LA REVISTA ANUAL DE GUARDIAN LE JOURNAL ANNUEL DU GUARDIAN TẠP CHÍ THƯỜNG NIÊN VỀ GIẤY NỀN GUARDIAN ISSUE 9 2019 THE ANNUAL JOURNAL OF GUARDIAN SPECIMEN: ISSUE 9

From the Editor’s Desk

Editorial Team Issue 9 of SPECIMEN centres on the

importance of collaboration.

In our experience, successful collaboration is not a group of people sitting around a boardroom table and then leaving to work in isolation. It is about working closely with a central bank throughout every step of the banknote journey to provide a bespoke solution.

n the Collaboration Issue, we take a look at the Bank of England’s experience moving from paper to Guardian polymer banknotes, and I how it considered feedback from the public and the commercial and Editor retail sectors. The bank has been able to draw on the expertise of CCL Tim Berridge Secure and its other suppliers while it works to deliver a new series. The issue also demonstrates the process and benefits of collaboration Editorial Consultant in case studies from the Reserve Bank of Australia, the Central Bank of Amanda Cirillo Costa Rica and the Reserve Bank of New Zealand, which is celebrating its 20th year of issuing Guardian polymer banknotes. Contributors CCL Secure is committed to continuing to improve the quality and Bradley Booth integrity of banknotes through Research and Development (R&D). We Brian Hayr have recently announced exciting new products with the potential to Brian Lang enhance a banknote’s security or extend its life in the cash cycle. Carlos Almenar Diaz Creating the best possible banknotes, which members of the public Gustavo Ascenzo want to use, is an integral aspect of ensuring the future of cash. Lachlan McDonald The role of cash in a crisis, such as natural disasters, is another example of how cash can continue to be used and valued moving forward. Design As the cash cycle continues to evolve, there is the potential to use data Next: Brand Strategy to inform decision making. This issue also explores how the life span of & Design polymer banknotes is significantly impacted by bank policy, uncovered by by analysing data from years of banknote analysis. Ultimately, a successful banknote project goes beyond the products used. True success is achieved when central banks and suppliers work together to realise the bank’s goals for a new note or series. When stakeholders collaborate, they help solve the challenges a central bank is facing with its cash cycle, as well mitigate risks during the transition process.

™ VIVID Tim Berridge Illuminate the next level of banknote security. A new security feature by CCL Secure

Fluorescent brightness. Complete design integration. Life-long durability ELEMENTOS OCULTOS SPECIAL REPORT SPECIMEN: ISSUE 9 SPECIAL REPORT SPECIMEN: ISSUE 9

Contents

1 From the Editor’s Desk FEATURE STORY CASE STUDY SPECIAL REPORT

Issue 9 of SPECIMEN centres on the importance of collaboration. The Bank of England’s 22 20 years of Guardian polymer 30 The role of cash in a crisis polymer journey in New Zealand INSIGHT In times of crisis, from a tsunami to a 8 1o years working with the ‘The Old Lady’. Two decades on from issuing its first terror attack, stability of the payments Guardian polymer banknote, the Reserve system is often compromised. 4 Keeping You Notified “I have been working with the Bank Bank of New Zealand is able to manage of England for just over ten years in Counterfeiting decreases by 20% in its cash cycle with improved efficiency Australia in 2017/18. my role as Technical Lead for the bank at CCL Secure, but this is a relatively and effectiveness. Looking into the crystal ball: what could a short timeframe for an institution that future banknote look like? was established in the 1600s, issued Neil Sanders leads CCL Secure’s vision banknotes since 1695 and has been on of innovation. its current Threadneedle Street site in London for some 285 years.” Uruguay’s commemorative Guardian note highlights polymer’s durability. LACHLAN MCDONALD SHARES HIS INSIGHTS INTO THE DECADE-LONG JOURNEY INTO DEVELOPING ENGLAND’S FIRST POLYMER NOTES

OPINION CASE STUDY BANKNOTES BANKNOTES

12 Collaborating with banks and 14 Australia’s new $50 note 20 The latest Guardian polymer 28 30 innovations in 30 years banknotes of Guardian polymer BEMs in the cash cycle Achieving success through collaboration

and dedication. Throughout 2018, central banks from The year 2018 marked three decades of Why collaboration is key to successfully issuing a new banknote series. around the world issued a number of Guardian’s proven market performance, new banknotes on Guardian polymer with the first polymer banknote issued in substrate. Australia in 1988. Here we present 30 innovations over this time that have contributed to PRODUCT Guardian’s enhanced security, durability and cleanliness, and reduced carbon footprint. 6 Illuminating the next level of security for Guardian banknotes CASE STUDY CCL Secure launches a new substrate- PRODUCT ANALYSIS based security feature, VIVID. 32 A banknote’s connections to 18 New Spartan banknote meets Using data to better manage national identity the needs of low denominations the cash cycle Managing early engagement with external Working with the Central Bank of Costa stakeholders, is one of the challenges A banknote product uniquely engineered In all aspects of life, we tend to Rica on the ₡1,000. central banks face when designing and for the “coin/note boundary”. experience “information overload” issuing a new series. from multiple sources of news and To maximise the opportunity this information. Analysing data from central presents, central banks are increasingly banks, as well as thorough banknote using multi-vendor procurement models. analyses, is fundamental to informed Competitors need to work together decision making. towards a shared objective.

BRIAN HAYR EXAMINES THE BENEFITS OF INDUSTRY COLLABORATION 24

2 3 SPECIMEN: ISSUE 9 KEEPING YOU NOTIFIED SPECIMEN: ISSUE 9

INSIGHT

Keeping You Notified

Counterfeiting decreases by CCL Secure’s Director of 20% in Australia in 2017/18 R&D, Marketing and Design, Tim Berridge, said: “It’s proven that Following the introduction of Next Guardian polymer is incredibly Generation Banknotes on CCL secure. We always see counterfeit Secure’s Guardian polymer, Australian rates fall when central banks switch counterfeiting rates dropped from cotton paper to our polymer significantly in 2017/18. substrate, or when they upgrade their banknotes with the latest round 26,000 counterfeits with security feature technology like the a nominal value of AUD$1.7 Reserve Bank of Australia has.” A million were detected in Australia’s level of circulation, equating to around 16 counterfeiting remains relatively counterfeits detected per million low by international standards, genuine banknotes. These figures largely thanks to the high-security represent a 20% reduction from Guardian banknotes, as well as the previous year. the Reserve Bank of Australia’s The $50 note was the most diligence in currency management counterfeited (59% of the total), and work with law enforcement followed by the $100 note (37%). agencies. These numbers are expected to decrease further with the new $50 issued in October 2018, and the new $20 and $100 launching in Source: Reserve Bank of Australia following years. (RBA) Annual Report 2018

Looking into the crystal ball: Diaz said he was intrigued by CCL Secure’s Senior Banknote Designer created a concept for what The commemorative $50 on Guardian celebrates the Central Bank Counterfeits detected in circulation (ppm), 2005–2018 what could a future banknote the concept of time when thinking a future banknote could look like of Uruguay’s 50th anniversary look like? about the future. 35 “Previously, time had no CCL Secure’s Senior Banknote numerical value and was 30 Designer, Carlos Almenar Diaz, understood based on the sun and entered the 2018 World Banknote stars. Now, many cultures measure 25 Project (WBP) run by the time using the constraints of iconography of a female face substrate, as well as colours that Uruguay’s commemorative Guardian note International Banknote Designers seconds, minutes, hours. portraying humanity, a flower react to infrared camera. Association (IBDA). While the “I asked the question, ‘what does representing the change in seasons, For Diaz, effective banknotes highlights polymer’s durability 20 world is experiencing a fundamental time mean?’, to a number of people a wormhole and infinity symbol. of the future will be developed in transition in the use of cash, the and it was interesting to uncover The design integrates a range collaboration amongst industry To celebrate its 50th anniversary, the Central Bank of Uruguay (CBU) 15 WBP aims to encourage designers that time has a different meaning of high-tech visible security groups, as well as the public. to express their visions of how future to different people. For some, time features, including windows, “Banknotes of the future will issued a commemorative 50 pesos banknote in September 2018, its banknotes could look and function. was viewed as a human construct, colour-changing inks, intaglio be highly secure and aesthetically first note on Guardian polymer substrate. 10 while others related it to natural printing, micro-lettering, metallics, striking. To make this a reality, iaz developed a cutting-edge phenomena like seasons and life fluorescent printing and more. designers, R&D teams, printers, ne side of the Uruguayan than paper equivalents and more 5 concept that provides a glimpse cycles,” said Diaz. Machine-readable features include product engineers, managers, and 50 pesos celebrates the inclusive for people with low into how he believes a future His WBP concept represents invisible white pigment, visible customers must all continue to D O bank’s proud 50-year history vision thanks to its distinct size banknote could be designed. these ideas through the white UV printed in the polymer collaborate,” concluded Diaz. 0 by integrating prominent and tactile features. 05/06 09/10 13/14 17/18 iconography such as the national Ensuring low denominations Source: RBA Neil Sanders leads Sanders will be relocating to Australia class performance in CCL Secure’s coat of arms, a map of the last a long period of time with after successfully establishing and three global plants. country and the 50th anniversary public use is critical for the bank, Counterfeit banknotes in Australia*, 2017-2018 CCL Secure’s vision managing the UK operations in Wigton. Sanders takes over the reins from His prior experience includes senior Bernhard Imbach, who has moved into logo. as these denominations have the of innovation $5 $10 $20 $50 $100 Total roles at both printers and central banks, an advisory role as Vice Chairman of The reverse features a highest circulation in the country. including Note Printing Australia, De La CCL Secure Australia. Number 41 276 592 15,351 9,614 25,874 mural by revered Uruguayan CBU’s President, Mario Neil Sanders has been appointed Vice Rue and the Bank of England. During a successful tenure, Imbach Nominal value ($) 205 2,760 11,840 767,550 961,400 1,743,755 President and Managing Director of With a mission to advance oversaw significant improvements in artist Walter Deliotti called Bergara, said the increased Parts per million 0.2 2.0 3.5 21.6 28.2 16.4 CCL Secure, overseeing all aspects of polymer technology and grow the product quality and will continue to play ‘Construcción Portuaria’. durability of Guardian has helped the polymer banknote business globally business, Sanders is focused on an important role in ensuring CBU credits Guardian polymer continue the bank’s “strategy * Figures are preliminary and subject to upward revision because of lags in counterfeit submission to the RBA. with an emphasis on quality assurance quality, innovation, maintaining strong CCL Secure remains an industry pioneer Source: RBA and customer service. customer relations and driving world- in polymer. for a note that is more secure, of issuing low denomination up to three times more durable banknotes on polymer substrate.”

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PRODUCT

Illuminating the next level of security for

VIVID has the potential to use a diverse colour VIVID WHITE displays bright white fluorescence VIVID IR fluoresces blue under UV illumination Guardian banknotes range

CCL Secure launches a new substrate-based security feature, VIVID

IVID is a new development in substrate-based security features, set to enhance the over time thanks to Guardian’s durability and complex security features. counterfeit resilience of Guardian polymer banknotes. The durable family of VIVID “VIVID now gives central banks another asset Vfeatures illuminate under ultraviolet (UV) light, and optionally under infrared (IR) to bolster the security of their banknotes,” said Booth. camera, to reveal vibrant hidden elements. Unique colour range and vibrancy The development of VIVID by CCL Secure is Proven counterfeit reduction The incredible range and vibrancy of colours another step in the innovative advancements of CCL Secure’s Product Manager, Bradley Booth, is unique to the VIVID family; the brightness banknote security features over recent decades. said one of the principal reasons that central under UV and IR illumination is striking. Inks Large complex windows, high resolution artwork, banks continue to choose Guardian polymer can change from one colour in visible light to a and inks that create interesting colour effects, substrate is because of the proven reduction in number of fluorescent colour options under UV. give Guardian banknotes the highest level of counterfeiting rates. This effect is made possible due to the unique security against counterfeiting. “Banks around the globe like the Bank of materials science and application techniques Last year, we saw how window features Canada, Banco de Mexico and the Reserve Bank developed by CCL Secure for Guardian substrate. have evolved from simple images to intricately of Australia have all reported major reductions in “When people see VIVID under UV for the detailed portraits and line structures in the counterfeiting following the adoption of polymer. first time, they are amazed by how vibrant and Brunei Darussalam commemorative What’s more, the decreased levels are sustained intense the colour is. It’s a really exciting step $50 Guardian banknote. A stunning and clearly forward in level 2 substrate-based security VIVID WHITE is printed on the opacified which shifts from bright green in visible light to defined portrait image of His Majesty the Sultan features. surface of the banknote substrate. Invisible fluorescent blue under UV illumination on the and Yang Di-Pertuan of Brunei Darussalam is The highly detailed portrait and crown of His Bradley Booth, CCL Secure’s Product Manager “The VIVID features are visually striking, under normal light, the dots fluoresce a brilliant 30-years house note. Uniquely, it is also visible embedded into the clear window of the Guardian Majesty the Sultan and Yang Di-Pertuan of difficult to replicate and extremely durable. All white under UV light. under IR illumination. The ability to be detected substrate complemented with a high-resolution Brunei Darussalam this considerably strengthens a banknote’s VIVID IR uses a vibrant spot colour ink, under both UV and IR significantly boosts a image of the crown, made possible with CCL design quality, security and performance in the banknote’s counterfeit resilience. Secure’s CAMEO and VIGNETTE security cash cycle,” said Booth. features. Design integration and durability Similarly, the VIVID family is a significant Celebrating 30 years of Guardian polymer Level 1 security feature The features can take any shape or size, meaning progression forward on previous features. VIVID CCL Secure worked in partnership with Note they can be integrated seamlessly into the Visible to the naked eye reveals coloured ink under UV illumination with Printing Australia (NPA) to develop a concept banknote design, offering complete design extreme neon-like brightness, whereas previously banknote design showcasing two VIVID features, integration. The opportunity to create bold and it has only been possible to illuminate basic VIVID WHITE and VIVID IR. complex designs presents major challenges to Level 2 security feature colours. Coupled with the potential to also be NPA’s design recognises 30 years of Guardian would-be counterfeiters. detected under IR illumination, it is very difficult notes in circulation, and uses VIVID WHITE in Visible using a simple device Along with its extraordinary vibrancy and to replicate. the circling dots around the hand and VIVID IR sophisticated security, VIVID is incredibly In today’s increasingly mechanised cash cycle, throughout the hand’s veins. durable. VIVID features have been developed to counterfeit resilience is not the only factor in The design concept is an interplay between Level 3 security feature last the extended lifetime of Guardian polymer developing security features. It is also important technology and ecology, inspired by the banknotes. Requires a machine or forensic to provide features that can be identified by possibilities created by the launch of the very The current family of features includes VIVID, automated equipment and, with this in mind, first polymer banknote in 1988. It also points analysis to be identified VIVID WHITE and VIVID IR and demonstrates VIVID targets level 2 authentication. to the technological and creative potential for CCL Secure’s commitment to R&D and expertise future banknotes. in product development.

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FEATURE STORY The Bank of England’s polymer journey

BY LACHLAN MCDONALD

have been working with the Bank of England for just over ten years in my role as demonstrate the security advantages of Guardian polymer, in particular how a wide range of Technical Lead for the bank at CCL Secure, but this is a relatively short timeframe for current and new security feature technology I an institution that was established in the 1600s, issued banknotes since 1695 and has could be integrated with traditional print such as offset and Intaglio into a finished polymer been on its current Threadneedle Street site in London for some 285 years. banknote. Our team designed a more advanced Throughout my experience, I have been banknote, with large transparent areas, multiple impressed with what is a modern and dynamic colour-shifting inks, lenses and diffractive central bank, open to continuous improvement CCL Secure’s next stage of work elements in the windows. and the use of modern technology to maintain was to demonstrate the security These security features are easy for the monetary and financial stability. I have also seen public to identify, yet incredibly difficult for what is not so apparent when observing from the advantages of Guardian polymer. a counterfeiter to replicate. It was essential outside: the research, time and effort that goes to the Bank of England that any new security into implementing a project such as the new feature technology not only be secure, but also polymer series. It is this commitment which is so futureproof its currency. A few years before the easy to explain to the public and intuitive to critical for achieving a great outcome for issue of the polymer series in Canada, the Bank authenticate. all stakeholders. of England started its own extensive analysis With proven ability to design secure into the prospect of using Guardian polymer banknotes, we commenced with two projects The journey begins substrate. in tandem; producing substrate for a public By 2007, the early adopters, many on full At this time in 2009, CCL Secure was first consultation program and designing a new series of Guardian polymer banknotes such as tasked with manufacturing a prototype £5 circulating £5 polymer note. Romania, Vietnam, Australia and New Zealand, note design based around the 2007 Series F could all demonstrate success in terms of £20 banknote. We designed a “fiver” with the Introducing polymer to the public decreased counterfeiting rates, long-term cost same look and feel as the £20 and £50 notes. As part of the public consultation program, savings, lower environmental impact, efficient The success of the prototype £5 confirmed the CCL Secure produced a substrate that could be manual and machine cash handling and good superior note life of polymer in laboratory tests, printed with similar plates and foil as the existing public acceptance. as well as its flexibility in terms of design and paper £5 and £10 notes, making minor changes In 2011 the launch of Bank of Canada’s ability to incorporate complex security features. to print on polymer to allow for the window. polymer series demonstrated how Guardian The bank was experiencing constant threats A small volume of polymer substrate was substrate was better equipped to integrate from counterfeiting, particularly on the £20 manufactured, which was based on the same new advanced security features, helping to note. CCL Secure’s next stage of work was to layout and sheet size as the existing “fiver”

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In early 2015, we began putting plans in place Ongoing benefit scale of the entire banking operation is greatly for the £5 and £10 ZPRs. An integral part of this With such large volumes of Guardian polymer reduced. process was the foil application, and for this we banknotes with foils being produced, efficient The most pleasing aspect of our work is to were able to draw on the wealth of experience manufacturing was essential to meet demands. see the British public enjoying the benefits of CCL Secure had gained from manufacturing CCL Secure’s technical support division, more secure banknotes, free from those tea, foiled substrate for the Bank of Canada. We PolyTeQ, worked with the Bank of England’s coffee and ketchup stains brought about by an were also able to supply training to the printer printer in Debden and other partners to English breakfast. CCL Secure has supported who had no prior experience of manufacturing combine 30 years’ experience of manufacturing The Old Lady of Threadneedle Street to live up polymer banknotes. polymer banknotes, with new foils and to its reputation of being as “safe as the Bank of printing equipment, to achieve best-in-class England”. manufacturing. In addition, CCL Secure has helped establish CCL Secure’s technical support a recycling program in which all waste material division, PolyTeQ, worked with the from the film, substrate, banknote production and unfit notes are collected and recycled, then Bank of England’s printer in Debden used to create other long-life polypropylene and other partners to combine 30 plastic products. With the fiver and tenner in circulation, the years’ experience of manufacturing bank is seeing counterfeit levels at record lows, polymer banknotes, with new foils as well as high public and industry support to convert the £20 and £50 notes to polymer. and printing equipment, to achieve The feedback from other countries issuing best-in-class manufacturing. full series on polymer similarly indicates that printing became more efficient, as the state print works were able to optimise their process for one substrate. They also reported lower By running the design, ZPRs and mass counterfeiting rates and high levels of public production in parallel for two denominations we acceptance. were able to meet the long-term plans of issuing Of equal significance, are the cost savings the new £5 note in September 2016 and then the that CCL Secure provided the Bank of England £10 note 12 months later. In 2020, the bank will from the downstream cash cycle efficiencies. issue the new £20 note and has future plans to With fewer banknotes being manufactured, convert the £50 note to polymer, completing the counted, authenticated and transported around

BANK OF ENGLAND FLICKR ENGLAND OF BANK full series on polymer substrate. the country thanks to enhanced durability, the

and “tenner”, but on Guardian substrate and impact and more efficient cash processing based • To maintain the note’s traditional design Focus groups, surveys and displays featuring a window with the image of Britannia, on over three years of research. elements but with brighter colours to make replacing the watermark. The Bank of England Interestingly, one of the key drivers for issuing the blue more recognisable and upgrade the in the bank’s museum generated printed on this substrate in early 2013 and the £5 note before the £20 was to change the size security elements; conducted a public consultation program in mid- of the new series. The reduction in size of all notes • To feature the Bank of England and Queen over 18,000 interactions, revealing to late-2013. in the new series by 15% would make them more Elizabeth II on the front of the note, with The consultation program was a significant user friendly and deliver further cost savings. Elizabeth clock tower and St. Edward’s Crown that 87% of the public was in favour investment in time and effort, with public events designed into the foil. In the substrate, we held all over England introducing the polymer used a multi-tonal image portrait of the of the new notes. £5 and £10 versions and inviting feedback. Not CCL Secure has helped establish Queen looking into the note and supporting in isolation, this was done as part of a wider the Intaglio portrait which is also looking in on program of focus groups, surveys and displays in a recycling program in which the note. This helps draw attention towards Surveys were also run by most the bank’s museum. all waste material from the film, the window and tower which houses Big Ben; The program generated over 18,000 and major newspapers and produced interactions, revealing that 87% of the public was substrate, banknote production • To depict Nobel Prize Winner and former in favour of the new notes. Surveys were also run and unfit notes are collected and British Prime Minister, Winston Churchill. similar results, with around 80% in by most major newspapers and produced similar We included images of the Nobel Medal, his results, with around 80% in favour of the new recycled, then used to create other books, the Blenheim Palace maze, and the favour of the new polymer versions. polymer versions. long-life polypropylene plastic Palace of Westminster. For the image of the This level of public engagement and outreach Elizabeth clock tower, we ensured that the was unprecedented within the banknote industry. products. time displayed was 3pm as this was the time The bank also reached out to other users of Churchill addressed parliament and made his 87% banknotes in the commercial and retail sectors to rousing “all I have to offer is blood, toil, tears gather their input on the polymer versions. The new “fiver” and sweat” speech. The positive feedback to the new notes by the Towards the end of 2012, the bank commenced public, provided further confidence ahead of the the second part of the project; designing a The final stages bank’s announcement that the £5 note would circulating £5 polymer note, the first in a new After six months of working closely with the be issued on polymer in 2016. The bank also polymer series. bank, we finalised the design and started working published a series of fact sheets demonstrating The design themes for the note were agreed more attentively with other key stakeholders to the benefits in terms of cost savings, a reduced between the bank and CCL Secure, which were plan for the first Zero Production Run (ZPR) and threat of counterfeiting, lower environmental essentially: supporting trials which would run until mid-2014.

10 11 SPECIMEN: ISSUE 9 OPINION SPECIMEN: ISSUE 9

OPINION These apprehensions are shared by central perspective on payment trends. A central bank’s securing support in a new series from all users. bank policy, planning and design teams. The security concerns around embracing user- Stakeholders that are also advocates of a central major BEMs have global footprints and operate centred design need to be mitigated to ensure a bank can help alleviate risk from the initial across diverse sectors, geographies, cultures and robust banknote is produced. issuance process by precipitating wider public circulation environments. This broad knowledge acceptance. Issuers can identify who could can help inform currency departments early in be trusted advocates early in the process and Collaborating with their planning. Authentic collaboration through encourage them to voice their support publicly. In CCL Secure’s experience, successful Collaboration with stakeholders requires collaboration between central banks and regular and transparent investment in time and effort from a central suppliers enable user-centred design principles communication is a prerequisite for bank. However, user-centred design principles banks and BEMs in to be adopted across key stakeholder groups. with shared risks and accountabilities, give a Invariably there are trade-offs on “need to securing support in a new series currency project the greatest opportunity to know” for protecting the integrity of early design from all users. succeed. the cash cycle concepts. While a successful issuance can take many Industry equipment manufacturers feature forms, user satisfaction is a key place to start. prominently in design and security feature Securing support Why collaboration is key to successfully issuing a new integration. The raison d’être of any product or service BEMs are driving automation across the provider is to achieve customer satisfaction, and banknote series cash cycle and leading change in the payments a central bank is no different. Collaboration establishes a model of shared landscape. They are a very important stakeholder Authentic collaboration through regular and objectives and risks, with expectations on and help futureproof designs by providing a transparent communication is a prerequisite for accountability and innovation.

BY BRIAN HAYR

anaging early engagement with external stakeholders, is one of the challenges central banks face when designing and issuing a new series. The currency industry M has multiple suppliers for design, substrate, security features and post-issuance processing and authentication. To maximise the opportunity this presents, central banks are increasingly using multi-vendor procurement models. Competitors need to work together towards a shared objective.

The complex cash cycle risks, with expectations on accountability and Why would central banks and issuing authorities innovation. want to collaborate? In a dynamic environment like the cash The cash cycle from “cradle to grave” is cycle, forecasting payment trends is challenging increasingly complex and requires multi- when planning a series upgrade and the related disciplinary skill sets across many policy and infrastructure investment. Cash is just one technical functions. No single organisation has part of the “payments universe” that central the breadth or depth of knowledge across the banks consider when designing a new series cash cycle to cover all of them. and its impact on the country’s cash cycle. Policy, issuance, distribution models and capital expenditure also come into consideration.

Cash is just one part of the User experience “payments universe” that central What will users want in the future? What technology will enable more efficient banks consider when designing a cash processing and authentication? new series. What is in the public’s interest? Such deliberations are driving the need to embed “user experience” into the design To ensure the public is onside from the start, process. central banks often publicly share their goals “Users” can be broadly defined as issuing and objectives for a proposed new issuance. An and processing staff, cash in transit providers, initial project team set up by the central bank can commercial banks, retailers, Banknote quickly absorb all internal stakeholders, external Equipment Manufacturers (BEMs) and the suppliers and users over the life cycle. They will note-using public. All these users will have a view all bring unique perspectives and innovations to on what is required to prepare a series for the the table. future. It is a widely held belief that a team outcome BEMs in particular are facing challenges with is better than an individual one, particularly multiple payment channels, where to invest, how in relation to a complex project. Collaboration to optimise user experience and how to keep establishes a model of shared objectives and confidence in cash as a payment method.

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CASE STUDY distinguish between different denominations. Proactive engagement with suppliers At 59% of the total number, the $50 was As with the current $5 and $10 banknotes, Despite the successful launch of the $5 and $10 comfortably the most counterfeited note, which the new $50 will also be recycled at the end of notes, McDowell credits the RBA for continuing has boosted expectations that counterfeit levels their useful life. its proactive approach with the $50 note, in can be reduced further in 2019 after the release “NPA recycles 100% of its spoiled material particular the emphasis on engagement with of the new $50. and the RBA destroys unfit circulated notes suppliers. The blind and vision impaired feature has in its recently opened world-leading National “It starts with understanding what the attracted significant media attention, on the back Banknote Site. The site is located in the RBA’s customer is aiming for and what the new of blind Sydney teenager Connor McLeod’s widely unique banknote precinct in Craigieburn, about product will look like. The RBA was proactive covered campaign several years ago to introduce Australia’s 20 kilometres north of the Melbourne CBD” in driving the project and put a lot of effort into a feature that would enable him to determine the McDowell explained. engaging with NPA and its key suppliers. value of the banknote he was holding. “By using an independent design studio, it A less obvious benefit, when compared was clear the RBA was looking for something against other more easily discernible positives, unique. CCL Secure was an enthusiastic and is the invaluable experience gained by all those CCL Secure was an enthusiastic important voice in helping define the product involved in the project. new $50 note and important voice in helping specification, understanding the functional This is a particularly important point for requirements, and managing and responding to McDowell, he added: “Not only are we grateful define the product specification, customer expectations.” for the challenge, but the intricate technical Achieving success through collaboration and dedication understanding the functional development and practical experience that NPA Weight of expectation gained as a result puts us in very good stead requirements, and managing Thanks to the release of the new $5 and $10 for what we can deliver with confidence to other and responding to customer notes, Australia saw a 20% reduction in central banks. counterfeiting levels in 2017/2018, which equates “The project has undoubtedly been of great expectations. to around 26,000 counterfeits in circulation with benefit to every contributor and the real highlight a nominal value of AUD$1.7 million. was the collaborative spirit embraced by all.”

nytime you launch a new banknote, collaboration is imperative to achieving success, but when you are tasked with releasing one of the world’s most complex A banknote designs into circulation, you simply cannot expect to achieve success without it.

Malcolm McDowell, CEO of Note Printing that supported a large amount of testing and Australia (NPA), saw first-hand the value of evaluation. effective collaboration when the Reserve Bank of “We ran numerous proofs and assessed Australia (RBA) launched its new Guardian $50 the results. There was a lot of collaboration in banknote into general circulation in October the analysis and insights we gained with CCL last year. Secure, which was then tested by repeat trials.” The $50 is the most widely circulated banknote in Australia, accounting for nearly half of the total value of banknotes in use, and it is the denomination primarily used in Automated It starts with understanding what Teller Machines (ATMs). the customer is aiming for and To increase resilience against counterfeiting, this Next Generation Banknote was designed what the new product will look like. with an innovative top-to-bottom clear window The RBA was proactive in driving that contains a number of dynamic security elements, including a reversing number and the project and put a lot of effort flying bird, as well as microprint and a patch with into engaging with NPA and its a rolling colour effect. key suppliers. Pushing the boundaries But delivering such an innovative and secure banknote came with its challenges according to The new $50 was the third denomination McDowell. in the new series of banknotes, following the “The Next Generation Banknote was a highly release of the $5 and $10 in previous years. challenging project as it represented a step It retained the basic design elements from change in complexity and fidelity which pushed the $5 and $10 and, to celebrate Australia’s our people, suppliers and machines to the social diversity, it features portraits of Aboriginal limit,” he said. writer and inventor, David Unaipon, and “The complexity of the design features Australia’s first female member of parliament, of the top-to-bottom window required a full Edith Cowan. understanding of supplier capability. It also embedded a ‘tactile’ feature with four “Our approach was systematic and highly raised bumps on each of the long edges of the detailed, composed of a number of projects banknote to help the vision-impaired community

14 15 SPARK WINDOW TACTILE FEATURE EMBOSS WINDOW In the shape of a swan, the secondary window Raised dots assist the visually impaired White vignette complements the embossing, allows the large oval SPARK feature printed community to identify different adding further complexity to the note. The fine on the reverse to take on an image of a swan denominations, which are more pronounced embossed lines in the secondary window are through the window on the front of the note. and durable on polymer. more pronounced on polymer.

POSITIVE SHADOW IMAGE EDGE TO EDGE WINDOW Next-generation banknote Visible when viewed in transmission, an image A first-of-its-kind feature extending the window of the swan is printed as a positive shadow from top to bottom of the banknote, featuring in coloured gravure ink, creating a reflection a mix of colour and white vignettes, as well of the swan under the water line. Additional as a surface treatment that facilitates the design wattles either side of the main window are also application of the foil stripe. visible in transmission. The new Australian $50 on Guardian polymer incorporates advanced features to upgrade the security of the country’s most counterfeited note. SPECIMEN: ISSUE 9 PRODUCT SPECIMEN: ISSUE 9

PRODUCT Spartan notes are printed and numbered in a single production process

New Spartan banknote meets the needs of low denominations

A banknote product uniquely engineered for the “coin/note boundary”

CL Secure’s new product, Spartan, is a cost-effective and extremely durable durability and circulation performance. It • Design (from concept to banknote artwork); At the end of its extended note life, Spartan polymer banknote. The innovative banknote provides a solution for making also means Spartan banknotes do not have • Origination (the creation of production tools is 100% recyclable, offering an environmentally C low denomination notes efficient for central banks to produce and manage transparent windows. and equipment specific to the particular friendly way to remove unfit banknotes from the The next step in building a Spartan banknote banknote’s design); cash cycle. in the cash cycle. is printing with a new range of inks. These inks • Production (including the film, finished Spartan banknotes can be destroyed have been developed and optimised to work with banknote and quality assurance); and and recycled using the same processes as Economies are constantly changing, which the polymer core like a lock and key. • Finishing (finished and packaged in the same Guardian banknotes. The unfit notes are directly impacts the currency needs of a The Spartan inks bind to the polymer core to format as other banknotes). shredded or granulated using existing banknote country. Denominational drift puts stress on create a combination that is extremely abrasion- By using cutting-edge design and origination, destruction equipment. The waste is then sent low denomination notes to move to coins, yet and crumple-resistant, as well as delivering CCL Secure achieves banknote-like print quality to commercial recyclers where it is converted to coins can have high costs relating to production vibrant colour. Multiple protective layers are then using this alternative method. The single print pellets and given a new life. and management once issued. They present applied, which also provides the unique paper process is highly efficient and controlled, making Recycled notes are used for a range of significant problems with public acceptance, as like-feel to Spartan notes. Spartan banknotes very economical. applications such as furniture, building materials well as “hoarding” where they are taken out of and playground equipment. the cash cycle and stored or collected in people’s How does Spartan perform? homes. Functionally, Spartan banknotes meet Why choose Spartan? We know that Guardian routinely CCL Secure has responded to these common the security and usage needs for a low Spartan is a remarkably durable and cost- challenges facing central banks by creating a new delivers four times the performance denomination. It looks, feels and performs like effective polymer banknote ideal for low concept for what a low denomination banknote other notes, while lasting much longer in the denominations, as a viable alternative for of paper in circulation based on should be. cash cycle. coins and where central banks face negative Spartan was born out of unique materials its use throughout the world. Now Berridge said laboratory testing has seigniorage. science and a reimagining of the banknote demonstrated Spartan’s toughness. Specifically, it is a solution to common with Spartan, we are targeting eight production process. It is ideal for low “Our tests have shown that Spartan performs problems at the coin/note boundary including: denominations under pressure to become coins, Spartan is an extremely durable and cost-effective polymer banknote times the durability of paper in the at least twice as well as Guardian, which is • Coins that have low public acceptance; or alternatively to replace coins with poor public the current benchmark for the best banknote • Coins with material costs greater than their cash cycle. acceptance. durability in circulation. face value; Manufactured in a single production process, “We know that Guardian routinely delivers • Low denominations that are stuck in Spartan offers multiple benefits beyond just four times the performance of paper in circulation and struggle to return to the exceptional durability. Spartan banknotes are denominations that experience heavy public use. the foundation of Spartan banknotes. Innovia Production process circulation based on its use throughout the central bank; manufactured with cash cycle-ready functionality, “Spartan was launched in 2018, which was 30 is the exclusive manufacturer of Clarity™C, the The production process of Spartan banknotes world. Now with Spartan, we are targeting eight • Storage or “hoarding” by the public, taking can be 100% recycled when unfit, and help instil years after the first polymer banknote was issued. polymer film used for Guardian substrate. is just as important to its performance as the times the durability of paper in the cash cycle. coins out of the cash cycle; greater public confidence in cash. Like the way polymer substrate revolutionised the However the polymer film used for Spartan materials science of the film and inks. Spartan “This kind of longevity presents real potential • Banknotes in circulation costing close to or CCL Secure’s Director of R&D, Marketing and industry back then, CCL Secure believes Spartan is very different to Clarity™C. It has a range of banknotes are not produced like conventional for both central banks and the cash-using public less than their face value; and Design, Tim Berridge, said Spartan provides an has the potential to set a new precedent for low unique physical and functional properties that banknotes through offset, intaglio and to benefit,” he said. • Banknotes under pressure to become coins. innovative solution for central banks. denominations today,” Berridge said. have been developed specifically to meet the letterpress processes. Instead, Spartan notes are A range of Level 1 and Level 2 security “I see Spartan playing a key role in the future “We started from ground zero and needs of low denomination banknotes. printed and numbered in one single production features are available for Spartan, including: of banknotes,” said Berridge. reconsidered the purpose and requirements of a How is Spartan unique? The most obvious difference is the Spartan process. • Level 1 (visible to the naked eye) – metallic “With the ever-changing payment habits of low denomination banknote to develop a product Unlike other banknotes, Spartan has been film is fully opaque, whereas Clarity™C is This proprietary process occurs within CCL inks, fine line, high res security print designs, people around the world, we need to provide the that’s truly fit-for-purpose. engineered for the “coin/note boundary”. transparent. Secure’s controlled environment, giving Spartan and positive and negative microtext; and public with cash that is practical and enjoyable to “Our R&D team has worked hard to create CCL Secure and its sister company, Innovia, Using an opaque film for a banknote’s core its exceptional durability and cost effectiveness. • Level 2 (visible using a simple device) – use. Issuing robust and functional banknotes like a product with extreme durability to suit low have developed a new polymer film forming provides the first step to delivering improved The production of Spartan involves: fluorescence, magnetics and infrared. Spartan will facilitate that,” he concluded.

18 19 BANKNOTES SPECIMEN: ISSUE 9 BANKNOTES SPECIMEN: ISSUE 9

The latest Guardian polymer

banknotes Left: Romania

The new commemorative 100 Romanian lei on Guardian substrate was issued to celebrate Throughout 2018, central banks from around the world issued 100 years since the ‘Great Union’ a number of new banknotes on Guardian polymer substrate. of the country.

Above: Australia

The Reserve Bank of Australia launched its new $50 Guardian banknote with enhanced security features, as part of the Next Generation Banknote series.

Right: Canada

The new vertical $10 Guardian Below: Uruguay note featuring civil rights activist, Viola Desmond, marked the first The first banknote on Guardian time a Canadian woman was polymer substrate issued by portrayed on a regularly circulating the Central Bank of Uruguay, Bank of Canada note. commemorated the 50th anniversary of the central bank.

Above: Papua New Guinea Above and above right: Mauritania The Bank of Papua New Guinea launched its new 2, 50 and 100 As part of the implementation kina notes, completing the new of the bank’s new strategy, the series of Guardian polymer Central Bank of Mauritania issued banknotes with upgraded security a new full series of Guardian and changes in size. polymer banknotes.

20 21 SPECIMEN: ISSUE 9 CASE STUDY SPECIMEN: ISSUE 9

CASE STUDY Performance of polymer notes in New Zealand 20 years of Customer preferences Average life span of notes Guardian polymer Paper Polymer Paper Polymer 5 in New Zealand 4 3 74% 90% Two decades on from issuing its first Guardian polymer 2 banknote, the Reserve Bank of New Zealand is able to manage 1

74% of the public 90% of retailers preferred Ratio 0 its cash cycle with improved efficiency and effectiveness preferred or strongly or strongly preferred preferred polymer notes polymer notes $5 / $10 $20 / $50 / $100

BY BRIAN LANG Counterfeits in notes (ppm), 2001–2009 ATM fault call-outs

Durability also improved significantly. After t used to be the case that central banks maintained a pivotal role in the cash 16 Paper Polymer the first 10 years in circulation, the average life distribution cycle, as it was considered the ‘safest’ way to ensure the integrity of of the two lowest denominations was 4.6 and 12 I notes on issue. 4.3 times the life of the former paper notes. 100% Outside of the central bank, suppliers and 10 Up until the year 2000, the Reserve Bank of New It was the bank’s belief that if these the public similarly reported positive feedback. 80% Zealand (RBNZ) was at the centre of this cycle expectations came to fruition, then public A major ATM servicing company reported 8 for the country, ensuring both fit and unfit notes acceptance and confidence in the currency a decline of 50% in fault call-outs with the 60% were redistributed from cash positive to cash would be assured. new polymer notes. In a public opinion survey 6 negative banks. undertaken by an independent polling company 40% In the late 1990’s, however, the priority of in November 2000, (18 months after first 4 the RBNZ changed to ‘improved efficiency and introducing polymer noters), 74% of the public effectiveness’ in the cash cycle post-issuance, and 90% of retailers said they preferred or 2 20% by taking a forward-thinking approach. It strongly preferred polymer notes over paper. 0 looked at a longer-term vision that championed Due to the relatively short life of low-value 0 innovation and challenged the bank’s modus paper notes and the potential concerns over the 2001 2003 2005 2007 2009 Paper Polymer operandi. level of counterfeiting, central banks using paper notes are often significantly involved in the cash cycle, which is fundamentally expensive. The plan was to use this change The introduction of more durable and secure polymer banknotes in New Zealand enabled the In 2011, more than a decade on from the new “Brighter Money” series. as a catalyst to downsize the RBNZ to become less involved in areas such introduction of the first polymer notes, a project A public awareness and education campaign The currency function expenses bank’s involvement in the cash as issuance, quality assurance, security and was launched to upgrade New Zealand’s accompanied each release, using print, transportation. In 2000, the bank closed two of banknotes to increase the level of security. declined to around 16% [from 42%] broadcast and online media channels. They distribution cycle. its three branches and became predominately Since 1999, there had been considerable informed New Zealanders about the release of of total bank expenditure. a wholesale supplier, while still retaining advances in banknote technology and, in order the Series 7 Brighter Money banknotes and the responsibility for destruction. to stay ahead of counterfeiters, it was deemed overt security features incorporated in the note During this time, the RBNZ conducted an A relatively simple and inexpensive software essential to review and upgrade the security of designs. in-depth technical evaluation on the use of upgrade to the RBNZ’s processing machines the notes. The RBNZ chose to retain Guardian it can detect machine-readable security features The excellence in design and security feature polymer substrate for banknotes, including an enabled them to easily identify paper notes for polymer substrate for the new series and ran a and process the notes. integration received global recognition in 2015 analysis of polymer’s performance in Australia. destruction and to band fit polymer notes ready design and print tender process. The banknote-handling industry was when the $5 polymer note was named Bank The decision was made to introduce Guardian for re-issue. The key design goals were to refresh the look consulted during the design process to ensure Note of the Year by the International Bank Note polymer banknotes, which were issued from Cost savings were significant. Prior to the of the notes while integrating the next generation it was adequately prepared in advance of the Society (IBNS). May 1999. The plan was to use this change as a The first $5 note issued on polymer introduction of polymer banknotes in New of security features. release of each denomination. The consultation Now in 2019, the 20th anniversary of catalyst to downsize the bank’s involvement in Following the introduction of Guardian Zealand and the downsizing of the RBNZ’s cash It was crucial that the banknotes remained process included industry stakeholder meetings, Guardian polymer in New Zealand, it is clear the cash distribution cycle. polymer notes, the RBNZ monitored banknote operations, the proportion of total currency recognisable as New Zealand currency, and that supporting and overseeing extensive equipment that polymer banknotes have made significant The key expectations for Guardian polymer performance closely. function expenses averaged at around 42% they better reflected the country’s unique heritage. calibration, as well as testing and deployment improvements in efficiency and effectiveness for banknotes were that they would: It found the number of notes in circulation of total bank expenditure. In the 2002/03 Another objective was to facilitate the growing activities. the RBNZ. • Better retain their structure and cleanliness; detected as counterfeits fell from around 16 financial year, when the majority of notes on use of equipment that automatically processes The $5 and $10 banknotes were issued Brian Lang is a Central Bank Advisor for • Reduce the risk of counterfeits; notes per million annually during the 1990s, to issue were polymer, the currency function banknotes, such as self-service checkouts in in October 2015, over 16 years after the first CCL Secure and worked for the Reserve Bank of • Perform well in ATMs; and an average of less than one note per million expenses declined to around 16% of total bank supermarkets and ATMs. With a new note design issuance in 1999, followed by the $20, $50 and New Zealand for 44 years in a number of roles, • Improve circulation performance. annually from 2001 to 2009. expenditure. comes the requirement to adapt equipment so $100 banknotes in May 2016, completing the including the Head of Currency for 17 years.

22 23 SPECIMEN: ISSUE 9 ANALYSIS SPECIMEN: ISSUE 9

ANALYSIS How do we measure the life span of a note?

Through the technical services and advisory division, PolyTeQ, CCL Secure uses two methodologies to estimate the life span of banknotes.

Method 1: Weibull distribution Using data to better The first is a monthly time series and a probability of failure increases with age, as cash cycle and for the introduction of a probability distribution. can be demonstrated with the graphs below. new series, and was adopted by the Bank of This method assumes that banknotes Each month, a certain quantity of new Canada. deteriorate following the Weibull distribution, banknotes is issued. The quantity of fit While it is a good model, any sudden manage the cash cycle an established distribution principle banknotes that remain at any month will be change of state, such as an accelerated commonly used in engineering disciplines. the sum of the surviving notes. withdrawal of a banknote series, will alter the In all aspects of life, we tend to experience “information The Weibull distribution indicates the This method is robust in a well-managed results. overload” from multiple sources of news and information. Analysing data from central banks, as well as thorough banknote Figure 1: The blue line provides Figure 3: This graph highlights the impact of four issues of new notes of different analyses, is fundamental to informed decision making. an example of the Weibull Probability volumes; 10 million, 7 million, 6 million and 4 million notes.(Source: PolyteQ data). Density Function.

BY LACHLAN MCDONALD Sum of the surviving 0.04 22 notes from previous 20 issues 0.03 18 0.03 16 1st Issue uppliers have a responsibility to understand the performance of products in order to 14 2nd Issue 0.02 12 effectively advise customers; informing central banks on a new currency product is 10 3rd Issue 0.02 no different. Investing in a new currency in a pivotal decision made by central banks 8 4rd Issue S 0.01 6 Circulation 4 and CCL Secure has a mandate to provide guidance based on facts. 0.01 2 0.00 0

In the banknote industry, the areas which could 0 10 20 30 40 50 60 70 80 0 10 20 30 40 50 60 70 80 benefit from more research include: • Specifications for substrate and finished banknotes; • Studies on what the public really want from a Figure 2: The green line demonstrates Figure 4: There is a significant difference between the note lives of paper banknote and how they want to use cash; a note’s decline over time. and polymer banknotes. (Source: PolyteQ data). • Ways to encourage and grow the use of cash as a means of payment; 12 30 • The true cost of cash; and Paper note life • How long a banknote should circulate before 10 25 (Years) being deemed unfit and destroyed. 8 20 Polymer note life It is the last point I will explore further, as (Years) it is important to understand the factors that 6 15 determine if a note is fit or unfit. 10 A banknote becomes unfit for purpose 4 when large holes or tears emerge, there is 2 5 significant ink wear, security features cannot be 0 0 authenticated or the note cannot be mechanically processed. 0 10 20 30 40 50 60 70 80 $5 $10 $20 $50 $100 There are a number of factors which may impact a banknote’s life span: • The production and printing processes; • Denomination and denomination mixture; The Weibull distribution methodology • Design and location of security features; estimates how long the notes have been • The climate; in circulation, but it does not provide • How it is handled; information about the quality of the notes in • The quantity of banknotes in circulation; and circulation. • The popularity of alternative means of It can therefore over or underestimate payment. note life and, due to the assumption of a steady state, it is not always a real Notes examined in PolyTeQ’s evaluations in New Zealand and Papua New Guinea are defined as Fit assessment of what is occurring in (top), Borderline (centre) and Unfit (bottom) circulation.

24 25 ANALYSIS SPECIMEN: ISSUE 9 ANALYSIS SPECIMEN: ISSUE 9

Method 2: Deterioration index How do we measure the life span of a note?

The second method is an evaluation of a the weighted sum of the note ratings. it provides information about the banknote PolyTeQ has conducted 205 of these studies banknote substrate, denomination structure, maintained high note quality standards sample of banknotes in circulation and The monthly deterioration rate is then quality at the moment of collection of over 14 years, providing a considerable banknote design, climate, local practices, regardless of climate and denomination. calculating the deterioration index. calculated, along with the time it will take to the sample and pinpoints the causes of amount of data that can be analysed to economic activity and popularity of different Evidently, the most important factor impacting This requires: reach the fit/unfit boundary. deterioration. It can be applied to any substrate understand the reasons for polymer banknotes payment forms. the life span of polymer banknotes is bank • A random sample of 400 banknotes from Finally, we obtain the distribution age and and repeated in consideration of the needs of becoming unfit. Trends which emerge include: policy. circulation; average life span of the banknotes. a central bank. On the graphs, the level of ink wear is rated • Banknote denomination does not have a We can see that polymer is helping • Evaluation of security features, ink wear and The data fed into the deterioration model is New Zealand is an example of the from one to nine, with one being perfect, five direct correlation to ink wear; countries to maintain a standard of notes in structural damage (≈ 14 variables); more representative than the first model, as it effectiveness of this method. being “borderline” and nine representing unfit • Climate does not have a correlation to ink circulation above or around the fit level. It • The issue date of all banknotes in the identifies anomalies in the notes in circulation The Reserve Bank of New Zealand (RBNZ) for public use. wear; and allows a greater time window for notes to be sample; and making it more consistent across cash cycles. issued a completely new series on polymer Using this data, we can examine the • Countries with significant control withdrawn from circulation. • A deterioration index that is constructed as The advantages of this method are that in 1999. different factors of the cash cycle such as and management of the cash cycle From this further analysis, the notes are

Figures 5 and 6: The new series had a drastic effect on the life span Figure 8: Ink wear levels of polymer regions: Africa, Asia Pacific and Latin Papua New Guinea 2 Kina (see page 24) are of New Zealand’s banknotes. (Source: PolyteQ data). banknotes in 19 countries, based on 45 America. The red line represents the average used as a reference image for each ink wear different studies across three different ink wear in each region. The images of a level. (Source: PolyTeQ data).

Paper (1998) Polymer (2009) Polymer (2011) $5 $10 $20 Africa Asia Pacific Latin America

120% 25% 75 75 75 Fit Unfit Fit Unfit Fit Unfit 100% 20% 60 60 60

80% 15% 45 45 45 60% 10% 30 30 30 40%

5% 15 15 15 20%

0% 0% 0 0 0 $5 $10 $20 Unfit Notes Unfit Notes L1 L2 L3 L4 L5 L6 L7 L8 L9 L1 L2 L3 L4 L5 L6 L7 L8 L9 L1 L2 L3 L4 L5 L6 L7 L8 L9 (ink wear) destroyed (ink wear) destroyed 2009* 2009 2014 2011 Figure 7: Ink wear levels of New Zealand banknotes in 2014 suggest Figure 9: The average ink wear in each region. (Source:: PolyTeQ Figure 10: Polymer note life span compared to high note quality. (Source: PolyTeQ data) data) paper. (Source: Bank of England).

$5 $10 $20 $50 $100 Looking at the annual destruction rates; the Africa Asia Pacific Latin America Low denominations 3.8 x life of paper 60% $5 on paper went from nearly 70% of notes 35 (most frequently handled) in circulation destroyed per year to 15% with 50% Middle denominations polymer. On the $10 it dropped from 102% to 28 4.5 x life of paper 23% and on the $20 it dropped over 75%. The 40% increased longevity helped drive significant High denominations 21 6 x life of paper 30% cost savings. (least frequently handled) 14 20%

10% 7

0% 0 1 2 3 4 5 6 7 8 9 L1 L2 L3 L4 L5 L6 L7 L8 L9

Identifying trends to improve note quality denominations than the destruction rates. approach to extract unfit notes. lasting between three- to five-times longer in more control of its notes in circulation, as the paper notes over their full life cycle. An interesting point to note from the New For all denominations, the note quality was The commercial banks were given every region and this ratio is not affected if the there is a bigger time window to withdraw The life span analyses published in Zealand sample evaluation was the level of classified between 1-4; the notes were fit with same-day credit for unfit notes detected by paper notes are coated or varnished. notes as they approach the unfit stage. Australia, England and Canada, along with the unfit notes in circulation and the destruction only a small tail end in the unfit area. processing machines, and the RBNZ paid for These results are consistent with other The bank’s processing centres will see the capacity for Guardian polymer banknotes to be figures. In 2009, the $5 unfit rates were If this data is inputted into the deterioration the transportation of those notes back to the studies conducted by central banks. For same note more frequently as it approaches recycled, provide thorough evidence to suggest higher than the destruction rate (25% versus index, knowing the issue dates, it demonstrates central bank for destruction. example, the Bank of England’s own analysis and passes the unfit boundary, allowing the that polymer banknotes can reduce the impact 15%), whereas for the $10 it was the same for note life improvement is over five-times that of The RBNZ also arranged regular $5 note showed around four-times greater note life for bank to remove the note from circulation. on the environment from banknotes. both at around 20%. paper. This is reflected in the destruction rates swaps with large retailers and supermarkets. lower denominations, four- to five-times for The data also suggests polymer banknotes This trend points to an issue in removing and lower operating costs reported by the bank. In the 2014 note performance analysis, middle denominations and six-times for higher Lowering a bank’s carbon footprint provide central banks with the opportunity to the $5 note from circulation. How did the RBNZ achieve this? the number of $5 notes with ink damage was denominations. The Carbon Trust recently certified that the more efficiently manage the cash cycle, leading However, in 2014, the unfit level of In 2009, acting on this analysis and public significantly reduced from 25% of the sample Research from the Bank of Canada new £5 and £10 notes issued by the Bank of to long-term cost savings and ensuring higher notes in circulation was much lower for all commentary, the RBNZ took a proactive to 12.5%. demonstrates it is easier for a bank to gain England have a lower carbon footprint than quality notes are in circulation for public use.

26 27 BANKNOTES SPECIMEN: ISSUE 9 BANKNOTES SPECIMEN: ISSUE 9

30 innovations in 30 years of Guardian polymer

The year 2018 marked three decades of Guardian’s proven market performance, with the first polymer banknote issued in Australia in 1988.

Here are 30 innovations over this time that have contributed to Guardian’s enhanced security, durability and cleanliness, and reduced carbon footprint.

1 5 10 13 17 22 25 28

1988 The first polymer banknote 1998 The first complete recycling 2001 The Solomon Islands 2004 Malaysian 50 and 100 2012 The Charles Darwin 2015 The Nicaraguan 200 2017 Latitude wins Excellence in 2017 The Bank of England is is launched in Australia, with the program of Guardian banknotes 2 dollar features a part shadow ringgit notes feature two Guardian Note shows excellent córdobas is the world’s first Holography Award – Best Applied awarded for reducing the carbon first foil and window to feature on is established in Australia. image and part window vignette. individual window designs on design integration of nine security circulating note with an image in Security Product for Brunei footprint of its new Guardian £5 a note. each note. features. Latitude. Darussalam and Singapore and £10. commemorative $50 notes.

2. 1991 Papua New Guinea 6. 1999 The first Guardian note 11. 2002 The Bank of Mexico 14. 2005 The Bank of Papua New 18. 2013 The new Mexican 50 Money $5 showcases commemorative features an 29. 2018 Mauritania is the first features the first window to with a self-verifying feature releases the first Guardian Guinea is the first to issue peso uses a world-first overt superior design, technical intricate Cameo portrait in the African country to issue a full incorporate a vignette on the launches on the New Zealand note with a machine-readable Guardian G-Switch on the and more complex Eclipse sophistication and security. frameless window. banknote series on Guardian 2 kina note. commemorative $10. feature. 100 kina. feature. polymer substrate. 24. 2016 The new Australian $5 27. 2017 The Guardian Global 3. 1996 Thailand’s 50 baht 7. 1999 Micro-perforation 15. 2006 Vietnam completes its 19. 2013 Canada becomes the note extends the edge-to-edge Recycling Program wins the 30. 2018 Aurora and Metalix are features first full tonal portrait technology is first used on a first full family on Guardian first country in the Americas clear window from top to Best Banknote Processing layered on the Mauritania as a window vignette, which Guardian note, the Romanian polymer, making it the first to complete a full series on bottom. Innovation Award. series to create unique colour became a feature of many one million lei. Asian country to do so. Guardian polymer. effects. later designs. 8. 1999 The Indonesian 100,000 16. 2011 A world-first full- 20. 2014 The Polish ł20 is the first 4. 1996 Reserve Bank of rupiah features the first gold length frameless window is to include Latitude, Aurora Australia introduces the first patch on a Guardian note. introduced on Guardian by and Metalix in one note. full denominational series on 12. 2003 Romania becomes the Bank of Canada. Guardian. 9. 2001 The first simple the first European country 21. 2015 Singapore is the Guardian Doe feature to issue a full series on first nation to introduce is incorporated in the Guardian polymer. Guardian’s large-format lens Vietnamese 5000 dong. technology platform, Horizon.

23. 2016 New Zealand’s Brighter 26. 2017 Brunei’s BND50

28 29 SPECIMEN: ISSUE 9 SPECIAL REPORT SPECIMEN: ISSUE 9

SPECIAL REPORT “Cash is best” The role of cash Many relief organisations across the globe take a “cash is best” in a crisis approach in emergency response settings when seeking donations for people affected by natural A core function of central banks is to ensure a resilient, stable disasters. and efficient payment system, which includes the integrity and According to the US Centre for availability of currency International Disaster Information (CIDI): “It is crucial immediately following a disaster to explain to the public and media clearly BY BRIAN LANG and persistently why monetary donations are the most effective.” he efficiency of payments is frequently given considerable attention, as the stability Global financial crises Cash is preferred over in-kind Cash also plays a vital role in major financial of the system can be perceived as a “given”. However, in times of crisis, from a donations because it allows crises. When Lehman Brothers and Northern T tsunami to a terror attack, stability of the payments system is often compromised. Rock bank fell in 2008, the finance sector purchases to be made near wobbled around the world. There was a huge the disaster site. This not only These situations are when cash has a vital distributed in ATMs. demand for cash globally. Through fear about supports the local economy but and unique contingency role. Numerous events The first cash deliveries occurred the next their bank’s solvency, people began withdrawing around the world have demonstrated the morning. Over the subsequent eight days their deposits simultaneously, putting intense also reduces logistical costs and importance of cash in a crisis. following the earthquake, $143 million was pressure on ATMs and increasing the likelihood physical barriers of transporting delivered to the disaster site. of further bank runs. goods. It is also fast and flexible, New Zealand A 2010 survey of 1,000 New Zealanders Over six months, the amount of cash in Christchurch, the second largest city in New showed they would normally hold around $100 circulation increased by 8.8% in the Euro zone, enabling relief organisations to Zealand, suffered two devastating earthquakes in cash on them. Post the earthquake, cash on financial institutions, the public and businesses. temporarily converted into mobile banks to 7.1% in the US and 5.9% in the UK. quickly provide what is most in November 2010 and February 2011. The hand rose very quickly to $350 per person. Careful management of logistics was also provide access to cash. needed and relevant at the time. second earthquake caused significant damage The RBNZ later reported the lessons learned: particularly important, as transportation routes In 2008 there was political turmoil after the Cash as a contingency in the city’s business area and inner suburbs, • Cash is important at times of national affected by the flood proved to be a major assassination of the former Prime Minister. The Cash is liquid. The damage to infrastructure and creating an immediate demand for cash. emergencies and is an immediate priority; obstacle to the bank’s operations. central bank in Hyderabad, a city 140 kilometres logistics caused by disaster creates difficulty in Many ATMs and bank branches were • Authorities may need to work closely with In a post-crisis review, the Bank of Thailand east of Karachi, was attacked along with more making electronic payments, and often people inaccessible, and the electronic payment system banks and cash in transit companies; reported the following takeaways were critical to than 600 commercial bank branches and do not accept cheques or electronic transfers in was not operating due to the infrastructure • All agencies must be flexible and innovative; the management of the situation: numerous ATMs. times of crisis. damage. Thousands of people were left and • Availability of cash is essential in times of According to the State Bank of Pakistan’s The key lesson from countries that have homeless but had no way of buying essential • Contingency planning should be a priority crisis; Vision 2020 statement, it not only has a suffered a significant crisis is that cash does items without access to cash. and regularly tested. • Proper preparedness and well executed responsibility for its own BCP, but for the fulfil a vital contingency role, albeit with some business continuity planning (BCP) ensure financial sector as a whole. The Vision 2020 challenges in ensuring supply. Thailand the functioning of the financial system and statement states that it will implement and Also in 2011, Thailand suffered serious flooding cash cycle; and test business continuity and risk management As people panicked, banknote in what was the world’s fourth most costly • Communication is a must. systems and will require commercial banks withdrawal sharply increased disaster. The floods were unrelenting and to ensure robust BCP arrangements for reached the capital city, Bangkok, in late October uninterrupted banking services, especially cash resulting in a temporary steep Pakistan and remained until mid-November. The Bank of Pakistan has suffered from both natural and operations. rise in cash holdings. In central Thailand reported that Gross Domestic Product man-made disasters, including floods and (GDP) growth reduced from 7.8% in 2010 to earthquakes, terror attacks, riots, strikes and Thailand, 600 bank branches and 0.1% in 2011. political turmoil. In 2005 there was a 7.6 The damage to infrastructure and 5,500 ATMs closed. As people panicked, banknote withdrawal magnitude earthquake in northern Pakistan that sharply increased resulting in a temporary steep caused extreme damage to the area. Less than logistics caused by disaster creates rise in cash holdings. In central Thailand, 600 5% of buildings survived. difficulty in making electronic The central bank needed to respond quickly. bank branches and 5,500 ATMs closed. There was an immediate surge in prices, The Reserve Bank of New Zealand (RBNZ) had The challenges for the financial system was and demand for cash increased exponentially payments, and often people do no branch or cash depot in Christchurch, and so to provide enough cash to meet demand and due to the unavailability of alternate payment not accept cheques or electronic received orders for cash from the commercial maintain ATM services. mechanisms. The banking sector responded banks two hours after the earthquake struck. The Bank of Thailand focused on strong, by relocating branches to spaces provided by transfers in times of crisis. All denominations were needed, not just notes proactive communication to all employees, the central bank. Shipping containers were also

30 31 SPECIMEN: ISSUE 9

CASE STUDY Transitioning all notes to polymer will benefit the country, reduce manufacturing costs thanks to longer note life, mitigate counterfeiting with high-level security features, and reinforce public confidence in cash. A banknote’s connections TM Carlos Almenar Diaz, CCL Secure’s to national identity Senior Banknote Designer What was the design brief you received from the Central Bank of Costa Rica?

To create a robust polymer banknote that preserved the colours and imagery of existing Working with the Central Bank of Costa Rica on the ₡1,000 notes. My focus was a large window that was attractive but complex, and could be integrated into the printing process along with other security features.

How does the design reflect Costa Rica’s culture and identity?

Costa Rican banknotes are some of the world’s most culturally reflective. They incorporate social, political and educational themes, as well he Central Bank of Costa Rica has announced it will transition the full series of as the country’s varied natural ecosystems. The widely used Costa Rican motto, “Pura Vida”, is banknotes to Guardian polymer substrate. The development follows the successful also inscribed within a security feature. T introduction of the Guardian polymer ₡1,000 note in 2011, which lasts three times Gustavo Ascenzo, CCL Secure’s longer than the cotton-based substrate equivalent with no counterfeits detected. Director of Business Development

Three people with key roles in the transition counterfeits of the ₡1,000. How did you work with the central bank to process share their experiences of developing Durability: A 2017 central bank study of achieve its vision? the new note. circulating ₡1,000 polymer notes and ₡2,000 cotton notes found polymer lasts at least three CCL Secure worked collaboratively with Marvin Alvarado, Head of the times longer. the Central Bank of Costa Rica to develop Treasury Department of the Central Cleanliness: A Costa Rican university study an understanding of the customer’s needs Bank of Costa Rica determined the surface of the​​ ₡1,000 banknotes and expectations. We ensured ongoing showed no signs of enterobacteria, unlike the communication and presented multiple design What did you aim to achieve from a ₡2,000. proposals, and were flexible and open to making functional and design perspective with the Recycling: 100% of unfit₡ 1,000 notes changes. polymer ₡1,000? are recycled to create plastic planks used for construction, and to produce chairs, trash cans How does the design support the ₡1,000’s The ₡1,000 is the lowest denomination used and trail signs for National Parks, among other circulation and functionality needs? heavily in commercial transactions. Prior to uses. Recycling benefits the local economy and mid-2011, the cotton note had high levels of environment. We designed the ₡1,000 to be robust and deterioration and its life span in circulation was cost-efficient. Guardian polymer enabled the less than 12 months. The positive experience How does the ₡1,000 perform in the humid inclusion of more sophisticated elements, of other central banks adopting polymer with environment? including level 1 security features which are easy increased durability and security, helped inform to identify, yet difficult to reproduce. The note our decision to make this innovative change. There are a variety of micro climates throughout also contains a tactile feature to assist the vision Banknotes are an important part of daily Costa Rica. Polymer has demonstrated impaired. life in Costa Rica, deeply rooted in our culture. great resistance to Guardian is Connection between banknote design and humidity and differing national identity results in greater public care environmental and pride, and helps to share our culture conditions; another internationally. advantage over cotton 100% recyclable substrate. What benefits have you experienced since issuing the new notes? What do you envisage for the full series of There have been many benefits ranging from polymer notes? counterfeiting, durability, cleanliness and recycling. Our vision is to have a Counterfeiting: During almost eight years in safe and efficient means circulation, the central bank has not received any of payment.

32 Specimen Issue 9, 2019 CCL Secure

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