This month is Currency Newsâ€™ 10th anniversary. We commented on the major developments of the last decade in the December issue and now, to mark ten years of publication, we are making our predictions on what the next ten years may bring. (Editor’s Note) We are pleased to provide you with a free copy of the 10th Anniversary Edition – just look for the link at the bottom of this article.
Early announcements: There is an increasing trend for central banks to announce plans for a new series prior to wide-spread circulation Â â€“ partly a consequence of more openness generally, and partly to engage the publicâ€™s interest at an early stage in new note planning. This strategy backfired for the US$100 and the new Swiss and euro series. All were announced pre-issue, only to fall victim to production problems with the new security features. CN predicts that central banks will be more cautious about public pronouncements until their selected technologies are proven.
Test circulation: Related to this, more innovative features will make their appearance in commemorative circulating notes Â before transitioning to circulating notes. Central banks want innovative features, but they also want these features to be proven in a manufacturing and circulation environment. One way of achieving this is to trial such features in circulating commemorative notes. There is nothing new in this; Thailand, for example, frequently uses commemorative notes for this purpose Â (for example, the first use of OVI was in 1988 on the commemorative 60 Baht), as does Kazakhstan. But CN foresees more central banks, not accustomed to issuing commemorative notes, following their example – Argentina and Morocco being two recent cases in point.
Keeping it simple: The watchword for new security features is now â€˜simplicityâ€™, exhibiting clear and unambiguous effects easily explained and understood by the general public. Optically variable effects such as those provided by holograms and colour shift ink or threads led the way, and still have an important role to play. But the past few years have seen two Level 1 overt security features emerge – Â Motion and SPARKÂ® â€“ where the simplicity of the visual effects belies the complexity of the underlying technology. We can expect both more of these, and a number of similar technologies, to become commonplace in banknotes in the years to come.
Integration: Another watchword is integration. The high cost of security features is now such that they need to be optimised both for security and for aesthetic reasons. The new European Europa series will display this trend if the new â‚¬5, launched in January 2013, is followed by the other denominations in the Euro series II, while the latest display of â€˜house notesâ€™ at Banknote 2012 gives an idea of what can be achieved by imaginative use of intricate design coupled with the latest security features.
Coin innovation: It is likely that there will be more innovation in coins, which are now Â under threat from two sides. One is the evolution of low denomination durable banknote substrates, and high value coins need to be more secure if they are to maintain Â their position at the coin/note boundary. Â The other challenge is from cashless alternatives that now threaten to impact micro-transactions. The advent and proliferation of technologies such as NFC and m-payments means that the coin industry will have to make coins more cost-effective, functional and attractive to use.
Public verification: Â Variations of the â€˜feel/look/tiltâ€™ message will remain key to public recognition of security features. However, the smartphone will start to make a significant impact â€“ not just as an additional means of providing information to users about their notes, but also as a verification tool. The first to address this opportunity are Orell FÃ¼ssli with StarPerf, and Giesecke & Devrient with MAGnite. Others will follow.
SectorÂ rationalisation: Global banknote demand exceeds 160 billion notes per year and the total supply in both the private and state-owned sectors is probably 200 billion notes per year. Â CN expects that more state-sector suppliers â€“ print works and paper mills â€“ will try to enter the commercial banknote supply market. State sector assets may be subject to Â privatisation and closure, and others may enter into cooperative ventures where the costs of investment and market development are shared between the state and commercial sectors.
Self sufficiency: One of the characteristics of the past decade has been moves towards self-sufficiency in production in countries with rapidly-developing economies and demand for cash. India, the Philippines, Chile and Indonesia are all examples of countries following this trend. It is likely that banknote production will be set up in the Middle East while China, already very largely self-sufficient in paper and print, will continue to power growing demand for currency.
Automation:Â Cash circulation processes are still disjointed and manual, despite advances in hardware and software, electronics, robotics, and communications technology, and CN predicts much greater automation â€“ at the branch or retail outlet, cash centre vault.
The key is not only technology (there are already numerous Â examples of major advances in, for example, cash recycling â€“ which will become the norm â€“ or central bank vaults that run almost entirely with robots). What is key is that companies work with one another to provide standardised solutions that enable a seamless transition from the moment cash is deposited to its redistribution (or destruction).
All of the above predictions are for incremental changes. The biggest potential game-change is, of course, the impact of alternative methods of payment, such as e-commerce or the next generation of cashless payments driven by NFC and mobile technology. Our prediction as to the impact of this is simple â€“ who knows? No-one does.
There is little the industry can do about e-commerce, but the best way of minimising the impact of the next generation of cashless payment technologies is to ensure that notes and coins become even more efficient and cost-effective, retain public confidence and are easy and attractive for the public to use.
Therein lies the challenge for the next ten years, and CN looks forward to a further decade in covering how the market is meeting this challenge.
(Editor’s Note) Currency News provides all the topical and technical news that affects our industry, in a monthly subscription format Counting On Currency and Currency News cooperate to ensure you have access to all the news that matters, all the time. If you enjoy this free copy, we encourage you to subscribe to Currency News – click here to view Subscription information. Click here to download your copy of theÂ 10th Anniversary Edition.