Counting On Currency — a resource for cash supply chain management professionals

A New Twist on Old Technologies

by Astrid Mitchell on February 12, 2012 · 0 comments

Improvements in security features are occasionally of the ground-breaking variety – the introduction of optically variable features such as holograms and OVI for example. Or polymer substrates with windows, and microlenses and, going back further, threads and fibres in banknotes and Orlof intaglio printing presses. All were ‘out of the box’ developments that represented a fundamentally new and different way of adding security to our banknotes.

Exciting though such developments may be, they are few and far between. Many of the advances in security in recent years have, instead, been incremental – ever-wider window threads, different types of latent image features, colourless or light infra red inks, combining colour shift with movement, electrotypes and pixel highlights in watermarks, paper/polymer hybrids and so on. These are no less significant for being variations on a theme, and the technology behind them can be every bit as complex, even more so, than the so-called ‘breakthrough’ technologies.

It is with this in mind that we cast a look over some of the recent developments, that fall into this latter category of incremental security enhancements – both existing features that are harnessing new technology for authentication, and new features that make use of existing authentication technology.

One example of the former is the work to show that smartphones can be used as a means of verifying one of the most common and traditional features in banknotes – the intaglio print. No refinement of the intaglio itself is required – simply optimisation of the camera hardware within the phones and development of verification software (although the word ‘simple’ is used advisedly).

If the developers can pull this off, it could overcome the problem of all Level 1 features – namely the difficulty the public has in using such features to authenticate their notes, either because they don’t know what the features are, or because they fail to differentiate them from counterfeits.

In another example, at Banknote 2011 last year Fabriano introduced SIGMA QR™, a watermark in which the image is a two-dimensional barcode (a datamatrix or Quick Response code). QR codes are rapidly gaining ground among manufacturers of consumer and industrial goods as a means of linking the code on the product or its packaging to a website that provides additional product and marketing information, the phone and its image capture capability plus connectivity to a database providing the means to do so.

Fabriano is the first to create the means to apply this concept to banknotes – the watermark image itself providing an overt recognition feature, while the code can be read and decoded by the smart phone, providing not just yes/no authentication but also information such as the note’s serial number, which can be matched back to that on the note itself.

Whether or not the public would ever be sufficiently engaged to use their phones in this way, should they be given the opportunity, remains to be seen. But in principal, expecting the public to check their banknotes with special tools is unrealistic. Providing them with the means to do so via tools they already have in their hand is less so.

And then there are existing verification devices for traditional features, enhancements or new versions of which are being developed. One example is UV lights, which – like smartphones – are ubiquitous (among cashiers, retailers and the like, if not the public at large). However, the features they read have limited security value because of the now widespread commercial availability of fluorescent inks. Hence the opportunities provided by the development of bifluorescent or even multifluorescent features, which represent an exciting prospect not only because of the permutation of different design effects that can be achieved, but also because the devices for checking them are already in widespread use.

Another example can be seen in the development by CTS Electronics of digital magnetic imaging technology for magnetic inks (see CN Vol 9, No 4). Magnetic sensors are nothing new, and various types are already widely used in cash processing systems. But they have their limitations – particularly in resolution and/or the amount of data that can be recorded. The CTS solution is a magneto-optical linear sensor that can record in a very short period of time, potentially at high speeds, images with a resolution as high as 1000 dpi. The result is that a whole new series of applications for magnetic ink can be realised – micro text for example, or barcodes and unique magnetic ink digital signatures, all of which can be read by the sensors.

While developers are always in pursuit of the next ‘big thing’ in banknote security, it is sometimes useful to remind ourselves that many of the answers to enhanced security already exist right under our noses.

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That Was the Year That Was

by Astrid Mitchell on January 19, 2012 · 0 comments

2011 has been a year of global economic, political and social turmoil set against a backdrop of natural and manmade disasters, and allegations that have rocked the foundations of our sector.

In our natural world, 2011 brought huge earthquakes in Argentina, China, Japan and New Zealand. Devastating floods occurred in Australia and South East Asia, and a savage tsunami struck Japan, leaving coastlines obliterated and nuclear calamity at Fukushima. Civil war has occurred throughout the Middle East and North Africa, where regime changes have caused civil unrest. The global economy has been turbulent and even now, the eurozone one is facing massive challenges and survival of the common currency is being openly questioned.

Whilst all of these events occurred, the banknote industry faced its own challenges and successes.

The allegations of impropriety against Securency followed by the production irregularities at De La Rue that began in 2010 spilled over into 2011 and both have yet to reach a conclusion. These latter allegations contributed to the RBI’s determination to become self-sufficient in all aspects of banknote production, a determination fuelled by increasing levels of supposed ‘political’ counterfeiting of the Indian currency.

More recently in the year, allegations were levelled against the Austrian state-owned printer OeBS for suspected payment of un-authorised sales commissions in Syria and Azerbaijan, allegations which stretched as far as Governor Ewald Nowotny who is a member of the ECB’s governing council. Today, these allegations still remain unresolved.

2011 has seen a mixed set of results reported by various major companies. In the spring Oberthur, G&D and Orell Füssli announced improved profits; Landqart, Oberthur, Spectra Sciences and Authentix raised money on the capital markets; and De La Rue surprised industry watchers with a better-than-expected half-year report. As we approach year end, however, Orell Füssli has issued a profits warning and Fortress, owners of Landqart, reported a very poor first half for the Swiss banknote paper maker and are raising another C$35m on the market.

There have also been a number of company changes seen during the year. G&D and Wincor joined forces in producing sensors and banknote sorting giant Toshiba bought US company Non Linear Concepts. The world’s largest security and CIT employer – G4S – tried but failed to acquire the Danish contract cleaning and catering company, ISS, in a £5.2 billion deal. De La Rue closed two non-banknote plants in UK, and in November G&D announced the closure of its 145 year-old plant in Ottawa, Canada saying that the decision was related to the Bank of Canada’s move to longer-lasting polymer currency which would reduce demand for new banknotes.

During November De La Rue surprised the markets when it announced the signing of a technical partnership with Komori. The strong demand for euro currency saw a Joint European Tendering (JET) contract awarded by De Nederlandsche Bank (DNB) to Bundesdruckerei, G&D and De La Rue, excluding Dutch banknote printer Royal Joh Enschedé from printing for its own central bank for the first time in 200 years.

Regarding industry products, most paper makers continued to promote durable substrates though seemingly ignoring the threat of industry contraction caused by longer-lasting banknotes. De La Rue launched its polymer substrate Flexycoin and announced its first reference note, for issue in 2012. Louisenthal’s paper/polymer variant Hybrid™ is now gaining traction, while Fabriano has joined the ranks of composite substrates with the launch of Fusion.

Despite the existing bewildering array of security features for banknotes already available in the market, 2011 saw the introduction of even more as, again, the industry showed its ingenuity in producing a wide range of substrate and print features.

But whereas product differentiation appears to be the name of the game on the production side of the industry, it is standardisation that is gaining ground on the issue side, with a growing consensus that common systems and platforms are the way to successful recirculation that will drive down the cost of cash in circulation.

As 2012 approaches, there are signs of better trading conditions; Nigeria is considering its future as a polymer substrate issuer, Euro Series 2 is predicted for issue in 2013 which will mean higher ES1 series printing, and there remains the outside possibility of a return to legacy currencies for some of the hardest hit eurozone economies.

No one can say the banknote industry is dull; we live in interesting times!

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The Voice of Cash

by Astrid Mitchell on November 6, 2011 · 0 comments

Taking the Message to the People

What do grey squirrels and cashless payments have in common? Admittedly, the link isn’t obvious. The grey squirrel, classified as vermin in Northern Europe because it is decimating the population of the native, cute and fluffy red squirrel, is referred to by many as ‘a tree rat with good PR’. The connection is the power of PR (public relations) to generate a message that favours your subject, be it a grey squirrel or the cashless industry.

We have long argued that our industry needs a voice – to promote cash – not necessarily to lobby, but simply to ensure that the virtues of cash receive a fair hearing out in the public domain compared with cashless forms of payment, in particular the new, ‘sexy’ digital forms such as e- and m-payments. There is certainly plenty of ammunition to support this case.

Take the recent presentation by Mike Lee of ATMIA entitled The Voice of Cash, which provides a detailed list of the ‘magical’ properties of cash – namely, it is the most tangible and liquid form of money, provides instant settlement and a store of value, is universal, has certainty of acceptance, ease of use and access, is fee-free (for end users), energy-friendly and fast. This presentation also provides detailed figures on the global use of cash – such as the fact that $14.413 trillion consumer payments were made in 2010, compared with consumer payment by cards (excluding commercial payments), of $9.582 trillion.

The presentation also outlines detailed figures on the rising use of cash in the US, UK, Canada, Europe, Brazil, China, Japan, Russia and South Africa, concluding that ‘there is virtually zero chance that cash will be withdrawn from society within the next generation (ie. 25 years). There could easily be another hundred years of cash.’

This is a powerful message, and is backed up by Retail Banking Research’s latest predictions that the number of ATMS will rise to 3 million by 2015.

A similar point in terms of the benefits of cash was made by Ravi Menon of the Monetary Authority of Singapore in his opening address to the Currency Conference. ‘Cash is still king’, he said, and it is growing at an average of 7% per year in Singapore. He underlined the key requirements of any payment system as Convenience, Confidence and Cost-Effectiveness (the three ‘C’s), concluding that ‘reports of the demise of cash are vastly exaggerated. Notes and coins have been with us a long time, and have served a crucial role in the growth of the modern economy. I suspect they will be with us for quite some time more.’

Admittedly, speaking to the interests of your audience is always a courteous move but, even so, it was a powerful message, and an encouraging one from such an eminent figure, and from a country like Singapore which is in the vanguard where the adoption of new payment technologies is concerned.

Another virtue of cash was apparent in the presentation from Alan Boaden of the Reserve Bank of New Zealand on how the country was able to meet demand for cash in the aftermath of the devastating earthquake that struck Christchurch earlier this year. Enormous damage to physical infrastructure, including bank branches and ATMs, combined with loss of power, meant the means for providing cash were severely restricted at a time when the public needed it most. That the RBNZ managed to meet this demand is testament to its organisational abilities, and the enduring power of cash as the currency of last resort.

In another context, we feature an interview with Michael Lambert of the Federal Reserve. There are many interesting strands to his comment, three of which stand out with relation to the topic of this Comment.

First is that, thanks to new technology, the Fed has been able to more than double the life time of the US$1 bill – not by reducing the quality threshold, but simply by being smarter in processing the notes. This, in turn, has turned the business case of the costs of notes versus coin on its head, as well as demonstrating how, going back to Mr Menon’s point about cost-effectiveness, it is possible to make savings by being smarter.

Second is that, the business case aside, in the US they actually listen to what the people want, and the people clearly want to retain the dollar bill. This is in marked contrast to so many other countries, where a top-down approach is taken by simply removing lower denomination notes and providing no choice. A public engaged in its currency can only be good for the currency.

And third is how easy it is for the media and the blogosphere, the twin conduits for information to interested parties, to take some superficial facts and subvert the underlying truth. Thus the calls to replace the dollar bill with a coin, based on selective use of data and the examples of other countries with completely different circumstances. This, more than anything else, underscores the need for the cash community to proactively frame the message in the context of all the facts, to prevent these being distorted either by parties with differing interests, or simply for the sake of a good story. .

Which brings us back to the original point. How to make this case? Or rather, who to make this case? As said, there is certainly plenty of ammunition out there. And, one way or another, potentially plenty of organisations to say it. One description of PR is that it is the practice of turning ‘a pig’s ear into a silk purse’. Our industry isn’t a pig’s ear. It is already a silk purse. We don’t need to twist the message. We simply need to convey it.

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 2.0 UK: England & Wales.

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ICCOS Asia 2011 – Will You Be There?

by Brendan Burge on October 30, 2011 · 0 comments

In an appropriate sequel position to my last post on conferences in the east versus west, comes the annual International Commercial Cash Operations Seminar (ICCOS) in Hong Kong, from November 13th through the 15th. Although there has ever been only one previous ICCOS in Asia, the experience and credibility of the organizers attracts a wide variety of central bank and commercial bank attendees, together with a good representation from associated equipment and software suppliers as well as partner organizations such as CIT’s and process outsource operations.

This years event in Hong Kong promises to offer attendance from a strong cross section of central banks and strong regional commercial institutions, with notable representation and presentation by The People’s Bank of China. A wide variety of general presentation topics and several specific breakout presentations should ensure content value.

Following is a quote from the main ICCOS website,

The inaugural ICCOS Asia 2010 at the Kuala Lumpur Hilton last November was very well accepted by 167 delegates from 34 countries (view photos from this event.) We are delighted to announce and invite you to the next ICCOS Asia which will be held from 13 to 15 November 2011. Download the conference brochure.

It will continue the tradition of all ICCOS events in sharing best practices and providing informative presentations and case studies from peers within the commercial cash cycle, as this is how ICCOS has grown to what is now seen as the premier global conference for commercial cash distribution and circulation.

ICCOS was traditionally held in America, where it grew from strength to strength. After requests from Central Banks and Industry Suppliers, we commenced planning in 2008 for regional conferences, ICCOS EMEA and ICCOS Asia.

Adrian Baxter, Conference Chairman says; “It is really a great pleasure and honour to be able to continue our ICCOS tradition withAsian success stories, local Central Bank Policy discussions, and best practice that has been proven to be successful in this diverse region.”

The first ICCOS Asia featured fascinating presentations including those from the following esteemed organizations: Amcop Security Resources Sdn Bhd, Bank Negara Malaysia, Bank of Thailand, Bangko Sentral ng Pilipinas, Central Bank of the Republic of Turkey, Certis CISCO Security Pte Ltd, G4S, Geldservice Austria (GSA), International Association of Currency Affairs, Linfox Armaguard Pty Ltd, Monetary Authority of Singapore, Protea Coin Group, Reserve Bank of Australia, SBV Services (Pty) Ltd and The Central Bank of Hungary.

There were 13 diverse sponsors with products that ranged across the whole cash cycle. The effort that these companies make in the creation of their exhibition booths and the thought process and dedication that goes into the breakout sessions is a large part of what makes ICCOS unique.

We hope this is of interest to you and those in your organization and look forward to welcoming you to ICCOS Asia 2011.

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 2.5 Canada.

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The Bank Conference Buzz: west vs. east

10.24.2011

I must admit that I have been saving up a bit some enthusiasm for this Post! Mostly I wanted to have two similar yet different conference experiences behind me. It was my good fortune to attend both the recent 2011 BAI Retail Delivery Show in Chicago and also the 2011 CIFTEE Exhibition in Beijing …. Having attended one major event this year in each region – east and west, one has a natural inclination to compare them. Banking related conferees, shows and seminars.in general, in north america and to a lesser extent in europe, are ….

Taking the Message to the People

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