2020: A Good Year for Polymer Banknotes Competition creates energy and change. It can be argued that 2020 was the year where the impact of there being two suppliers of polymer substrate in the banknote market started to be seen. The take-up of polymer by central banks accelerated, while investment brought new security features to market, more capacity and more recycling capability. The history of polymer banknotes is well known. The Reserve Bank of Australia first issued a commemorative polymer note on Guardian™ in 1988, followed by a circulating $5 banknote in 1992, with the number of banknotes on polymer steadily growing over the next 25 years. Large scale adoption of polymer by major currencies, including Vietnam, Romania, Singapore, Hong Kong, Mexico, and Canada meant that – by 2011 – the use of Along with circulating notes, approximately The move by Angola and the Saudi polymer had spread worldwide. The latter 40 commemorative notes have also been Central Bank to introduce polymer is was particularly significant because not only issued since polymer was first introduced. an important one, since both are high was it the first G7 country to adopt polymer, volumes users of banknotes. Egypt, but it made explicit that its decision was In a year that has seen an acceleration in another high volume country, has also based as much on the security offered by the number of banknotes converted to a announced the introduction of a polymer the substrate as its durability. polymer substrate, several trends stand out. denomination later this year. CCL Secure’s Guardian™ polymer substrate Confidence was responsible for this growth and, in The uptake in polymer demonstrates Dual supply expands choice 2013, was joined by another polymer that there is widespread confidence in The ability to source polymer banknotes option – De La Rue’s SAFEGUARD®, which polymer among a range of central banks, from two sources – with further options made its debut on the Fiji $5. denominational values and continents. already being developed – helps to address any concerns that central banks may have The growth has continued to accelerate. In total, 15 note issuing authorities issued had about converting to polymer and being By early 2021, polymer accounted for 3% new polymer notes – 11 for circulating reliant on a single supplier. of banknotes by volume and 14% percent notes (four of which for the first time), and by number of circulating denominations. a further four for commemorative notes The increased acceptance of polymer Over 50 banknote issuing authorities now (see chart below). appears to be driven by a number of factors, not least the growing evidence issue at least one polymer banknote. 147 Trinidad and Tobago and the East which demonstrates both the performance circulating banknote denominations are Caribbean states now join the 11 other benefits and cost savings that can be now, or will very shortly be, issued on countries who have already made the achieved by adopting polymer. polymer, up from c. 25 in 2010. transition to all polymer series, while This marks a sixfold increase in a decade. Costa Rica and the Bank of England will The influence of existing polymer users is Of this number, in denominations, roughly complete the move of their whole series also important: the decision by the Bank twice as many are produced on Guardian to polymer this year. of England to adopt polymer, for instance, clearly influenced similar decisions made as on SAFEGUARD. But of those issued England and Mexico are introducing high by other issuing authorities in the United since 2013, when De La Rue entered value denominations on polymer. Again, Kingdom, in Scotland and Northern Ireland, the market, around twice as many this shows confidence in the security of whilst its own decision had been influenced denominations have been introduced on the notes, especially when combined by the Canadians. SAFEGUARD. With two suppliers available, with the issuing authorities who have their the number of polymer denominations has complete series on polymer. Sensing the growing interest in polymer, tripled since 2013. 2020 saw both CCL Secure and De La Rue run informational webinars and other Guardian™ SAFEGUARD® communications to feed the interest of Circulating Banknotes Circulating Banknotes banks and issuing authorities worldwide. National Bank of Angola National Bank of Angola And just last month, the Bank of England Reserve Bank of Australia East Caribbean Central Bank awarded its second substrate supply Central Bank of Costa Rica Bank of England Bank of England Bank of Ireland, Northern Bank and Ulster Bank tranche under its framework agreement Banco de México (Northern Ireland) with both companies. Between them, De The Saudi Central Bank Bank of Scotland, RBS, Clydesdale Bank (Scotland) La Rue and CCL Secure provide all of the Central Bank of Trinidad & Tobago substrate for the Bank’s £5, £10, £20 and Central Bank of Uruguay soon-to-be-launched £50 production, with Commemorative Banknotes Commemorative Banknotes CCL Secure retaining 75% of the highest Banque du Liban Reserve Bank of Fiji volume denomination, the £20, and De Bank of Namibia La Rue receiving 65% of the £5, £10 and Central Bank of Nicaragua £50 production. Countries issuing one or more denominations on Guardian or SAFEGUARD polymer in 2020.

10 CURRENCY NEWS | POLYMER SUBSTRATES Currency News ran an expert opinion For instance, it reports a surprisingly low piece on this topic in the December 2020 carbon footprint associated with shipping edition, highlighting how machines can polymer waste for recycling, which opens run at speeds of up to 10,000 sheets per up viable recycling providers. hour on polymer and showing that anti- The Carbon Trust has certified that the static is not required once the set-up has carbon footprint on the Bank of England been optimised. polymer ‘fiver’ is 16% lower than its paper Investment in capacity, the predecessor. Furthermore, because environment polymer is part of a closed system (people Recycled polymer banknotes in the form of plastic don’t throw away banknotes), the notes pellets which are then turned into various household With five production lines across three products (© CCL Secure). locations worldwide, CCL Secure is are returned to the central bank at the end the dominant manufacturer of polymer of their life, enabling polymer banknotes to Expanded market choice and increasing substrate. But De La Rue is catching up – be recycled. awareness of the benefits of polymer last month it announced that it is expanding New security features are behind some fundamental changes its UK security features and polymer Polymer security features have also seen in attitudes and procurement practices production site to more than double its advances. In 2020, CCL launched Cinema™ within the commercial sector. Established capacity for polymer substrate, with plans and Vivid™ Colour. The Cinema feature papermakers/printers source polymer from to create a Centre of Excellence for polymer adds three-dimensional and movement both De La Rue and CCL Secure. De La substrate production by the end of 2021. effects integrated directly to the polymer Rue – via its printing arm – even uses CCL’s Between them the two companies are substrate, while Vivid transforms a plain Guardian for some clients. clearly gearing up to meet a growing global white image into full colour when seen Angola, for instance, let its preferred demand for polymer. under UV light. printers select their own substrate suppliers. The increasing need for a more Whilst CCL’s security features are, by Another example is Oberthur Fiduciaire, environmentally sustainable approach also definition, polymer-based, most paper- which printed for Uruguay but chose its plays in favour of polymer. Both companies based security features also work equally own polymer supplier. have put considerable effort into explaining well in polymer. In addition, there is a There are now several instances across the environment benefits of polymer, which growing trend for features to be either Asia, Africa, Europe and the Americas is consistently highlighted by lifecycle optimised or developed specifically for of countries who dual source Guardian analysis. The more durable substrate polymer. An example of the latter is De and SAFEGUARD, or who have switched means that fewer notes need replacing and La Rue’s SAFEGUARD ARGENTUM the polymer substrate between the the demand on raw materials is reduced. It silver feature, which enables mirror-like two suppliers. also means that notes remain in circulation free-form shapes to be incorporated into Debunking myths for longer, with consequent reduction in the substrate. transport and processing – with all else 2020 was also the year where there being equal, banknotes are recycled more were attempts to debunk industry myths. locally and have to be transported less Part of the effort was addressing the frequently to a central site for destruction perceived COVID-19 related risk of handling and replacement. banknotes (not just polymer). Environmental sustainability initiatives are A lot of effort went into providing evidence not new in the polymer banknote industry. that COVID-19 related risks were extremely CCL Secure has been providing support low for handling all banknotes – comparable to central banks for many years through its or lower, in fact, than other physical objects Guardian Global Recycling Program, which such as mobile phone screens, keypads on helps banks to establish recycling programs point-of-sale terminals and touch screens locally, leading to both environmental and on automated checkouts. CCL Secure, for social benefits. instance, established an end-user facing website – truthaboutplasticbanknotes. More recently, with the opening of the com – which addressed many of these Zacapu recycling plant in Mexico, CCL now Polymer notes have also resulted in a myths head on and promoted the benefits provides recycling at all of its production resurgence in the use of holograms (or of polymer to the wider public. facilities worldwide. The recycling process Kinegrams) in both patch and stripe format transforms old polymer banknotes into Another polymer-specific misconception – the smoothness of the substrate providing polypropylene pellets for use in a wide that was countered in 2020 was the claim an optimal surface for the features, range of new plastic products, including that polymer was harder to print on than enhanced by the presence of one or more garden furniture, building materials and paper banknotes. Malcolm McDowell, Chief windows, whereby different diffractive long-life clothing. Executive Officer Note Printing Australia effects can be viewed from either side of and Peter Viney, Plant Manager at the For De La Rue, with 100% of its UK the note. This resurgence has spilled over Bank of England’s Debden site both stated polymer waste recycled and also to paper notes too; according to De La during the year that printing speeds can supporting banks to establish recycling Rue, which also produces holograms, 38% be maintained once equipment has been solutions, the message to customers in of all the banknotes (paper and polymer) it optimised for polymer. In fact, both pointed 2020 has been about the optimal solution designed that were issued in 2020 carried a out that polymer brings advantages such as depending on individual situations. holographic patch or stripe. a more stable substrate enabling a narrower Continued on page 12 > printing operating window.

CURRENCY NEWS | POLYMER SUBSTRATES POLYMER SUBSTRATES | VOLUME 19 – NO 2 | FEBRUARY 2021 11 A Good Year Shrap Offers a Future for Polymer (Continued) Without Coins

Even more choice? Whilst the market is currently being driven, and shared, by CCL Secure and De La Rue, there are other potential suppliers in the wings. The Central Bank of Russia introduced its own polymer commemorative banknote for the Sochi Winter Olympics and it is believed to be continuing its work on polymer. China Banknote Printing and Minting Corporation is said to have its own polymer substrate, although this has yet to make an appearance in China’s banknotes. And in 2020, Spectra Systems announced that it was introducing a polymer substrate. The future At the Future of Cash conference, Chris Shrap’s solution – described as a hybrid But whilst 2020 was undoubtedly Forero-Slee introduced his business, app/card-based replacement for coins a very good year for Guardian and Shrap. As he said, he does not expect – suggests a route to a ‘coinless’, rather SAFEGUARD, is the world really to be popular with those who make their than a cashless, society. It enables users converting to polymer? living from or who like coins. Shrap (the to spend in cash but instead of receiving Clearly, we will see many more company presumably takes its name physical coin as change, they receive their banknotes transition onto polymer from shrapnel, ie. fragments of shells change electronically and instantly in Shrap. substrate in 2021. Some central banks or bullets but also a colloquial term for Participating retailers set up a digital float, have already announced their intention small change) is a solution that offers an which is directly debited when change to do so. During a De La Rue webinar alternative to coins, which they regard is issued. in 2020, 67% of 102 banknote issuing as a ‘pain point’ in payments. In other words, you pay for your purchase authority and state printing work The presentation started by considering and the change goes into a ‘wallet’ that representatives stated they were ‘likely’ why coins are regarded as a problem, carries the value. Lose the wallet, lose the or ‘very likely’ to transition to polymer whether for the retailer or others. For value. The wallet, which could be on your banknotes when polled. the retailer, the time they take to handle, phone, but could also be a ‘Shrap card’, It is important to point out that paper count and manage, along with losses from allows you to use the coin value on it to pay remains the substrate used for the the till. For central banks, the cost of the or to transfer to another wallet or even into majority of banknotes in the world, denomination for which the face value does your bank account. Apart from the last of and the level of innovation around not cover the cost of manufacture (which these, there is no fee to do this. security features and durability remains Chris stated was some $70 million per year South Korea’s coinless initiative for the US), the challenge of managing the extremely high. Polymer will not have This isn’t the first such initiative to replace cash cycle and the costs and challenges of everything its own way, therefore. coins. In 2017, the Bank of Korea initiated a managing coin when and if it returns. But the future points towards an pilot among 36,000 convenience stores, as increasingly important role for polymer, Coins are generally regarded as inefficient part of its ‘Payment System Policy Roadmap particularly as cost, durability and to handle and count, heavy and dirty – Vision 2020, enabling customers to receive sustainability will be key factors to handle and transport and difficult to small change in the form of top-ups onto in decision-making. manage – almost a one-way payment pre-paid cards. The objective was to ‘ease means, as the US and others found in The big question is whether CCL the inconvenience of using and carrying the pandemic. Secure and De La Rue will have this coins and reduce the social costs incurred in growing market to themselves. Or will, Having painted this gloomy picture, the their circulation and management’. as is equally likely, we see more polymer presentation went on to consider on The pilot was the first of its kind in the providers enter the market? one hand the convenience, efficiency, world. Despite the results of a survey (perceived) security and hygiene of digital prior to the pilot, in which the majority of payments, and on the other the loss of respondents said they did not like receiving privacy, the risk of exclusion and people not coin as change, the response to the pilot managing their budgets that it brings. itself among the public was lukewarm. But he posited that for a substantial That response notwithstanding, the Bank minority of consumers, digital payments are continued with the programme, expanding not a ‘win’. If cash is used less, whatever it to major retailers in the country in 2020, replaces it must work for all, people but also allowing change to be credited to must be free to choose the freedom of consumers, bank accounts, rather than just paying without a middleman (and their prepaid cards. fees), anonymously, with the stability that At that time, the Bank stated that the comes from a sense of security and with ‘change deposit service’ had been used in something that is accessible to all. over 30 million purchases since its launch. 12 CURRENCY NEWS | PAYMENT NEWS