LA REVISTA ANUAL DE GUARDIAN™ LE JOURNAL ANNUEL DU GUARDIAN™ TẠP CHÍ THƯỜNG NIÊN VỀ GIẤY NỀN GUARDIAN™ ISSUE 8 2018 THE ANNUAL JOURNAL OF GUARDIAN™ SPECIMEN: ISSUE 8

TM Contents

2 From the Editor’s Desk BANKNOTE DESIGN The Carbon Trust’s Footprint Label Polymer substrate secures the future awarded to the Bank of England’s of cash. 18 Educating and Recognising 3 new £5 and £10 Guardian™ polymer Guatemalan Designers banknotes demonstrates that these INSIGHT CCL Secure recently launched a denominations will deliver carbon- banknote design workshop and reduction benefits due to their greatly 3 Keeping You Notified competition in Guatemala. extended lifetime. LATITUDE™ Wins 2017 Excellence in Holography Award INDUSTRY STUDY Guardian™ Notes Reduce Carbon 20 Future Challenges for Cash Emissions Handling: The View from GLORY FEATURE STORY Mike Bielamowicz, GLORY’s Chief 4 Guardian™ at the Forefront Marketing Officer, discusses the of Banknote Security challenges cash handlers are facing today and how the industry is adapting As more central banks adopt Guardian™ to change. polymer banknotes, CCL Secure

redefines banknote security. TREND ANALYSIS

SPECIAL REPORT 22 Banknote Confidence in a BCM’s main reasons for the full Mechanised Cash Cycle conversion to polymer were to 8 Polymer Counterfeits: The make the banknotes safer, cleaner Case of the Mexican $50 Note Maintaining stakeholder confidence in 10 circulating banknotes is usually a core and more durable, and retain Counterfeit rates drop dramatically deliverable or outcome of a central bank public confidence. The polymerisation of when polymer is introduced. However, issuance department. the full series will also save BCM more no banknote is completely counterfeit- proof and polymer banknotes are no than US$4,000,000 per year on banknote exception. 24 The Future of Cash: Meaning management and issuing costs. and Implications for the

SPECIMEN EXCLUSIVE Industry

In a fast-changing payment landscape, 10 Central Bank of Mauritania’s how can we ensure that banknotes

New Guardian™ Polymer remain a trusted payment method? Series

On 1 January 2018, the Central Bank of Mauritania began circulating a new banknote and coin family. The RBV has reported no serious ™ counterfeiting attempts and the CENTRAL BANK CASE STUDY Guardian is 14notes are proving significantly more 14 The Vanuatu Experience: durable than the previous paper series. Full Series Now on Guardian™ Polymer

100% recyclable Peter Tari, the Deputy Governor of the Reserve Bank of Vanuatu, talks about the bank’s decision to create a new series of banknotes using Guardian™ polymer technology.

1 SPECIMEN: ISSUE 8 SPECIMEN: ISSUE 8

INSIGHT

From the Editor’s Desk Keeping You Notified

Editorial Team Polymer substrate secures the future LATITUDE™ Wins 2017 anniversary of the Currency Excellence in Holography Interchangeability Agreement. of cash Award Both notes include the same LATITUDE™ level 1 feature, which Paradoxically, as cash transactions decrease in a fast-changing payment LATITUDE™ has won the 2017 can be validated in both reflection landscape, more central banks are adopting polymer substrate. Excellence in Holography Award and in transmission. This – Best Applied Security Product by substrate-integrated diffractive s Victoria Cleland, Bank of England’s Chief Cashier, explained in an IHMA for the Brunei Darussalam optically variable device, which interview with the Guardian, “Cash is definitely here to stay. That’s and Singapore commemorative uses nanoparticles, depicts Brunei A why it’s important we in the cash industry invest in it, even though $50 banknotes. Darussalam’s Istana Nurul Iman and Singapore’s Istana. transaction demand is going to slow down.” And that is exactly what the ince its inception in 1993, Unlike foils or other banknote Bank of England did. It invested in a cleaner, safer and stronger banknote. the International Hologram holograms, LATITUDE™ is Editor The bank’s efforts to cut carbon emissions and reduce environmental Manufacturers Association integrated into the substrate and Pilar Ruperti impacts, as well as deterring counterfeiting, were recognised recently S (IHMA) has awarded annual is therefore not restricted to a when its £5 and £10 Guardian™ polymer banknotes were awarded the Excellence in Holography Awards to conventional applied patch or Editorial Consultant Carbon Trust’s Footprint Label for carbon footprint reduction. Read more outstanding holographic projects. stripe format. Banknote designers Lorna Hendry on page 3. The Best Applied Security can be more creative, using any In this issue of SPECIMEN, we look at one of the hottest topics in the Product category is intended desired shape or level of intricacy, Contributors industry and examine how Guardian™ polymer substrate can contribute to for products or projects where as well as working in combination Carlos Almenar securing the future of cash in an increasingly mechanised cash cycle. Since a hologram is used as an with the opacification layers to Gustavo Ascenzo the release of the first Guardian™ note in 1988, our polymer technology authentication or security feature. ensure the feature fits seamlessly Tim Berridge continues to evolve at an incredible rate and redefine banknote security, Part of the assessment of projects into the banknote. Bradley Booth but security is just one of the many benefits of Guardian™. Read more on in this category is how well the Highly visible to the public, Brian Hayr page 4. hologram serves this purpose and but extremely difficult for the Brian Lang In countries such as Mauritania and Vanuatu, where cash is the how effectively it is integrated into counterfeiter to replicate, Jaime Pacreu preferred method of payment, central banks have also adopted Guardian™ the product. LATITUDE™ represents a significant polymer for their full series. Read more about their experiences and The recently launched Brunei technological advance. The science Design reasons for switching to polymer on pages 10 and 14. Darussalam $50 and Singapore behind its development is a step Next Brand Strategy The Chief Marketing Officer of GLORY, one of the world’s largest $50 Guardian™ banknotes forward for both polymer substrate

& Design suppliers of cash technology solutions, gives us his view on the future commemorate the fiftieth and holograms. DONN STEWART PHOTO: challenges for cash handling on page 20. Cash is here to stay and great design is the key to increasing banknote Guardian™ Notes Reduce Carbon production, circulation and security and maintaining public confidence. Read more about the case of Emissions disposal. the Mexican $50 note and the lessons learnt on page 8. At the 2017 Carbon Trust’s The design possibilities with Guardian™ substrate are endless. £5 and £10 Guardian™ polymer annual awards, the Bank of England CCL Secure’s proprietary features can be applied at various stages of the banknotes have been awarded the was recognised by the Carbon multiple opacification layers to create highly detailed security features. Carbon Trust’s Footprint Label for Trust for exceptional performance To educate the next wave of creative talents on the complexity of polymer carbon footprint reduction. in reducing their environmental banknote design, CCL Secure launched a Guardian™ design workshop and impacts. “The Bank of England competition in Guatemala. Find out more on page 18. he label demonstrates that the is committed to reduce its Bank of England has accurately environmental impacts, and we Happy reading! T measured the carbon footprint have set ourselves a challenging of these denominations, and that 20% by 2020 carbon-reduction they will deliver carbon-reduction target. The bank is honoured to benefits due to their greatly have been awarded the Carbon extended lifetime. Trust’s Best Performance in Product The Carbon Trust has certified Carbon Footprinting award. This is that, over their full life cycle, the a great recognition of our efforts in carbon footprint of a £5 polymer cutting our carbon emissions, and Pilar Ruperti banknote is 16% lower than the the environmental as well as anti- Editor £5 paper banknote, while the counterfeiting benefits of the new carbon footprint of a £10 polymer £5 and £10 polymer banknotes,” banknote is 8% lower than the £10 said Victoria Cleland, Chief Cashier. paper banknote. This certification At the end of their life cycle, was completed in accordance with unfit polymer notes will be the international standard PAS returned to the Bank of England 2050, and considers the full life to be shredded, and then sent to cycle of greenhouse gas emissions be recycled into further polymer

PHOTO: STEWART DONN STEWART PHOTO: related to the banknotes, including products.

2 3 SPECIMEN: ISSUE 8 FEATURE STORY SPECIMEN: ISSUE 8

FEATURE STORY

Australia New Generation $10 Banknote ™ Featuring a positive Shadow™ and a top-to- bottom Complex Window™ with Vignette™, Guardian at the Spot Colour™ and foil. Forefront of Banknote Security As more central banks adopt Guardian™ polymer banknotes, CCL Secure redefines banknote security.

BY BRADLEY BOOTH

ur company was born out of a central bank’s A window into the future of banknote security Guardian™ substrate in combination with vision to build a better banknote – one When the first polymer banknote was launched security features O that was cleaner, safer and stronger – and in Australia in 1988, the presence of a clear The Guardian™ platform allows CCL Secure this goal has underpinned Guardian™ polymer window represented a new paradigm in security. to include not only a wide range of proprietary substrate technology ever since. Following It was a revolutionary new base material that, features but also third-party features, such as several years of extensive research and when combined with unique security features, optically variable inks (OVI) and optical variable development, Australia began the transition to instantly prevented casual and semi-professional devices (OVD) applied in windows. These can Guardian™ polymer in 1988 with the release of counterfeiters from reproducing the notes. The be integrated within our Clarity™C base film or the $10 bicentennial commemorative banknote. film effectively combated photocopying. The applied directly onto Guardian™ substrate. Polymer and the clear window had begun their clear polymer window has been so successful in journey into history. deterring counterfeits that it has even inspired Since then, the innovative Guardian™ the creation of window features on a number of The innovative Guardian™ banknote substrate has been used to issue paper substrates. Today, the window remains in excess of 55 billion banknotes, gaining a key security feature on polymer banknotes. It banknote substrate has been used the confidence of more than 40 central is highly secure and easily recognisable by the to issue in excess of 55 billion banks for use in over 160 mainstream and public. commemorative notes that circulate in some of Polymer substrate now has 30 years’ proven banknotes, gaining the confidence the world’s most demanding cash cycles. market performance, and Guardian™ has of more than 40 central banks for Our polymer technology continues to evolve been at the forefront of polymer development at an incredible rate. The development of new throughout this period. The unique bi-axially use in over 160 mainstream and security features and designs are key drivers of oriented polypropylene (BOPP) Clarity™C gives commemorative notes. this change. They inspire banknote designers Guardian™ its distinctive balanced tensile to focus on the synchronisation of polymer and properties. These are not only exclusive to the associated security features. However, all the polymer banknote market; they also provide The multiple opacification layers that make up complex elements that ultimately represent and superior printing and handling properties across Guardian™ allow CCL Secure’s proprietary features protect the identity of a nation’s currency must all banknote-printing platforms. to be applied at various stages of manufacture: be adapted to the printing systems. The aim is Clarity™C film – in combination with CCL within a clear window, under one or multiple not to design a complex banknote that is difficult Secure’s opacification process, which includes layers of opacification, on top of opacification, or to produce, it is to design one that is difficult printing and embedding security features on the a combination of all three. This increases feature

to counterfeit. film, creates Guardian™ substrate. integration, complexity and security. DONN STEWART PHOTO:

4 5 FEATURE STORY SPECIMEN: ISSUE 8 FEATURE STORY SPECIMEN: ISSUE 8

The new £10 Note. Canada 150 Commemorative Banknote Featuring a Complex Window™ and Half Featuring METALIX™ and a Complex Window™ Window™ combination with CAMEO™, with Spot Colour™ and foil. This image is a copy Vignette™, GSwitch™ ink and foil. that is reproduced with the permission of the

Bank of Canada. DONN STEWART PHOTO:

Examples of features that can be applied in compared to existing paper banknotes. a clear window and viewed from both sides of • Cost savings – Cost savings arise mainly from the substrate are: As CCL Secure’s R&D scientists the increased lifespan of the banknote, which • CAMEO™: a rich, tonal image printed within work from the microscopic to the is typically three to five times that of paper the transparent window banknotes. Improved lifespan also has a • LATITUDE™: an optically variable device nano-level, this space is getting knock-on effect on cash cycle savings, with providing colour shifts and movement within larger and larger. These spatial a reduction in the movement of banknotes, the image when tilted, with the added security sorting and handling playing a significant role. of being see-through in transmission characteristics are the key reason • Reduced environmental impact – • ECLIPSE™: an optically variable device that that Guardian™ will continue By adopting a 100% recyclable Guardian™ reveals a hidden message when looking product, central banks not only reduce their through the transparent window at a point to stay ahead of counterfeit impact on their local environment, they light source technology far into the future. also save costs by selling used polymer for • AURORA™: a combination of two OVIs that recycling rather than sending it to landfill. match in reflection but are different • Improved hygiene – Independent studies have in transmission. METALIX™, IRIswitch™ and Spot Colour™ shown that Guardian™ contains significantly are printed on the surface opacification layers less bacteria than paper banknotes, which can for a more obvious effect. Opacification layers help reduce the spread of disease. The combination of layers means also allow features such as AURORA™ and • Customer perception – A full Guardian™ GSwitch™ to be printed in a Half Window™, series adds consistency and reduces the design possibilities for creating a switching effect on the window side confusion for the general public, especially Guardian™ are limitless. and a tinted substrate on the reverse. in the areas of touch and feel. The suite of The combination of layers means the design Guardian™ features allows for a coherent A banknote designer can allow possibilities for Guardian™ are limitless. theme throughout a series, allowing for faster their imagination to transcend A banknote designer can allow their imagination identification. to transcend multiple layers, rather than being • Cash handling – A full Guardian™ series multiple layers, rather than being restricted by the flat surface of a paper substrate. creates less complexity at cash processing restricted by the flat surface of a machines, and gives central banks better What are the drivers to switch from paper purchasing power by providing a cleaner note paper substrate. to Guardian™ polymer? handling experience for the public. Security is just one of the many benefits of Guardian™. There are a number of drivers While paper is a flat two-dimensional structure, Other features, such as Shadow Image™, behind a central bank’s decision to switch polymer substrate is effectively a three- Shadow Image Thread™, Micro Lettered a single denomination or a full series to dimensional space. As CCL Secure’s R&D Thread™ and MAGread™, can be applied under Guardian™. These include: scientists work from the microscopic to the one or multiple levels of opacification, allowing • Increased security – The use of the Clarity™C nano-level, this space is getting larger and larger. designers to hide them beneath banknote film, combined with clear windows and the These spatial characteristics are the key reason printed features, or create tonal effects with integration of Guardian™ features, reduces that Guardian™ will continue to stay ahead of different layers. counterfeit rates by a factor of ten when counterfeit technology far into the future. PHOTO: STEWART DONN STEWART PHOTO:

6 7 SPECIMEN: ISSUE 8 SPECIAL REPORT SPECIMEN: ISSUE 8

SPECIAL REPORT Figure 1: Counterfeit rates of Mexican $50 note (ppm), 2009–2017

High Polymer Counterfeits: Moderate Low The Case of the Mexican 350 310.8

$50 Note 300

238.5 Counterfeit rates drop dramatically when polymer is introduced. 250 However, no banknote is completely counterfeit-proof and 200 polymer banknotes are no exception.

150 BY GUSTAVO ASCENZO AND JAIME PACREU 101.7

100 73.4 here are two main types of counterfeiters: enough resources to carry out their crimes. more sophisticated design. By 2014, the $50 amateurs, and professionals or criminal Nonetheless, it is easier for police authorities to Guardian™ note was again the second-least 50 31.6 26.8 23.9 T gangs. catch one criminal gang than many amateurs. counterfeited denomination and well below the 16.4 13.3 Amateur imitations of polymer banknotes average level of paper and total counterfeits. are rare. This is due to the difficulty of printing Mexican $50 note 0 on plastic and the impossibility of reproducing The $50 Guardian™ polymer note was Lessons learnt 2009 2010 2011 2012 2013 2014 2015 2016 2017 transparencies with photocopiers, printers or introduced in Mexico in 2006. Counterfeits of After their arrest, the criminals disclosed how home scanners. To make a window, an amateur this note dropped dramatically in subsequent they had created an acceptable imitation of the counterfeiter must have extremely advanced years. However, in 2010, the $50 note was $50 note. manual skills in order to cut the substrate and attacked by professional counterfeiters. Between • Design and origination: They used Figure 2: Average counterfeit rates in Mexico (ppm), 2006-2017 add inserts. Experience shows us that these 2011 and 2012, a large number of professional commercial software operated by experts imitations are rough and obvious. counterfeits of the $50 polymer banknote were in digital image manipulation and offset For professional counterfeits to be found in circulation. production. Paper “acceptable”, criminals turn to experts with In 2012, two important events played a • Substrate: It took several months to achieve Average extensive knowledge in printing. They also major role in dropping counterfeit rates. an acceptable imitation. Polymer have access to either cutting-edge or tailored The criminal gang was arrested and a new $50 • Inks: They used commercial and automotive commercially available printing technology and Guardian™ note was put into circulation with a inks, but were forced to ask the manufacturer for a special formulation that suited their Guardian™ Guardian™ $50 New $50 requirements. • Printing: The process demanded 18 steps of offset, four steps of silkscreen and two 250 The new Mexican $50 note manual steps. Launched in 2012, the new, more sophisticated Although it was very effective against $50 note reduced counterfeiting significantly. amateur counterfeiters, the original $50 note 200 design was not very complex and had not been updated since its introduction. As part of the solution, Banco de México 150 issued a new $50 note on Guardian™ with a much more complex design and better security features. These include Complex Window™ with 100 WinBOSS™, Eclipse™ and coloured Vignette™; a second Complex Window™ with SPARK® ink (allowing the optically variable ink to be viewed 50 from both sides of the substrate); and Half Window™. Although they use the same polymer substrate, the difference in the complexity of 0 the design of the two notes is clearly evident to 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 the naked eye. The importance of good design is essential for banknote security. The advantage of Calculated from Banco de Mexico website data. Guardian™ polymer is that the possibilities are Denominations on polymer: $20 and $50. Denominations on paper: $100, $200, $500 and $1000 practically endless.

8 9 SPECIMEN: ISSUE 8 SPECIMEN EXCLUSIVE SPECIMEN: ISSUE 8

SPECIMEN EXCLUSIVE

Central Bank of Mauritania’s New Guardian™ Polymer Series

On 1 January 2018, the Central Bank of Mauritania began circulating a new banknote and coin family.

BY PILAR RUPERTI

fter a period of stable economic growth polymerisation of the full series will also save bank account to exchange more than the limited and relatively low inflation, the Central BCM “more than US$4,000,000 per year on amount in order to increase the rate of banked A Bank of Mauritania (BCM) has rebased the banknote management and issuing costs,” citizens – a measure that has been proven Mauritanian currency– the ouguiya – by removing says BCM Governor, Abdel Aziz Ould Dahi. successful so far.” one zero from all denominations. Accompanying These assumptions are based on BCM’s The central bank also used the advantage of the rebasing is a change in the currency comparison of the different substrates, according surprise to great effect, taking just one month designation from MRO to the new MRU. The to their experience and rigorous banknote to implement the measure and one month to BCM has also adopted CCL Secure’s Guardian™ life assessments. manually exchange the higher denomination polymer substrate for their full new banknote (the most likely to be counterfeited). “We worked series. The rebasing is expected to better extensively with CCL Secure and Canadian Bank control inflation and the amount of currency The first Guardian™ Note Company for months to ensure a smooth in circulation, while the adoption of Guardian™ transition while keeping the surprise effect, and substrate will significantly reduce banknote MRO1000 notes, issued in couldn’t be any more grateful to their teams for production costs and the overall risk associated 2014, reported no counterfeits their help in the successful launch.” with carrying large volumes of banknotes. As for the new designs and security features, BCM was established in 1973 and it has and rare mutilations of the Mauritanian public have quickly become put four series into circulation since then. Last this denomination. The familiar with their new notes, which they say January, Mauritania became the first African are more aesthetically pleasing and easier to country to issue a full series of banknotes on polymerisation of the full handle. As part of BCM’s public communications, polymer substrate. All denominations, designed series will also save BCM “more Mauritanian citizens have easy access to the and printed by Canadian Bank Note Company latest and most relevant information through Limited (CBN), feature traditional themes based than US$4,000,000 per year both digital and print collateral, such as a on the country’s flora and fauna, cultural symbols, on banknote management and dedicated website (ouguiya.mr), social networks, and main social and professional activities. posters and leaflets, a free call centre and Security features include CCL Secure’s Clear issuing costs.” educational workshops for children. The central Window™ and Half Window™ with Vignette™, bank is also planning a public survey in the and AURORA™ and METALIX™ inks, as well as upcoming months. CBN’s TOUCH® tactile feature, which assists the However, not all that glitters is gold, and In addition, central bank, commercial visually impaired to denominate the notes. with change comes risk – especially for a bank and government officials also benefited The new banknote family consists of five geographically vast country where cash from Guardian™ training seminars conducted denominations, ranging from MRU50 to is ubiquitous. “Inflation, counterfeits, the in December and January by PolyTeQ – CCL MRU1000. These replace the six denominations stability of the cash cycle, were some of the Secure’s technical support division – with of the old series: the three lower denominations risks we considered carefully. To mitigate the assistance of CBN Director of Business were printed on Hybrid™, MRO1000 notes those and other risks, the BCM has adopted a Development Bobby Lovric. The seminars, were on Guardian™ polymer, and the two higher clever communication strategy based on the complemented by the new e-learning modules denominations were on paper. interaction with all stakeholders, maximising that were launched last year, mainly covered BCM’s main reasons for the full conversion all media and communication channels,” the handling and care techniques for their new to polymer were to make the banknotes safer, explains Sidi Mohamed Dhaker, BCM Head Guardian™ polymer banknotes. cleaner and more durable, and retain public of Communication. “We have also adopted a BCM will assess their recycling options with confidence. The first Guardian™ MRO1000 proximity approach in the choice of exchange PolyTeQ, and continue to monitor this major notes, issued in 2014, reported no counterfeits points for the new ouguiya family, while setting currency transformation as it strives to foster and rare mutilations of this denomination. The a limit for manual exchange and requiring a innovation and be a role model in the region.

10 11 AURORA METALIX Large and obvious visual effects using A brilliant metallic sheen and lustrous rich leading-edge ink technology that delivers colour creates a dominant visual effect multiple colour shifts across the life of that is entirely resistant to chemical attack the note. or oxidation.

auritania is the first African country to issue a full series of banknotes on polymer substrate. All denominations, designed and printed by M Canadian Bank Note Company Limited (CBN), feature traditional A Premier African themes based on the country’s flora and fauna, cultural symbols, and main social and professional activities. Security features include CCL Secure’s Clear Window™ and Half Window™ with Vignette™, and AURORA™ and METALIX™ inks, as well Currency as CBN’s TOUCH® tactile feature, which assists the visually impaired to denominate the notes. The new series were introduced on 1 January 2018, and the old and new ™ Introducing Mauritania’s New Guardian™ Polymer Series. currencies will co-circulate until 30 June 2018. SPECIMEN: ISSUE 8 CENTRAL BANK CASE STUDY SPECIMEN: ISSUE 8

CENTRAL BANK CASE STUDY

The Vanuatu Experience: Full Series Now on Guardian™ Polymer Peter Tari, the Deputy Governor of the Reserve Bank of Vanuatu, talks about the bank’s decision to create a new series of banknotes using Guardian™ polymer technology.

BRIAN LANG INTERVIEWS PETER TARI

n 2010, in Why did the RBV introduce Guardian™ The review concluded that polymer note printing conjunction banknotes in 2010? stood a higher chance of addressing these I with the thirtieth At the time, the bank was facing increased costs issues, and that this was the right step to take. anniversary of of issue caused by the short lifespan of cotton The existing family of notes had then been in independence in paper notes in our humid environment and circulation for 30 years. Vanuatu, the Reserve the scattered geography of the island country. Bank of Vanuatu The economic justification for a more durable (RBV) launched the substrate had received support from the public first banknote in a in a 2008 survey, which also indicated a demand The bank is very happy with new series using for a higher denomination at the top of the the performance of the new Guardian™ polymer substrate. The banknote series and a strong push for the counterfeiting was a new high-value denomination: 10,000 challenges to be contained. Another key series. There have been no Vatu (VT). At the launch, the RBV Governor motivation for a change to Guardian™ was a serious attempts to counterfeit paid tribute to Note Printing Australia (NPA) desire to modernise the nation’s currency and and PolyTeQ – CCL Secure’s technical support cash cycle. on a polymer or plastic surface. division – for designing and producing the note Overall the notes are proving in just six months. The bank also acknowledged the contribution We undertook extensive significantly more durable than of local artist Mr John Joseph, who was appointed research in countries where the previous paper series. by the bank and worked alongside NPA and PolyTeQ in the design stage. Traditional painting polymer notes were circulating, artworks were sourced by a team of locals who and that had a proven record represented a cross section of the economy. What other analyses did you do before Between 2010 and 2017, the RBV added two of greater durability and deciding to move to Guardian™ substrate? additional denominations to the Vatu family reductions in counterfeits. We undertook extensive research in countries of notes, increasing the number from four to where polymer notes were circulating, and that six, and had all six denominations converted to had a proven record of greater durability and Guardian™. Today there are very few cotton paper Following the 2008 survey, the RBV decided reductions in counterfeits. An extensive cost– notes left in circulation. to review the creation of a new family of notes. benefit analysis was also undertaken.

Inset: Peter Tari, Deputy Governor of the Reserve Bank of Vanuatu.

Right: The 2,000 Vatu note on Guardian™ launched in June 2014. PHOTO: STEWART DONN STEWART PHOTO:

14 15 CENTRAL BANK CASE STUDY SPECIMEN: ISSUE 8 CENTRAL BANK CASE STUDY SPECIMEN: ISSUE 8

Above: Simeon Athy, Governor of the Reserve Bank of Vanuatu, and Peter Tari, Deputy Governor, at the launch of the 5,000 Vatu note in July 2017.

Opposite: The full new series of Vanuatu notes.

Have the polymer notes met your about recognising and using the notes. In expectations? Vanuatu, these occasions draw large crowds The bank is very happy with the performance and were attended by respected government The RBV conducted a very of the new series. There have been no serious and regional officials. The bank also sent staff significant public awareness attempts to counterfeit on a polymer or plastic to the various islands to raise awareness in surface. There have been some notes rendered the remoter areas. This has been quite time- campaign and launched each unfit as the public experimented with their consuming, but has proved very effective. denomination at a major durability, but overall the notes are proving significantly more durable than the previous What is Vanuatu’s physical environment like? public event. paper series. The cost of issue has declined Vanuatu has a tropical climate and can be hot, markedly in the past two to three years. humid and wet, particularly in the summer months. It has a chain of four main islands and window, incorporating a G-Switch™ (colour 79 smaller islands, 68 of which are inhabited. shift), embossing of the denomination value, There has been a significant The main form of transport is by water, thus the a shadow image of the logo of the RBV and a waterproof polymer notes are ideally suited in complex clear window design incorporating a drop in note-issue expenses circulation. shell vignette. in the past two to three years. Why did the bank decide to convert the full Is the bank planning to recycle the unfit This is greater than we initially family to Guardian™ polymer? polymer banknotes? anticipated, thanks to the One of the key drivers was to modernise the Yes, we intend to recycle granulations of unfit currency and the cash cycle. To do this, it notes when we have a sufficient quantity to durability of the substrate was logical to maintain a common approach transport to a recycler. At the moment, the resulting in less unfit notes across all denominations that was suited to the waste polymer is being stored at the bank. conditions. needing replacement. Has the move to Guardian™ polymer How did the bank choose the designs and delivered any unexpected benefits? security features for the new series? Despite higher initial issue costs, the long-term What key risks did you identify and how did At the outset it was decided that the front of benefits are now being realised. There has you mitigate them? the banknotes would have a common design, been a significant drop in note-issue expenses Initially, the biggest concern was public reaction. and the reverse sides would feature themes in the past two to three years. This is greater Would people accept the change? To mitigate that carried special importance for the country, than we initially anticipated, thanks to the this risk, the RBV conducted a very significant such as family and traditional gatherings on durability of the substrate resulting in less unfit public awareness campaign and launched each the 200VT note and tourism on the 5000VT notes needing replacement. The notes also denomination at a major public event. This note. The security features were selected to take portray the country to visitors and tourists in helped to raise the confidence of the public advantage of the polymer substrate and clear a favourable light.

16 17 SPECIMEN: ISSUE 8 BANKNOTE DESIGN SPECIMEN: ISSUE 8

BANKNOTE DESIGN – awarded two honourable mentions and one Polymer banknote design – present and However, banknotes of the future cannot lose winning concept, which received a prize of future their sense of national identity. It is important US$1,500. This was the first time a public polymer to educate and involve the public and other The judges were astounded by the skill and banknote design workshop and competition commercial interests at the outset of the design beauty of all the designs. We were also proud has been held for students, professionals in process. Involving the public in decision-making Educating and to be part of such a memorable experience for the field of graphic design. The experience was processes like the choice of subject matter the participants, some of whom were moved very rewarding and generated a lot of interest in helps give them a sense of ownership of the to tears by the recognition they received. The banknote technology and banknote design as a final design. central banks were so impressed by the success profession. CCL Secure is committed to giving back Recognising Guatemalan of the competition that some have expressed For central bank delegates, this experience to the industry to help it grow. We value the interest in hosting one of their own. allowed them to see how local designers can opportunity to educate the next generation The winning concept was designed by represent their culture through banknote of talented designers. Designers Valeria Loarca, a first-year student at University concepts that range from very modern trends of Isthmus (UNIS). The design featured to classic designs. More importantly, it CCL Secure recently launched a banknote design workshop and images of Christopher Columbus and a famous demonstrated how designers can interpret and footballer. CCL Secure’s experts and the central conceptualise the banknote of the future. competition in Guatemala. bankers were fascinated by how close the The key to Guardian™ polymer banknote concept was to real, circulating banknotes. The design is the technology that allows for technical incorporation of security features was transparent, semi-transparent, opaque and also one of the most complex in the group of complex window designs, and these elements entries, using windows and holographic effects. must be an integral part of the design process.

BY CARLOS ALMENAR

aper substrates have existed for centuries. functionality of the clear window. Major design Guardian™ Polymer Banknote Design Over time, innovations like the development initiatives have heralded new generations of the Competition P of watermarks, security threads and window design and multiple innovative ways of Attendance at the workshop was not a durability have evolved, but the raw material representing a culture. requirement to enter the competition, which remains unchanged. Modern substrates, like was launched a month in advance. However, polymer, have made banknote designs more Guardian™ Polymer Banknote Design we developed a number of design rules, as dynamic and complex. Features such as Workshop well as a concept design that served as a guide transparency and opacity can now be integrated The one-day Guardian™ Polymer Banknote for participants to develop their own concepts to produce highly detailed security features. Design Workshop was conducted last year in and enter the competition. CCL Secure was Banknote designers interpret the culture Guatemala to support the Guardian™ Polymer overwhelmed by the interest the competition and identity of a nation and translate these Banknote Design Competition. It educated generated, with many more entries received semantic concepts into the specific techniques design students and professionals about than had been expected. required to build a banknote. Their ideas focus banknote history, recent developments in A select team of internal experts – including on the designs, substrates, security features banknote technology, polymer design trends Head of Product Management & Design, Tim and printing techniques and they work in and the banknote design process, as well Berridge, Communications Coordinator, Pilar collaboration with other specialists in the as giving them the opportunity to learn new Ruperti, and myself – examined the entries. We banknote industry. skills. The aim was to inform designers and had the difficult task of selecting ten finalists Polymer substrates offer a unique design artists about Guardian™ technology and its from the very high-quality entries, all of which element: the clear window. The invention of the possibilities. uniquely and beautifully represented Latin clear window – easy for the public to recognise During the workshop, participants were American culture. but extremely difficult for counterfeiters to encouraged to design their own prototype of a The ten shortlisted designs were displayed replicate – was a breakthrough in banknote Latin American promotional banknote that was at the seminar’s gala dinner. A secret ballot of security. Design innovations have driven inspired by local values, folklore, flora and fauna, the guests – including central bank and political a range of changes in the appearance and and the history of the region. representatives from throughout Latin America

A secret ballot of the guests awarded two honourable mentions and one winning concept, which received a prize of US$1,500.

Top: Winning entry, Valeria Loarca Middle: First mention Bottom: Second mention

18 19 SPECIMEN: ISSUE 8 INDUSTRY STUDY SPECIMEN: ISSUE 8

INDUSTRY STUDY

Future Challenges for Cash Handling: The View from GLORY Mike Bielamowicz, GLORY’s Chief Marketing Officer, discusses the challenges cash handlers are facing today and how the industry is adapting to change.

SPECIMEN INTERVIEWS MIKE BIELAMOWICZ

With GLORY reaching its 100th anniversary, What are the main factors driving change? allowing the global CITs to think much more is cash handling still relevant? Companies involved in cash processing – strategically about their role and drive greater We certainly recognise that the future is likely whether they are banks, cash-in-transit (CIT) economies of scale. Secondly, they are adopting to be “less cash” but not “cashless”. There is companies or retailers – are all seeking to a solution-based approach by adding cash a lot of conflicting data about how people are reduce the costs of cash. Branch footfall has management to their traditional transportation settling transactions today. We see a report from fallen in some countries as more banking and processing roles. This involves activities the UK stating a preference for small payments services move online. This has led some banks such as white-labelling ATMs, smart safe digitally, and the next day a report from the USA to reduce the number of bank branches, but deployment and the provision of branch that small payments are typically made in cash. merchants still need to deposit their takings. In services on behalf of high street banks. Payments are 70% electronic in the Netherlands the past, banks, CITs and ATM operators shaped and 70% cash in Germany. In the developing the cash industry but looking forward we see How are retailers’ cash habits changing? Mike Bielamowicz world? Everyone uses everything! retailers being in the driving seat, looking for Not so long ago, retailers managed cash by GLORY’s Chief Marketing Officer For many people, cash remains the most more efficient ways to process their cash. hand, whether at the point of sale or in the back trusted and most reliable method of payment. office. If machinery existed, it was generally It does not rely on any underlying technology limited to a weigh scale, or simple note or and is accessible to all. Most central banks are We will see a greater emphasis coin counters. This is changing rapidly. At the still reporting growth in the issuance of cash point of sale, there is a much greater customer and, most importantly, our customers are still on connectivity and real-time acceptance of self-service, particularly in investing in new and innovative cash solutions. data, giving organisations grocery stores. In the back office, smart safe The simplest way to look at the challenge is technology has proliferated, simplifying cashiers’ to assume that overall transactions will keep up-to-date information on start and end-of-day processes and improving increasing fast enough to allow for all types their cash holdings. For cash accountability. of settlement – including methods that do The drive towards higher levels of not exist yet – and that we will be managing to remain competitive, its cost automation is enabling greater recycling of cash At GLORY, we are seeing a dramatic increase we can fully exploit the potential of the new organisations up-to-date information on their every kind of transaction, and particularly cash must remain low compared to within the store and driving additional benefits in central bank–driven sorting standards, banknote designs when they are issued. We also cash holdings. For cash to remain competitive, transactions, for a very long time. for the retailer, such as improved cash visibility, coupled with regular compliance testing. This see opportunities to discuss our latest detection its cost must remain low compared to alternative payment levels, so greater security and, in some cases, provisional is happening across the world, not just in developments with issuing authorities, which alternative payment levels, so we will see more How committed is GLORY to the future we will see more automation – credit, where the cash is credited to the retailer’s Europe or North America. We believe this is may lead to more secure banknote designs. automation – more self-service devices and of cash? account before it is physically collected and having a positive effect on the industry, driving more automated systems in cash centres. GLORY continues to invest significant sums more self-service devices and counted. up performance standards and improving the How do you see the industry evolving in the Finally, we will see more sophisticated of money in new products. Last year, we spent more automated systems in quality of notes in circulation. next five to ten years? banknote technologies to keep one step ahead over 6% of our revenue, or US$125 million, What is the role of the central bank? First and foremost, we believe that cash will still of counterfeiters. GLORY is investing in all these on research and development. That’s a level cash centres. The role of the central bank, indeed all regulatory The technology of banknotes is also evolving. be a significant part of the payment landscape. areas to make sure our solutions are ready for of investment that few players in our industry authorities, is becoming ever more important. Do you see this as a positive? There is little doubt that the number of electronic the challenges ahead. can match. We continually look at the overall In the past, central banks played a much Absolutely. We want to play our part in ensuring payment transactions will continue to increase, payments market in which we operate. I Banks might argue that cash is non-core, but bigger operational role than they typically do that banknotes remain a trusted payment but cash will continue to play a vital role in the strongly believe that new technologies, such it seems inevitable that the CIT industry will today, having outsourced many of the physical mechanism, so we welcome new developments lives of millions of people worldwide. About the company as Blockchain, Internet of Things, Cloud be squeezed. What’s your view? banknote processing tasks to the commercial that make the counterfeiter’s job harder. We What will change, however, is the way that GLORY is one of the world’s largest Computing and Big Data will significantly Of course, CITs are heavily dependent on cash, cash centres. However, as their operational also welcome efforts by issuing authorities to cash is managed. We will see even greater suppliers of cash technology solutions. increase the value delivered by cash handling but they are taking robust action to protect their involvement has decreased, their regulatory collaborate closely with banknote equipment levels of local cash recycling at the retail store Headquartered in Himeji, Japan, and with solutions, and I expect GLORY to be at the business. Firstly, size counts. The industry is responsibilities have increased. manufacturers, such as GLORY, as new features or bank branch. We will see a greater emphasis annual revenues of US$2 billion, it is active forefront of this exciting new chapter. consolidating at a rapid pace in many regions, and substrates are developed. The ensures that on connectivity and real-time data, giving in more than 100 countries worldwide.

20 21 SPECIMEN: ISSUE 8 TREND ANALYSIS SPECIMEN: ISSUE 8

TREND ANALYSIS leakage or write-offs. These are often seen as specialist or central bank authentication. ATM banknotes will have a negative effect on the simply a cost of doing business. However, this vendors currently promote this capability with quality, efficiency and effectiveness of the cash is not the case for banknotes that are rejected by retract/reject cassette options. cycle. Instead, central banks need to provide a machines. This situation creates administration A similar process could also apply to strong incentive to retailers and banks for the for the teller and, potentially, a negative accelerating the segregation, separation early segregation, separation and repatriation Banknote Confidence in customer experience. There are often no and removal of machine-unfit and mutilated of low-quality machine-unfit banknotes. The commercial incentives to withdraw or repatriate banknotes. Central banks could consider this market is making substantial investments in machine-rejected or mutilated banknotes. The type of process and incentive to improve mechanisation and sensors. These investments default option is to, quite literally, ‘pass the buck’. processing efficiencies through the cycle, and will be impacted if the machines experience a Mechanised Cash Cycle Bank and retail tellers do not generally see at the central bank. more jams and poor machine unfits and themselves as first-line law enforcement for More durable banknotes will lead to fewer availability. Banknote quality and stakeholder Maintaining stakeholder confidence in circulating banknotes machine-rejected banknotes when they are machine-unfits and suspicious banknotes – the confidence are inextricably linked (as illustrated managed and measured on customer experience. Bank of Canada has reported a reduction of in Figure 2). is usually a core deliverable or outcome of a central bank If value was given for suspicious banknotes, as is unfits by 78%. This will reduce the proportion of Central banks need to re-evaluate their issuance department. often the case for card and cheques for disputed repatriated notes in circulation and, potentially, policy frameworks to be fit for purpose for a low-value transactions, this may accelerate the make the economics of note repatriation less mechanised cash cycle. They should understand repatriation of machine-rejected and mutilated attractive. Ironically, it is these smaller volumes the value drivers for retailers and banks, and the banknotes. These notes may still need to be that need more focus from the stakeholders. economics of repatriation. If issuers align their reviewed later, i.e., the teller or machine track Charging banks or cash-in-transit retailers policies with stakeholders, they may find the and traces the note and customer subject to to repatriate poor-quality or machine-unfit market will plan for more investment.

BY BRIAN HAYR Repatriation flows

n the past, public and retail tellers who issuance and repatriation costs if they are effective technology throughout the cash cycle, Figure 1: Traditional model handled cash manually provided a key recirculated locally or close to origin. while maintaining confidence in banknotes. I assurance and control point for banknote The Bank of Canada has reported a The new technology also improves cash’s quality. They ensured that unfit, mutilated reduction of 45% in processing volumes for competitiveness with electronic payments. and suspicious banknotes were repatriated, polymer notes compared with paper, and their Before reflecting on a central bank’s policy Public Surplus fit Cash centre Surplus fit withdrawn or reported. In many markets, there unfit notes are down by 78%. Retailers and framework, let’s look at areas that might be Central bank Retail are now large deployments of cash processing banks will want to capture similar benefits from aligned with the stakeholders and their needs. Unfit/mutilated Retail bank Unfit/mutilated machines and increasing levels of machine increased mechanisation and more durable, Gaming, vending, etc acceptance, authentication and quality control good quality banknotes. Common objectives in the banknote life cycle in retail environments. Many traditional central Central banks and retail owners have shared bank or cash centre functions – authentication, objectives that will maintain consumer fitness sorting and reissuance of fit notes – confidence in mechanised cash transactions. Rejected or mutilated banknotes need to be Issues: • Retail banks and cash centres often recombine authenticated at a central bank or cash centre before mutilated notes back into their processed unfits, Central banks need to provide a • Two categories of fitness (fit and unfit) may not be can now be performed by a small retailer with • Machine reliability: Cash-handling machine value is given. The definition of ‘unfit’ usually includes: which causes further processing jams at the central suitable for a machine environment. a desktop machine. uptime and availability is important for bank. Volumes are usually low (<1%), but they create a strong incentive to retailers and • worn, damaged or defaced notes (machine processed) all stakeholders and a key driver of user • Often, mutilated and machine-unfit notes are disproportionate processing issue. • suspicious notes (machine processed) separated by the public and retail sector then banks for the early segregation, • Some central banks charge the market to repatriate experience. Poor user experiences lead to recombined into a single bundle when returned • counterfeit notes (depending on policy) unfit notes. The Bank of Canada has reported separation and repatriation negative perceptions of both the payment to cash centres and retail banks. The processing method and the machine providers. • mutilated or machine-unfit notes (unprocessed). equipment then performs poorly when it tries to a reduction of 45% in processing of low-quality machine-unfit • Data availability: All machine owners want process mutilated and surplus fit. volumes for polymer notes banknotes. real-time reporting on value and volume. Machines should deliver real-time value – vs compared with paper, and their batch or end-of-day value – so that cash However, the challenge for central banks is competes with comparable cleared electronic unfit notes are down by 78%. Figure 2: Alternative model to ensure that policy frameworks and incentives funds. reflect this new mechanised cash life cycle. • Banknote fitness: All machine owners and Maintaining confidence and circulating good users want a fit banknote for issuance Surplus fit Surplus fit What then does the future hold for central quality banknotes is important, but the policy and acceptance. It is in everyone’s interest Public Cash centre bank policy frameworks supporting confidence, drivers may have to change to reflect the new to support the early repatriation of unfit, Central bank Machine unfit Machine unfit Retail and banknote users who increasingly rely on reality. The circulation of poor-quality banknotes mutilated and suspicious banknotes. Retail bank mechanisation and more durable banknotes? is not a new issue, with most markets having Gaming, vending, etc. Mutilated/rejected Mutilated/rejected Issuance, repatriation and withdrawal challenges with low-denomination notes. These of banknotes to a central processing site is may be accentuated by local cultural practices, Central banks need to expensive and requires specialised secure geography, poor incentives or, in some cases, logistics. In recent years, there has been disincentives (as illustrated in Figure 1). re-evaluate their policy Mutilated notes should be separated early in the Benefits: • The central bank encourages public repatriation to the repatriation process. Stakeholders should then be retail bank by encouraging acceptance of rejected and • Banknote processing capability and circulation significant investment by commercial banks in So what changes with mechanisation? encouraged to withdraw or repatriate these different damaged banknotes. frameworks to be fit for purpose performance will improve, increasing public categories of banknotes. retail distribution and processing technologies, Businesses invest in machines because they confidence. • The central bank potentially pays retail banks and which is often not an area of expertise for are more efficient, effective, safer and more for a mechanised cash cycle. Mutilated and rejected banknotes are clearly not cash centres for small losses/incidents – judgement • The mutilated numbers are small, but suitable for machine processing, but they will require applied as in other payment losses. central banks. Many central banks have a limited reliable than manual processing. Machines disproportionately disruptive. authentication by an expert before being destroyed. understanding of distribution economics and can provide real-time data and reports, saving • If not already the case, the central bank pays for • Rejected banknotes continue to be authenticated by repatriation costs of all unfits. the key drivers of value. on administration and reconciliation costs. Areas for improvement the central bank or law enforcement. There is also a trend towards more durable The challenge for a central bank is to align Banks and retailers that accept cash, card or banknotes, which can significantly reduce itself with this trend of more efficient and online payments often have small discrepancies,

22 23 SPECIMEN: ISSUE 8

TREND ANALYSIS TM

The Future of Cash: LATITUDE™

A diffractive optically variable device (DOVD) Meaning and Implications integrated into the transparent window area of CCL Secure’s Guardian™ polymer substrate. Latitude™ is not restricted to a conventional applied for the Industry patch or stripe format, allowing complete design freedom. This easy to recognise Level 1 security In a fast-changing payment landscape, how can we ensure that feature can be validated in both reflection and banknotes remain a trusted payment method? transmission, enhancing the security on both sides of the banknote.

www.cclsecure.com

BY TIM BERRIDGE

onsumers are facing increasing choice in crypto-asset exchanges to the same rigorous What does all this mean for those of us how they purchase goods and services. standards as those that trade securities would who are involved in and supporters of physical C We are all familiar with the huge changes that address a major underlap in the regulatory cash? It is clear is that the choice for consumers have occurred in the retail and entertainment approach.” and users of cash is only going to increase. We markets with the development of the internet. However, several other central banks – must accept that we live in a world where people Shopping for clothes and electronics has moved including Japan, Sweden, Canada and Estonia can use a combination of payment methods from high street retailers to online giants such – are seeking to embrace cryptocurrencies and depending on what they are buying and what as eBay, Amazon and Alibaba. It has even implement central bank-backed equivalents to retail channels they are using. influenced how we consume entertainment Bitcoin. Still, the majority of them also stress that As an industry, we must ensure that we media, with traditional formats and platforms this work is exploratory and the results could be provide a product to the public that functions in a being undermined by on-demand streaming years away from being implemented. more automated world and is easily understood, from providers like Spotify, Netflix and Amazon Confusingly for the public, some banks that trustworthy and enjoyable to use. We can achieve Prime. are discussing the demise of cryptocurrencies these goals with technology innovation and, Inevitably, the way we pay for goods has also also talk about the potential benefits of the perhaps more importantly, with great design that changed. The shift from physical transactions distributed ledger technology that underpins engages, connects with and delights the public. to online purchases will drive an increase in them. What is clear is that the technology behind At CCL Secure, our continued commitment electronic payments. However, this is not Bitcoin and other cryptocurrencies is in its to world-leading innovation and design for the only drag on physical cash. In addition to infancy. We are yet to see or truly understand the Guardian™ substrate and banknotes is our physical banknotes and coins, we can now pay impact it might have. contribution to securing the future of cash. for goods in a myriad of ways. We use credit cards, debit cards, PayPal, Apple Pay, Android Pay, commercial bank applications, contactless payment and even cryptocurrencies like Bitcoin and Ethereum. This array of choice creates challenges for central banks and the industries that support banknotes as the most trusted payment method. Central banks now have the arduous task of deciding whether to embrace these changes – and provide a framework and regulatory environment to enable these new choices – or to work with lawmakers to legislate against their use. Comments by people like Nouriel Roubini, professor of economics at New York University, who said that Bitcoin is “the mother of all bubbles” favoured by “charlatans and swindlers”, have prompted some authorities to clamp down on cryptocurrency exchanges and increase regulation in the market. Winner of Excellence in Holography Award - In March 2018, Mark Carney, Governor of Best Applied Security Product 2017 by IHMA. the Bank of England, said, “In my view, holding

24 Specimen Edition 8, 2018

CCL Secure T +61 3 9303 0700 E [email protected] www.cclsecure.com

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