all the What is your role within BDR? comes down to price. Q: needs for euro production. I am head of the business unit for value Q: What is your capacity? A: But that doesn’t give us an automatic printing, meaning I have full profit and loss We have one line, which equates to just right to print euros. There are basically two A: responsibility for banknote production and over one billion banknotes per year. options for the supply – the opt-in and stamps. That includes features, pigments, opt-out models. Some printers are owned Q: In addition to euro work, how successful security systems such as sensors – in other by their central banks and get their orders have you been on the international market words, anything around banknotes. direct. But then they are only allowed a in recent years? Q: How many business units are there and small involvement in the international market A: As I said, there is no guarantee for what is their business? – something like 80% of their revenues euro work, but we are also free to seek A: Six. Basically all of them develop have to come from euro production. international work. digital solutions and products for secure We are not in that model. We are state In recent years, however, BDR has been digitalisation `Made in Germany'. The owned, but are one of two banknote undergoing a digital transformation – maybe product portfolio of the other units includes printers in Germany and aren’t automatically only half of the business units are actually topics like ID cards, ID management, digital awarded any contracts for Germany, or still making physical products. The rest data management, trust service products, any other euro contracts for that matter. of the business is focused on high tech, for example certificates and signature We have to tender – and the available work digital solutions and systems – for example services, and secure digital infrastructures. is from either the Bundesbank or JET (the security of servers, or data transfer and Q: How long has BDR been Joint Euro Tender), a joint purchasing group storage – whatever is needed by the state printing banknotes? in which a number of smaller countries or private companies. A: For a long time. We printed the first without their own printworks combine their Continued on page 8 > banknotes in 1879. And even before that, requirements, with the Dutch central bank we were printing other value documents. taking care of organising the tenders. We are more than 250 years old. Of course, in those days, it was the Kingdom of Prussia and not Germany as it is today.

CURRENCY NEWS | PEOPLE IN THE NEWS ON THE RECORD | VOLUME 17 – NO 10 | OCTOBER 2019 7 Historic Highs Bundesdruckerei (Continued) The point is that, during this transformation So – in addition to our ownership, security for Australian process, the focus wasn’t on banknotes. and infrastructure – that is perhaps another Banknotes My main task now, therefore, is to build of our USPs. up a team and make BDR more visible in In addition to the 450 researchers, we also In its 2018-19 Annual Report, the the international market, and in particular have an innovation department of around Reserve Bank of Australia (RBA) looking not just a banknote printing 30-40 people which is trend screening demonstrated progress against itself, but offering a complete service to around the globe for all kinds of industries. all of its core responsibilities and central banks. Their focus includes all the activities that we key projects. Q: As you begin your quest for international and the other business units are involved in, The value of notes in circulation rose business, are there any particular parts of with so many opportunities where we can 6%, a slight fall to 4% as a proportion the world that you're going to focus on. learn from one another. of GDP, although still a historical high. We are flexible. It entirely depends on the Q: So if you've got all the bases covered At the end of June, there were 1.6 A: customers – who is tendering, who is giving for actual banknote production, what more billion banknotes in circulation, worth orders, launching a new family, doing a can you be doing? Data management and A$80 billion. The proportion of notes commemorative note etc. analytics is a current hot topic in currency – used as a store of value is believed to it sounds like this is an area and a strength We are also very flexible in terms of our be falling but is estimated to be 62.5% for BDR. of the total stock, with 25% used for partners in the banknote supply chain. We Certainly. If you look at one of the big legitimate transactions and 5% used in source what is needed by the customer as A: demands from central banks and their the shadow economy. The balance is we are not bound to any particular supplier. issuing departments, it’s big data. This, too, regarded as ‘lost’. What sets you apart from other Q: is a big topic at BDR – not necessarily in the banknote suppliers? There were 18,000 counterfeits, a rate value printing unit yet, but the technology of 11 parts per million, down 38% on A: As a future product and solution service and know-how can be transferred from 2017-18. The A$50 accounted for 59% to the central banks, we have some other business units that area already and the A$100 37% of the counterfeits. distinct USPs that will enable us to position dealing with this. A public perception survey showed that ourselves in this way. Again, that is key to BDR – we don’t work 60% of respondents did not think there For example, BDR belongs to the state. in silos. We stay focused on our respective was a counterfeiting problem. Also, Germany has a very robust economy areas but we work together to come up In October 2018 the A$50 New and is represented around the world. with common solutions. Generation Banknote Series (NGB) was This means that people have trust and Q: Another big topic at the moment in the released. It accounted for 8% of A$50 confidence in us and, in terms of security, industry is corporate social responsibility. Is notes by the end of June 2019, a slower are keen to buy products made in Germany. BDR taking the necessary steps to ensure take up than the A$5s and A$10s. The I would also say that, when customers you are good corporate citizens? A$50 makes up the highest volume visit BDR, they can look around and see A: Very much so. Because we belong to of notes in circulation and is the main what BDR offers additionally, particularly in the state, we are very visible and there is ATM note. terms of technology and our other business a really high risk of reputational damage if The new National Banknote Site (NBS) units. When you see the transformation the we don’t do things right. So there is really became fully operational in August company has undertaken, it shows we are a high level of responsibility and focus in 2018, allowing the closure of the much more than just a printer. We are really this area. Melbourne city centre storage facility into secure digital transformation, and this and the planned closure of storage at impacts banknotes because it shows what We are not yet accredited to BnEI, but we the Sydney Head Office at the end of kind of support and service we can offer will be. And we are also ISO-certified. So 2019. The NBS is a state-of-the-art beyond just banknote production. we already have many obligations to fulfil to be ethical, correct and to act from a strong purpose-built facility to store, process But if we focus for the time being on Q: moral perspective. This is very important for and distribute notes. A$6.8 billion new production, what level of vertical integration the BDR management. and A$1.7 billion recycled notes were and in-house capability do you have? issued and A$2.9 billion unfit notes The same can be said for the environment. We don't have vertical integration when returned to it. 100% of note orders were A: As a state-owned company, environmental it comes to inks, substrates or foils. But delivered on the day requested. laws affect us immediately and I would say we have our own patented pigment-based that Germany is one of the countries in Note Printing Australia (NPA) features for second or third level security Europe that is keen to be at the forefront NPA delivered 428 million notes to the for which we offer the whole package – the of this green movement. We are already RBA, up from 228 million in 2017-18, pigments, sensors, maintenance of these undergoing refurbishment to adapt to the earning it A$108 million compared with and data management. We produce these latest laws, and this could be a USP in A$82 million the previous year. ourselves. So whilst we have cooperation itself, although not necessarily a particularly partners, we aren’t just buying everything In addition, NPA delivered 46 million visible one. banknotes under contract to Papua in – we develop a lot ourselves. New Guinea, Singapore and the Q: How is your R&D organised? Solomon Islands in 2018/19, dealing A: We have a huge R&D department of directly with the respective central almost 450 people, which are in a support banks in those countries. function called Technology. BDR is very much a technology-driven company and that's a key advantage – particularly as what they have in mind or are developing can be adapted from other business units towards what we need.

8 CURRENCY NEWS | ON THE RECORD MOTION SURFACE – When Micro is Nano The subject of the Banknote of the Month in the September issue of Currency News was the new Aruban florin series, the first circulating notes to feature Crane Currency’s MOTION® SURFACE® technology. It was 15 years ago that MOTION® first burst onto the scene, at the Optical Document Security conference in 2004, prompting the development of a whole new range of authentication features based on micro-optics. To mark this milestone, we take a closer look at this latest incarnation of the technology. When MOTION was first released in a circulating banknote, the Swedish 1000 kroner in 2006, its unique three- dimensional, motion effects both surprised and fascinated central bankers, banknote designers and the public at large. It also attracted the attention of physicists, not least because while the scientific principle (Moiré magnification) was not new, the application, material science and Creating this unique artwork takes hours At such a scale, the production tolerance engineering most certainly were. of computation using state-of-the-art between the lens and icon are critical; Today there are a number of banknote computer processing, which represents a the smallest misalignment will destroy the security features that use micro-optics, major improvement over Crane’s production effect and distortions must be limited to but in different ways from the MOTION of the first MOTION features. within nanometers. technology. And MOTION itself has not The addition of skilled software engineers In fact, the only technology currently remained a one effect, one product to Crane’s micro-optic technical design capable of accurately measuring distortion technology – we had the MOTION® team has produced proprietary software is the micro-optics themselves. Inside the RAPID® thread in 2014. And now MOTION that has speeded up the process by well Crane facility, measurement schemes using SURFACE, a stripe. over 100,000 times, allowing for more micro-optics have been developed that An important visual effect of MOTION intricate designs and effects and accurate allow artifacts smaller than 25 nanometers SURFACE is Topo, which produces a very renderings of the final product. Were Crane and distortions less than 10 nanometers to strong three dimensional effect. The name to use the same computational software be visible to the naked eye. Topo derives from the word topography, now to render MOTION SURFACE designs, These tight tolerances drove Crane to ie. the practice of describing relative the computer processing time would be develop customised production equipment position, elevation and contour of surface measured in months. capable of producing multiple layers of features. Producing its visual effects on a Today, by virtue of these advancements millions of individual micro-optic structures, security feature thin enough to be applied in algorithms and computing power, the while keeping everything precisely aligned to the surface of a banknote requires process is so controlled that it allows the and in specification to the original digital very specialized materials, equipment creator to fine tune every characteristic of rendering. This equipment is required to and know-how. an effect. It is possible to revise specific keep the angular alignment between the On a typical 10mm wide MOTION dimensions, shape, and magnification of lens and icon layers extremely tight (to SURFACE stripe, an array of over 3 the moving images. The strong 3D effect one sixtieth of a degree) while producing million lenses is aligned horizontally over and the curved images one sees in the hundreds of thousands of kilometres of 3 million icons, each of them subtly and final feature is a result of the combination material, and billions of precise optical uniquely altered to achieve the desired of expertise and equipment which enables microstructures per second. effect. The changes in the position of each every icon to be unique in its size and The results justify the investment because it icon are so small as to be unmeasurable shape from those around it, and to position enables visual effects that are bold and very by conventional means, but the three each precisely under each lens. easy to use despite their invisible complexity dimensional effect of Topo could not be Once the design of micro-optic icons produced without this tightly-managed are created and arrayed into position, array of iconography. this master artwork must be delivered to production. In a similar way that digital print files are delivered through the modern process of pre-press in security printing, the artwork for the MOTION icon and lens array is created using proprietary technology that ensures no distortions or inaccuracies are introduced into the process.

CURRENCY NEWS | ON THE RECORD TECHNOLOGY PROFILE | VOLUME 17 – NO 10 | OCTOBER 2019 9 Nanotech Launches KolourDepth™ multiple colours, omni-directional movement, and overprinting. Moreover, KolourDepth security feature is extremely thin and durable, with a thickness of under five microns.

Canada-based Nanotech Security Corp KolourDepth has many key features to – a specialist in nano-optic structures protect against counterfeiting. When and colour-shifting materials used in inspecting the feature, the viewer can According to Nanotech’s President the banknote and brand protection expect to see three-dimensional elements and CEO, Troy Bullock, who says the ™ markets – has launched KolourDepth , a along with vibrant, and colourful images feature delivers effortless currency security feature specifically designed for that float at multiple layers above and below authentication, ‘in recent months, the currency authentication. the surface of the banknote. The viewer will company has focused on aggressive According to Nanotech, the KolourDepth also see omni-directional movement inside product development and commercialising security feature represents a new paradigm the security feature as multiple 3D elements our technology, and KolourDepth in the company’s currency authentication move simultaneously at different speeds represents another important milestone in product offerings, with visual effects that and directions. Nanotech’s growth’. include 3D, colour, and movement. The Meanwhile covert features such as high The KolourDepth security feature is based company says the security feature’s visual resolution microtext, nano-imagery along on Nanotech’s patented KolourOptik® effects allow for intuitive authentication with detailed visual elements provide nanographic display platform, the while delivering unparalleled security. multi-level security. Machine-readability foundational technology behind its Developed using a combination of nano- can also be added, and the feature can nanotechnology-based products, which scale origination, proprietary algorithms be customised with a wide range of visual allows these to be seamlessly integrated and specialised manufacturing techniques, effects such as multiple 3D elements, into commercial manufacturing processes.

FNMT: Investment Leads to Flesure As described in the July issue of solution, which it calls Flesure®. And whilst test, the Bank of Mexico’s wet IGT crumple Currency News, in the On the Record this has been a ‘work in progress’ over that degrade (x 12) test and the Túrbula dirt rub with Antonio Olmos, last year the paper time, it is the implementation of FNMT’s test. To give some sense of the rigour of mill of the Fábrica Nacional de Moneda new processes and equipment that has the approach adopted, in the IGT test 18 y Timbre – Real Casa de la Moneda enabled the development to be bought different types of paper were compared. (FNMT) completed its major re-build of to fruition. The conference paper demonstrated its paper machine and updating of the The goal of the development was to create the effectiveness of Flesure and Javier paper mill. a durable paper by strengthening the talked about how the ink adhesion and The €60 million investment has increased fibre structure, increasing the mechanical performance of the paper in the print works the capacity of the mill from 2,300 tonnes resistance of the paper and increasing was unchanged compared with standard per annum to 3,300 tonnes and updated the anti-soiling properties of the paper, paper. Colour coordinates did not need all of the systems from stock preparation all without losing the contrast within to be adjusted, the humidity, opacity and through to the on-line monitoring of quality, the watermark, maintaining a uniform mechanical-chemical stability of the paper including the latest coding systems to and homogeneous sheet formation and was maintained. The definition and tactility allow full security accounting for all paper ensuring that the print properties of the of intaglio print was improved on Flesure. produced. Javier Baraja, Coordinador- paper were unchanged. FNMT has worked Javier suggested that lower coat weights of Jefe of the mill, presented a paper at this closely with its own state printing works and post-print varnish could be used and that year’s High Security Printing Latin America with accredited external laboratories during this would reduce any subsequent cracking conference in Costa Rica about the work this development. of that varnish. done and the R&D work on durable papers At the start of the project FNMT evaluated The environmental performance of the that it has enabled. a range of test methods, including those paper, both for those handling it in the print Over the last 10 years FNMT has also from the Bank of Mexico, Lufa, KBA, works and circulation and for the wider devoted considerable R&D resource to Túrbula and Giesecke + Devrient. In the end environment, had also been investigated, develop its own multi grade durable paper it selected the standard washing machine with no issues found.

10 CURRENCY NEWS | TECHNOLOGY NEWS All Eyes on Yokohama!! 1st World War Coin Heads Winners (Continued)

In other categories, the Royal Canadian Mint won the ‘Best New Coin Product, Feature, or Distribution Innovation’ award for its tri-metal security token. Made from three metallic pieces compromising one metal ring and two inserts, the coin provides a novel And no – we’re not talking about the will form the basis of the seminar, which will geometry effect while offering increased Rugby World Cup, but the forthcoming be an update on similar seminars run earlier security at a cost-effective price. High Security Printing (HSP) Asia this year at HSP Asia’s two sister events in The ‘Best New Circulating Coin or Coin conference, which takes place in Costa Rica and Malta. Series’ award went to the Central Bank Yokohama, Japan on 25-27 November. Following the welcome address on the first of Mauritania and La Monnaie de Paris A total of 45 presentations will be delivered day of the conference, the first sessions for the large denomination 20 ouguiya, over the two days, divided into two will include presentations on ‘Cash Usage which is the world’s only circulating tri- streams for currency and ID, with six Trends in Japan’ from speakers from the colour coin. sessions covering the Asia-Pacific currency Tokyo Centre for Economic Research and Commenting on the awards, IACA landscape, the latest note and coin Chuo University, the Japanese Mint on the Executive Director Eugenie Foster said projects implemented across the region, new 500 yen coin, China Banknote Printing the standard of entries had again been developments in security, design and public and Minting Corporation on its new notes, extremely high, reflecting an industry engagement, sustainable production, sustainable banknote production from that continues to evolve, innovate cash and payment alternatives, innovation Louisenthal, and carbon neutral banknotes and surprise. and authentication. from the Central Bank of Samoa and De La Rue. ‘This was again one of the toughest The event will open with four pre- years to judge the awards and conference seminars on 25 November, two A number of papers will then explore congratulations to all the winners and of which will be dedicated to banknotes. developments in currency design, security finalists’, she said, adding that ‘the The first, ‘Managing Risk, Delivering Quality and public engagement from around awards, which celebrate the very best in and Driving Efficiency Through Software the world. coin development, technical innovation in Today’s Print Works’, will focus on the The second day will lead off with a session and social implantation, keep coins wide range of digital solutions involved in on the Birth of a Banknote, involving all the at the forefront of global currency the manufacture of banknotes. Moderated partners involved in the development of a strategies that offer choice, freedom by John Winchcombe of Currency News, new specimen note from the region. and financial inclusion for billions of it will bring together a number of major This will be followed by sessions on print people across the world.’ suppliers to present their solutions and the and production technologies, and cash key principles that lie behind their work. In management and alternative payments. A particular, it will cover: dedicated session focusing on innovation How software improves printing and technology will formally close press performance enhancing quality, the programme. productivity and security A specialised exhibition of some 35 How can quality inspection provide companies will be held as part of the event, feedback to the print processes, both real providing delegates with an opportunity time and trend analysis for use in design to see the latest industry products and optimisation and manufacturing process solutions. As usual, the event will play re-design? host to prestigious Regional Banknote and How can data from finishing and vault Regional ID Document of the Year awards. management flow through to the Furthermore, on the following day, there cash cycle, how can the cash cycle will be two post-conference tours. One is performance of the banknote reach back of the National Printing Bureau (NPBJ), the into manufacturing? Japanese governmental agency in charge Jeff Hanke of Royal Canadian Mint (left), Chris How do you link the shop floor processes of the production of Japanese banknotes. Humphreys of the Reserve Bank of New Zealand (centre and Eugenie Foster of IACA (right). to the overall ERP factory software? It also produces various other products, such as postage stamps and the official The second, ‘Security Threads and In addition to the winners, presentations governmental gazette. Numbers for this Diffractive Foil Features for Banknotes’, were made to the finalists in each tour are strictly limited. presented by Drs David Tidmarsh and Mark category, which also included the Deakes of Reconnaissance, will cover all The other is of Komori’s flagship Tsukuba United States Mint, China Banknote aspects of security threads and diffractive factory. Located in Japan’s verdant Printing and Minting Corporation, the foil features on banknotes – including the Tsukuba Science City, on an 185,000m² Singapore Mint, Bangko Sentral ng history, application, production, types, site, the plant consists of the factory, a Pilipinas and South African Mint. material science, technologies, design and research centre and a training centre, features . The recently-published special and prides itself on its certification as an report on diffractive features and the soon- environmentally excellent operation. to-be-published report on security threads www.hsp-asia.com CURRENCY NEWS | TECHNOLOGY NEWS VOLUME 17 – NO 10 | OCTOBER 2019 11 Chatboxes Add a Magnificent Muscat for MEA New Dimension Cash Cycle (ICCOS) Seminar With highly engaged delegations at handling and providing commercial to WBS the recent MEA Cash Cycle Seminars, accounts in an era when the branch The organisers of the World Banknote organisers Currency Research (CR) footprint and interest in cash services are Summit 2020 – which takes place 24-26 will build on this energy for the changing or lessening. February in Prague – have announced next seminar in Muscat from 24–26 The focus will then shift to the talk of further innovation to the conference February 2020. transition. There is much hype around the programme in the form of ‘Chatboxes’ Kicking off the week will be the pre- advance of digital payments, with many and a special printers’ workshop. seminar Central Bank Summit and central banks supporting a less-cash The conference programme will address the Workshop ‘Alternative Payments, New society, but cash continues to grow in challenges in banknote production, demand Technologies’ on Monday, 24 February. most economies. The ‘Cash in Transition forecasting and circulation management, Roundtable discussions and case study – A Digital Destiny?’ panel will separate data analysis, Central Bank Digital analysis on current cash cycle issues the facts from the myths and examine a Currency (CBDC), the user’s perspective will be discussed in the morning. The future where digital payments and cash on cash, disruptive technologies in the afternoon session will look into new co-exist, but differently than now. payment landscape, and the role of cash in technology and payment methods, With significant operating environment the future. particularly how mobile devices and changes and more automation and The speaker line-up includes infrastructure can help retail and store digitization in the cash cycle, potential representatives from central banks and payments, and how smartphones can new threats could have an impact on state printworks around the world, the be a driver for financial inclusion in business continuity planning (BCP). The Bank for International Settlement and law emerging markets. ‘Resiliency – BCP, Fraud, and Cyber enforcement agencies. It also includes The main seminar begins on Tuesday, Security’ session will present how key experts from outside the banknote 25 February, and will lead off with stakeholders know and understand community, for example from supermarket presentations related to ‘Trends in Cash potential points of failure and their plans chains, universities, software and fintech Usage, the Cash Cycle and Digital should failure strike. When the electronic companies. Details on the speakers Payments.’ As the payments landscape is payments infrastructure is rendered and the agenda are available on the becoming more digitized, many countries ineffective, cash is often the saviour, so conference website. are studying digital currency and ensuring resiliency in the cash supply In line with the versatile agenda topics, the forecasting currency levels appropriate for chain is of paramount importance. their future operations. World Banknote Summit employs different Outsourcing of the Cash Cycle presentation platforms and discussion This session will also address trends As stakeholders have no doubt identified, formats so that the attendees can profit in cash and non-cash payments, and the time has come for partnerships of from the expertise present to the maximum whether the cash cycle is adapting to CITs, FIs, central banks, and suppliers to extent possible. the change. define the efficient cash cycle of the future Hence, in addition to its Immersion Following this session, attention will based on visibility, cost-effectiveness, Sessions, which are focused workshops shift to ‘Best Practices for Commercial and security. The ‘Outsourcing of the looking in details at specific topics, it is Cash Handling’, with panellists from Cash Cycle’ workshop/session will introducing another discussion format in the central banks and commercial banks focus on understanding the obstacles to form of the Chatbox. discussing how to handle large volumes outsourcing and discussing what can be These are discussion rounds involving up of commercial cash and how to service done about them. to eight people, chaired and moderated commercial cash accounts. Competition Other sessions will discuss currency by an expert. Various Chatboxes will be may be fierce in the supplier marketplace quality, currency manufacturing run on multiple tracks, allowing delegates but cash management is not the priority innovations for notes and coins, cash to choose their preferred topic of interest. for many organisations – even though visibility and the best practices for cash The duration of each – 40 minutes – is large volumes of cash still need to be logistics and data accuracy, and how to designed to provide sufficient time to handled and deposited daily. Industry facilitate track-and-trace throughout the examine a defined topic, but also offers the leaders will discuss the challenges supply chain. associated with commercial cash possibility of attending several Chatboxes www.mea.iccos.com during the conference. Chatbox subjects will range from currency forecast and planning models to data analysis software implementation projects. In addition, a session dedicated exclusively to representatives of state printing Banknote Horizons 2020 works will be run on the morning of the KBA-NotaSys has announced The event will be held in Lausanne, first day of the conference. In this two- the dates for the 6th edition of Switzerland from 15-26 June 2020. hour session, attendees will have the Banknote Horizons, its main event According to the company, it will gather opportunity to debate practical issues of for showcasing, demonstrating central banks and security printers from banknote production with their peers in a and trialling the results of its latest around the world, providing new insights closed setting. technology advances. into the banknotes of the future, as well www.worldbanknotesummit.com as unparalleled networking opportunities.

12 CURRENCY NEWS | CONFERENCES Orell Füssli Celebrates 500 Years with Unique House Notes Orell Füssli is celebrating its 500th anniversary this year, having been A B C founded in 1519 by Christoph Froschauer (just 71 years after Johannes Gutenburg, a goldsmith in Germany, is credited with inventing the printing press). The company’s first products were books, most notably the Zurich Bible printed in 1531. Intaglio printing was introduced into the company in 1603, it produced its first security documents in 1826 and printed the Swiss banknotes for the first time in 1914. Since 1973 the company has produced all Swiss banknotes. To celebrate this special milestone – five centuries of printing is no minor achievement – Orell Füssli Security Printing (OFS) has introduced a unique new house note concept – not one but three house notes in one. The design was partially revealed earlier this year, but overlaid by a Fig 1: the new specimen note produced on Durasafe (A), cotton paper (B) and Guardian (C). jigsaw puzzle from which one piece was removed each month running up to the full unveiling at the Intergraf security printing conference in Copenhagen this month. In the version featuring Durasafe (A), a Other security features include fine line OVI composite of paper (both outside layers) printing, SPARK® TrueSpin, Microperf®, The planning for the anniversary started and a transparent polymer (inner core) fused a watermark and ColourSwitch™ thread in 2015 when the idea of a special house together, the Thrusafe™ transparent window (for the Durasafe and cotton versions) and note first surfaced. A design competition (below) is overprinted with SICPA’s OVI®. Viewsafe (Durasafe only). was launched in 2016, with Christophe Métroz being chosen out of a group of In the cotton version (B), known for its five Swiss graphic artists. He selected the tactile feel accentuated greatly by intaglio ® theme of ‘Time’ along with ‘Swissness’, printing, the window has KINEGRAM ‘long historical tradition’ and ‘looking to APL, an innovative window patch from the future’. KURZ, in combination with a KINEGRAM REVIEW® feature. The anniversary note is a collaboration between OFS and project partners KURZ, SICPA, KBA NotaSys, Landqart, CCL Secure, Hueck Folien and Zeiser. It is special not only for its design concept but that it is printed on three different substrates – standard cotton-based paper, Landqart’s Durasafe®, and CCL Secure’s Guardian™.

The objective was to demonstrate how The Viewsafe feature in the Durasafe note (above) a single design could be adapted to and the printed motif in the Guardian note (below). the unique characteristics and technical The KINEGRAM APL in the window of the cotton- requirements of each substrate and based note. The 500th anniversary banknotes are the security features, at the same time instantly recognisable as being Swiss by achieving the main objective of any In the Guardian note (C), where the their innovative modern design, colours and house note, namely demonstrating OFS’s structure is a pure polymer core selectively complexity with simplicity. Swiss banknotes expertise in creating tailor made solutions coated with multiple opaque layers so that are also generally recognised as being the for its customers in terms of substrate, a transparent window remains, there is a most secure and, if these were circulating feature selection and design integration. motif printed in the window. banknotes, it is also most unlikely that any decent counterfeits would emerge. One design, three substrates There are a wide variety of security features, The three banknotes can be seen in Fig most of which are common to all versions; However, their main objective was to mark 1, the main obvious difference between whilst others are specific to one or more 500 years of continuous printing at Orell them being the security feature used in of the substrates. Intaglio and offset are Füssli, and given their special purpose the window. prominent, providing the colour and design and display of what can be achieved in but also some of the features themselves, today’s banknotes – in terms of design, such as numbering, microtext (both offset printing, security features and quality – they and Intaglio), UV, see-through register, and will hopefully set Orell Füssli on course for a double TwinTilt latent image. another 500 years!

CURRENCY NEWS | CONFERENCES BANKNOTE OF THE MONTH | VOLUME 17 – NO 10 | OCTOBER 2019 13 New A$20 In other news… The Banque des Etats de l'Afrique The National Bank of Ukraine has put Centrle (BEAC), the central bank for the into circulation a new high denomination Takes Flight Central African Monetary Union, is to issue 1,000 hryvnia (UAH), with the objective a new banknote series, replacing the of increasing convenience and reducing The Australian $20 note, the fourth in the current one which was issued in 2003. the costs of producing and processing new series of five notes, has now gone banknotes. 5 million of the notes have into circulation. The new note features been initially issued. portraits of two Australians known for The National Bank of Kazakhstan has their enterprise and ingenuity – the announced that it will be replacing the The UAH 1,000 contains more than convict Mary Reibey, who became a 200 tenge banknote with a coin in 2020, 20 security features, including SPARK successful businesswoman, and Rev in order to reduce costs and increase the depicting a flower crystal element that John Flynn, who pioneered the Royal lifespan of the denomination (which is changes from gold to green, and a ® ® Flying Doctor Service. expected to last 10-15 years in circulation, MOTION RAPID thread. The front of compared with the current 12-18 months the new banknote shows a portrait of the for the notes). The latter will remain legal prominent scientist Vladimir Vernadsky. tender, but will gradually be withdrawn An image of the building of the Presidium from circulation as they wear out. of the National Academy of Sciences of Ukraine is on the reverse.

The National Bank of Angola has announced that it will be issuing a new series of 200, 500, 1,000, 2,000, 5,000 and 10,000 kwanza notes in 2020. The existing series, in circulation since 2012, is printed on paper and, according to the Bank’s governor, replacement of degraded notes costs the Bank $30 million per year. It plans to save some of this by switching At the other end of the scale, the Bank to polymer for all the new notes. Once they has now begun withdrawing 1, 2 and 5 The banknote also includes new security are introduced, the existing series will be kopiyka coins from circulation, a move that features seen on the new $5, $10 and discontinued. will save it c. UAH 90 million ($3.5 million) $50 notes issued over the past three a year in production costs. years, such as a rolling colour effect and The National Bank of Bulgaria will issue top to bottom window incorporating a a revised 50 leva note on 1 November, hologram. With more than 170 million $20 The National Bank of Georgia has put the second in its new series (the first, the banknotes in circulation, the Reserve Bank into circulation an upgraded 10 lari, the 100 leva, was issued last December). The of Australia has been working closely with fifth and final note in its new series, which design is largely the same as the 1999 manufacturers and businesses that use has been progressively upgraded from and 2006 versions, but the notes include cash handling machines over the last few 2016 onwards. In keeping with the other enhanced security features, among them months to help them prepare for the new new notes, the predominantly blue 10 lari a dynamic RollingStar® LEAD stripe with banknotes, and ensure sufficient stocks has a modern design and security features multiple images, a true colour portrait, are available. including SPARK®, a holographic stripe 3D and holographic and gold-to-green and windowed thread. There are no plans The final note in the new series, the A$100, colour shifting effects. The colours are to upgrade the 200 lari. will be issued next year. synchronised with the SPARK® Live feature and, on the reverse, with a RollingStar windowed thread. The Central Bank of the Bahamas has New versions of the 5, 10 and 20 leva released its new $50 note – the sixth in will follow. the CRISP Evolution series – and the first note in the world to integrate a MOTION® RAPID® thread into a Durasafe® composite substrate. Other features include a see- through window in which a replica of a window from the Parliament building can be viewed, a mould-made watermark with electrotype, SPARK® and, on the reverse (which is in portrait orientation) an Employees at Note Printing Australia, producers of iridescent stripe. the new A$20, celebrated the launch with a series The National Bank of Cambodia has of flight-related activities, including a Paper Plane issued a 15,000 riel note to celebrate Flying Competition. the 15th anniversary of King Norodom Sihamoni’s coronation.

14 CURRENCY NEWS | NOTE AND COIN NEWS The Asia Cash Cycle Cash & Payment News Seminar 2019 Highlights of the October issue of The 2019 Asia Cash Cycle Seminar The discussion pivoted in the next session Cash & Payment News™, the sister (ICCOS) was held in Colombo, Sri Lanka, to ATM recycling, the challenge of ensuring publication to Currency News™, from 23-26 September. Co-hosted by banknote quality and authenticity, and include: Currency Research (CR) and the Central what impact current technology or future Save Our Cash: Lessons from Bank of Sri Lanka (CBSL), 175 delegates innovation may have on recycling. The Sweden from 31 countries and 77 organizations panel consisted of the State Bank of Facebook’s Key Partners Quit Libra – including 20 central banks – gathered Pakistan’s Muhammad Ashraf Khan, Project to discuss the latest issues, trends, and Johannes Bäckman of Loomis, and Glory’s best practices in the Asia cash cycle. Ben Thorpe, with the latter noting that Asia The State of Payments in Sweden Prior to the formal start of the conference, in the last five years has witnessed a huge M-Payments Next Big Thing for Retail; two pre-seminar workshops were held on spike in retailer recycling. Shop Online, Pay in Cash 23 September. The first, led by the Asian Day 2 commenced with a keynote speech New Zealand Proposes Legislation in Cash Management Association (ACMA), from Patrick Jonasson, GS1 Global’s Support of Cash reviewed the regulatory environment and Director of Public Policy, Asia-Pacific. Country Cash Profile: Costa Rica its impact on CMCs in the region, while the Jonasson spoke on how data standards Central Bank Summit – available exclusively can bring greater transparency and Amazon Seeks to License Cashier- to central bank delegates – was organized efficiency to the cash supply chain. Much Free Technology by CR in cooperation with the Central Bank like retailers in the past, so too, Jonasson UK Access to Cash Update of Sri Lanka. argued, can the cash cycle be made Cards Dominate UK Retail Payments more efficient, with greater oversight and The seminar officially opened the Consumers Need a Right to Use Cash following morning, 24 September, as security, through the adoption of cash Mobile Payments Take a Hit in CR’s Vice President of Operations Dan visibility standards. Zimbabwe Harrison delivered his opening remarks The evolving role of cash management and introduced to the stage Dr Indrajit companies – and how best to regulate Dutch Crypto Providers Prepare for Coomaraswamy, Governor of the Central them in light of their transition away Supervision Bank of Sri Lanka (CBSL), who warmly from being strictly armored CITs – was Cash at Post Offices? Patently welcomed the attendees to the country. addressed in another panel discussion. Unrealistic The morning plenary session explored Moderator Ted Devereaux spoke in favour As a reminder, whereas Currency News trends in the cash cycle—including the of what he called ‘structured legislation’, looks at the way cash is specified, use of cash and non-cash instruments in as opposed to toothless self-regulation, in produced, distributed and managed in payments transactions—and the impact order to ensure a robust and sustainable circulation, Cash & Payment News looks that digitization is having on the cash cycle. cash cycle. at the broader payments eco-system, The changing dynamic of the cash and Two sessions devoted to the impact where cash fits within it, how it is used payments landscape in Sri Lanka was of digitization on the Asian cash cycle and where the future challenges lie. explored by CBSL’s Superintendent of closed the seminar. In a panel discussion Currency News subscribers qualify for Currency H P Tamara Wijesuriya and D moderated by David Hensley (Enryo) a 50% discount on Cash & Payment Kumaratunge, Director of the Payments and and featuring panelists Channa De News. Contact us to set up your Settlement Department at the Central Bank Silva (LankaClear), Sandun Hapugoda subscription. of Sri Lanka. CR’s Tom Mitchell delivered a (Mastercard), and Kanishka Weeramunda summary of CR’s recently published Cash (DirectPay), the four debated how and Industry in Transition report, an examination whether cash and digital payments would of the internal and external factors co-exist in the Asia of the future. impacting the cash industry. The timely Lastly, Vasantah Alwis, IT Director of the

subject of digital currencies was the focus Central Bank of Sri Lanka, shared the VOLUME 2 – NO 10 / OCTOBER 2019 Facebook’s Key of the World Bank’s Dr Ranee Jayamaha. central bank’s approach to cyber resilience Partners Quit Save Our Cash: Libra Project Lessons from Sweden Seven of the high-profile companies and its importance for business continuity; originally intending to participate in A pair of panel discussions ensued. The the Facebook-led Libra cryptocurrency consortium have backed out of the project in the past month, starting David Hensley looked at the characteristics with PayPal. VISA, Mastercard and first zeroed in on improving the efficiency eBay followed a week later by the Latin American payment system Mercado Pago, the payment processing company Stripe and Booking Holdings of a resilient industry in an ever-connected (which owns Booking.com and other of the cash cycle, lowering costs, and travel sites). The reception of the proposed Facebook digital currency from central bankers and environment, stressing the need for regulators around the world so far hasn’t remaining competitive in an increasingly been particularly cordial. Widespread In Sweden, where cash is marginalised criticism by policymakers – ranging from to an extent that suggests that an entirely mild caution to outward hostility – is Changes in payment technology are cashless society cannot be ruled out undoubtedly the reason behind the innovative thinking, collaboration, and a affecting all countries, and lessons as a viable future scenario, the central departure of Libra’s key partners. Most digital environment, one that featured learned from the countries that are bank (Sveriges Riksbank) has raised its recently, two US senators reportedly sent more advanced in this transition concerns in the form of a recent petition to letters to the CEOs of Mastercard, Visa and provide valuable insight for others. the parliament of Sweden, the Riksdag. Stripe expressing their ‘deep concerns’ risk framework that serves all consumers While the decline of cash usage comes about Libra and warned that the companies The issues covered in the petition go unique perspectives from panelists across as no surprise to most people, the rapid may see more regulatory scrutiny because beyond the usual digital exclusion pace of the decline in the last few years of their involvement with the project. concerns and freedom of payment choice. observed in countries leading the cashless In this document, the Riksbank highlights Facebook says this is fine, and ‘would drive – Sweden, Canada, UK, China, regardless of payment preference; while fundamental issues about the role of the caution against reading the fate of Libra into Australia, among others – was somewhat the Asian cash cycle – central banks, state in the payment market, the future this update’ as tweeted by its blockchain unexpected even for industry insiders. of central bank money and the concept head David Marcus. According to Marcus, The transition away from public to private of legal tender, as well as the limits of the regulatory pressure has been intense, money creates a system where central G+D’s Matthias Roherich expounded on the central bank’s ability to promote a and he respects the decisions by Visa and banks may find it difficult to function as safe and efficient payment system in an Mastercard to ‘wait until there’s regulatory commercial banks, CMCs, suppliers guardians of financial stability. economy where cash is no longer present. clarity for Libra to proceed’. In the UK, the endangered position of Money as a medium of exchange The Libra Association is carrying on despite cash caused a recent review of access functions on the basis of confidence, the defections. 21 remaining organisations the benefits of digital twins as a means of to cash, resulting in a set of measures either intrinsically embedded within the held a meeting in Geneva to sign a charter and operators. to ensure its continued existence, payment instrument itself, as in the early for the consortium and name a board widely covered in our earlier issues. forms of coins made of precious metals, of directors. The effectiveness of these measures in or provided as a guarantee by the state generating efficiencies in the cash cycle. preventing a continued rapid decline of Meanwhile, Bertrand Perez, COO and in a form of legal tender. In Sweden, the cash is yet to be proven, but it is generally interim Managing Director for the Libra definition of legal tender as it currently accepted by the UK authorities that a Association, told CNBC that he remains stands only applies to banknotes and complete elimination of cash is, for many ‘confident’ there will be 100 members by coins issued by the Riksbank. reasons, undesirable. the time the currency launches. At the close of the conference, CR revealed Continued on page 4 > that the 2020 Asia Cash Cycle Seminar www.cashpaymentnews.com will be held in Manila, as ICCOS is set to return to the Philippines for the first time since 2012. www.cashpaymentnews.com

CURRENCY NEWS | NOTE AND COIN NEWS VOLUME 17 – NO 10 | OCTOBER 2019 15 Counterfeiters Defeated by Technology Swiss federal police report that the The likely reason for the drop in forged Out of all the Swiss banknote country’s new banknotes are far more notes is advances in technology that denominations, the most frequently forged resistant to counterfeiting than in make the latest series of Swiss banknotes note by far was the CHF 100, followed by the past, resulting in a dramatically harder to reproduce. The latest series, the CHF 200. reduced number of identified forgeries. the ninth, which was phased in from April The detection of fake coins continues to Conversely, the number of counterfeit 2016 and culminating with the issue of improve. Advanced equipment spotted coins captured last year has increased, the new CHF 100 in September, is widely 6,512 fake copies of the CHF 5 coin in which is attributed to improved recognised to comprise the most secure 2018 compared to 4,350 a year before and detection methods. banknotes in the world. Forged banknotes just six examples in 2007. can often be spotted with the naked eye In 2018, only 1,200 counterfeit banknotes According to the Swiss police, on the basis of the various highly advanced – with a combined face value of CHF counterfeiters in Switzerland are nearly security features. 208,140 – were discovered by police, the always caught. In the last 10 years, Federal Office of Police (Fedpol) reported The number of forgeries found in between 150 and 400 cases were reported in its latest counterfeit statistical release. Switzerland in all currencies has also to the Attorney General’s Office each year. This is a record low number and less than continually fallen in the last few years, from half the number of counterfeit banknotes 21,789 in 2014 to 12,869 in 2018. spotted five years ago.

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