Editor’s Note: 2013 certainly was a year of contrasts and contradictions in the currency industry. Who better to comment on that than a person who spends all day every day immersed in what’s happening with our money, globally speaking. I surrender the podium to Ms. Astrid Mitchell…
2013 – a Year of Contrasts and Contradictions
The debate about the future of cash has this year reached fresh heights with regular, and in some cases ill-conceived, promotions from alternative payment providers, all claiming their product offers major advantages over cash. But do transactions by smart phones, e-purses and bitcoins to name but a few really achieve what the promotions claim and do they fill the public with confidence? And what impact are they really having on public payment habits?
The jury is out on these points but, in the meantime, cash continues to make its own case Â – Â more notes were printed worldwide than ever before this year and the volumes are forecast to continue growing strongly, especially in emerging economies where high, single digit growth is likely. But growth does not come without cost, and many central banks are now embarking on cost reduction programmes, with some specifically seeking to contain cash growth or even reduce it by promoting alternative payment systems.
Moreover, although banknote volumes were buoyant this year, profit margins in the commercial banknote sector â€“ both paper and print – came under increased pressure, and signs of supply-side consolidation in all sectors of the industry were seen.
State-owned companies continued their interest in the commercial banknote sector in Latin America, Asia, Africa and Europe, further squeezing the commercial sector and even the National Printing Bureau of Japan declared interest in printing banknotes for the export market.Â But the Bank of Belgium called it a day and announced the closure of its printworks by 2020, while the Banque de France caused labour unrest early in the year by announcing its intention to make changes and privatise paper production.
Substrate Wars Heat Up
The substrate wars between paper and polymer also heated up. De La Rue announced its own version of polymer banknote substrate and won two orders in Fiji and Mauritius, while Louisenthalâ€™s HybridÂ paper/polymer composite was launched successfully in Jamaica and Bhutan. The Bank of England, close on the heels of Canadaâ€™s move to polymer, said it was considering issuing at least two denominations printed on polymer. The Reserve Bank of India launched a tender for substrate â€˜containing at least one layer of polymerâ€™ and Innovia Security became the new name of Securency after the Reserve Bank of Australia disposed of its 50% stake. Since then, Innovia in turn has been put up for sale. Almost coincidental with that announcement, Nigeria decided that its experiment with polymer substrate was over. Zambia also dropped polymer for its new series.
The durability theme has not just focussed on substrates – improving sensing technology has enabled banknote life to be extended. In the case of the US $1 bill, its life has almost doubled to 5.8 years. This is an astounding length of time for a banknote at the note coin boundary, and around six times that of the â‚¬5 prior to it being post print varnished, which is now becoming almost standard practice for low and transaction denominations.
Another noticeable trend has been for central banks to engage to a much greater extent than ever before, both privately and publicly, with their cash users, from consulting them prior to taking decisions on new series and involving cash handlers to staging major publicity events for the launch. The revealing of the design of the new $5 from a Canadian Astronaut on a space station was one such example this year, and another was the ECBâ€™s wide-ranging publicity campaign for the launch of the new â‚¬5, which is being followed up with a Partnership Programme for the forthcoming new $10. The Bank of England carried out a major consultation programme with the British public regarding their proposed switch to polymer â€“ effectively letting the public make the decision.
Cash Handling in Better Shape than Ever
The cash handling industry, which suffered the first – and perhaps the most â€“ from the financial crash of 2008 and subsequent economic downturn, appears to be on the up again as economic confidence returns â€“ arguably in better shape now since many of the companies restructured and cut costs to weather the storms.
The coin industry has not fared so well.Â This year Â has seen tough market conditions, with three of the major suppliers â€“ the UK, Â Canadian and Finnish mints â€“ all seeing performance suffer due rising metal prices, over-capacity and demands to reduce cost. Suppliers are responding to such demands with cheaper coins through electroplating, while in a growing number of countries, issuers are reviewing their low denomination coins and, in some cases, discontinuing these.
While this has not been the best of yearsÂ for commercial companies in the currency industry, nor for state organisationsÂ involved in export sales, in most other respects the industry has thrived. Counterfeiting remains well under control, the volumes of currency in circulation have increased and, although currency is seeing its share of transactions reduce, cash remains king in numbers and shows no signs of dying out any time soon.
On which note, Currency News wishes you a Happy New Year, and a prosperous and successful 2014.
Editor’s Note: our own Canadian comedian Rick Mercer’s humorousÂ (and often referenced) favourite rant on the future of plastic money…