Polymer: The (Paper) Wave of the Future?
Posted on 10/25/2011
In continuation of the thought-provoking dialogue generated from PMG Finalizer Bruce Thornton’s recent thread on the chat board about the “Future of US ‘Paper’ Money,” an in-depth look at the Bank of Canada’s efforts to produce a series of polymer banknotes provides an interesting opportunity to draw connections with possible trajectories for the US BEP (Bureau of Engraving and Printing) and currency writ large. In a supplement to the Bank of Canada Review released in June, the findings of the bank’s nearly decade-long development program aimed at producing the country’s first series of circulating polymer banknotes were made public and supply an excellent case study for how a similar program might be attempted in the United States.
Primarily designed to incorporate the most advanced anti-counterfeiting technologies currently available, the Bank of Canada’s new polymer notes offer a wide range of financial and environmental advantages far exceeding those of their paper predecessors. As the Bank of Canada was left trying to manage a dramatic increase of counterfeiting immediately following the release of the Canadian Journey series between 2001 and 2004, confidence in Canadian currency was under threat.1 The bank’s response to the sophistication and speed which counterfeiters were able to mimic the security features found on Canadian Journey notes was both swift and complete. Suggesting that “public confidence in bank notes rests fundamentally on notes that are as resistant as possible to counterfeiting while being easy for users to identify as genuine,” the Bank of Canada appears to have accomplished this goal with the introduction of polymer banknotes and the extreme challenges this type of currency presents to counterfeiters.2
In addition to the numerous security features made possible by the use of polymer substrates for currency, the Bank of Canada’s polymer notes also offer considerable economic and environmental savings. Expected to far outlast their paper counterparts – from two to four times longer circulating life depending on the environment – the Bank of Canada has found that polymer notes will decrease the cost and environmental impact of producing the new polymer series over the course of the planned life-span of the new notes.3 Even though the initial cost of polymer notes in the Canadian case is two times that of paper notes, the increased life expectancy of polymer notes substantially reduces the number of replacement notes required to the point that the Bank of Canada has projected a savings of more than 25 percent in production costs associated with achieving similar counterfeiting resistance on paper notes. Additionally, by eliminating the substantial environmental impact of producing cotton for banknotes, decreasing the transportation requirements of newly issued and replacement notes, and using a recyclable substrate offers the opportunity to produce bank notes that are environmentally responsible while still offering security and economy.4
Through the collaborative efforts of the Four Nations Group – the combined research effort of the Bank of Canada, Reserve Bank of Australia, Bank of England, and Banco de México – the new Canadian polymer series of banknotes offers an excellent example for any potential future attempts by the US BEP to issue notes on a new substrate. In an era increasingly marked by austerity, shrinking budgets, increasing concerns about the future of the US dollar, the escalation of counterfeiting techniques and growing fears about our impact on the environment, polymer banknotes appear to be an excellent opportunity to meet these challenges in a positive way.
I harbor no illusions, however, in regard to the possibility of the US BEP switching to a polymer substrate. This change would represent the same kind of paradigm shift in the production and circulation of US currency as observed in the switch from large to small-size currency in 1928. With nearly a century of proven success any shift away from cotton paper small-size US banknotes will undoubtedly be met with passionate criticism from industry leaders and collectors alike. Given the multitude of challenges currently facing the US BEP and the apparent shortcomings of the US Mint’s dollar coin program, however, the potential benefits of polymer bank notes are undeniable. With the Bank of England now joining the increasing ranks of economies of scale beginning to evaluate the advantages of polymer banknotes according to a recent article in The Independent, the significant success realized by countries transitioning to polymer currency stands as a strong reason to be optimistic about the future of “paper” money as an important part of the global economy.5
As a collector and someone heavily invested in the future of banknotes, the prospect of US polymer banknotes is exciting as a potential gateway for a new generation of numismatic enthusiasts. As many in our country look to a myriad of “golden ages,” there is a growing feeling that polymer banknotes offers the opportunity to return to a time when US currency was beautiful while simultaneously fulfilling our responsibility to increase the security of our currency, encourage economic stability, and promote environmental accountability. This transition will not be easy, but all observations seem to suggest that polymer banknotes are the (paper) wave of the future.
1Bank of Canada. 2011. Paying with Polymer: Developing Canada’s New Bank Notes. In Bank of Canada Review (Spring): 2. 2 Ibid, 7. 3 Ibid, 5. 4Ibid, 6. 5Mark Leftly. 2011. British Bank Notes set for Plastic Surgery. The Independent. September 4.