The Note of the Future?
Posted on 6/17/2014
In 1983, notes made of polymer were issued by the Isle of Man, but these prototypes were defective and were eventually discontinued. Five years later, the Reserve Bank of Australia reintroduced polymer banknotes, this time made of long-lasting polypropylene. In 1996, Australia converted to polymer notes entirely, with dozens of countries introducing polymer notes of their own.
Since Paper Money Guaranty is based in the United States, the train of thought around here naturally arrives on the subject of the dollar and its future. The subject of polymer dollars has been explored by economists and numismatists for quite some time. While proponents cite polymer’s durability and enhanced security features (detailed here), detractors point out the higher cost and the risk of notes sticking together or melting in the sun. However, despite these concerns eight countries have fully converted to polymer: Australia, Bermuda, Brunei, Canada, New Zealand, Papua New Guinea, Romania and Vietnam. The United Kingdom and India are both exploring their options, and the former is expected to convert in 2016. But why have these countries chosen polymer for their banknotes? Canada is one of the newer converts, having made the switch in 2011. Their reasoning is justified, given the statistic of 470 counterfeits for every million Canadian dollars in circulation. The intricate design windows are difficult to forge, but Mexico has found counterfeiting has grown despite that country’s switch to polymer, while Canadian counterfeiting has dropped, along with every other country using the material.
Despite these facts, some have predicted that the United States will never fully convert to polymer, even as the new $100 note contains polymer “microlenses” to reveal latent images. Their pessimism derives from the theory that Crane & Co., the manufacturer of the United States’ paper money stock have “amazingly strong lobbyists on Capitol Hill,” while also mentioning the late Senator Ted Kennedy and his apparent power to prevent changes to dollar banknotes. With these theories in mind, you can see why higher production prices and decreased business for Crane & Co. would lead polymer talks to go nowhere. Additionally, other countries can be cited as reasons for the United States’ hesitation, as Thai citizens customarily fold their notes, it is more difficult with polymer notes, and the blazing sun of Nigeria faded the ink on a trial run of polymer notes, leading to a return to cotton paper.
In conclusion, while polymer might have its advantages as it relates to security, unless the production methods change, cotton paper will continue to be the material of choice for the United States dollar for the foreseeable future. As for other countries, time will tell whether or not polymer notes have the capacity for improvement, because if pricing and its numerous flaws can be corrected, it would certainly be interesting to see the continuation of new varieties pass through the halls of PMG.