Among existing features, the new Thai series will introduce a watermark depicting the portrait of a Thai King alongside denominational electrotype that is visible when held to the light; a windowed colour-shift security thread located on the back of the note that changes colour from dark blue to red when viewed from different angles; irregular shapes of a see-through register printed on the front and the back of the notes that combine to form the denomination numeral when the note is held to the light; raised printing of letters and numerals; and two tactile marks in the shape of flowers in dark blue representing the Braille number 5.

The design of the new series – known to the Bank of Thailand as Series 16 – depicts Thai kings from different periods throughout the country’s history. The 50-Baht note features the portrait of HM King Bhumibol Adulyadej.

“The thinking behind the new look is to honor the Thai Kings of the Sukhothai, Ayutthaya, Thonburi and Rattanakosin periods, to visually improve and update the banknotes, to develop counterfeit-protection measures and to assist blind people dealing with the banknotes,” Dr Prasarn Trairatvorakulm Governor of the Bank of Thailand, told the Phuket Gazette this week.

The 50-Baht note will be followed by the release of new 20, 100, 500 and 1,000-Baht notes. The Phuket Gazette reported that the entire series isn’t expected to be in circulation until the end of 2026.

The release of the new banknote series comes less than a week after politicians in Thailand’s opposition party warned the government not to force the central bank to cover the country’s public debt.

The Thai government had proposed shift the public debt of Bt1.14 trillion to the Bank of Thailand’s account, but critics said the move would lead to hyperinflation and a severe devaluation of the Thai currency.

SOURCES:
Thailand Business News: “The Bank Of Thailand Launches New Series of Banknotes”
Phuket Gazette: “New 50-Baht Banknote In Phuket By This Weekend”
The Nation: “Govnt Debt Policy Will Make Currency ‘Worthless’”

In their proposed 2012 fiscal plan, the Thai government is attempting to borrow Bt400 billion to finance the budget deficit and intends to borrow another Bt400 billion in order to finance restoration projects that are necessary to help rebuild the country after it was struck by major flooding in the spring of 2011. On top of this, the government has also announced efforts to shift the public debt of Bt1.14 trillion to the Bank of Thailand’s account.

“The government’s plan to force the central bank to repay the debts of the Financial Institution Development Fund would result in the printing of more money for the government,” said Democrat MP Sansern Samalapa. “People would be happy for a while, for there would be no need to pay taxes, but then the banknotes would become worthless paper.”

Printing more money than needed is a dangerous road, writes MSNBC Senior Producer John W. Schoen.

“If you create more currency without raising the value of the whatever backs that currency, the value of the currency drops,” he says. “Currency is really just a piece of paper that stands for something of value. Increasing the amount of currency without increasing the value it represents just makes the currency worth less than when you started.”

Samalap provided examples of Latin American countries who tried to undergo similar debt shifts, and who ended up in situations of hyperinflation leading to the collapse of their economies.

Michael K. Salemi, an economics professor at the University of North Carolina, provides an account of one of these situations, which occurred in Bolivia.

“The Bolivian hyperinflation is a case in point. Eliana Cardoso explains that in 1982 Hernán Siles Suazo took power as head of a leftist coalition that wanted to satisfy demands for more government spending on domestic programs but faced growing debt service obligations and falling prices for its tin exports,” he writes. “The Bolivian government responded to this situation by printing money. Faced with a shortage of funds, it chose to raise revenue through the inflation tax instead of raising income taxes or reducing other government spending.”

Hyperinflation, Salemi says, always reduces an economy’s efficiency due to the fact that it drives people away from monetary transactions.

SOURCES:
The Nation: “Govnt Debt Policy Will Make Currency ‘Worthless’”
MSNBC Answer Desk: “US Budget Deficit Fix: Print More Money?”
The Concise Encyclopedia of Economics: “Hyperinflation”

“In the fourth quarter [of 2011] we once again began printing the paper 10 ruble note, as banks had begun to complain of a deficit of the coins,” Central Bank head Georgry Luntovsksy told The Moscow News.

The plan to remove the banknotes was due to the Bank’s belief that the low-value note (worth 30 US cents) was too costly to reproduce and was impractical to contemporary currency users. When they made the decision to nix the paper banknote, the Bank of Russia anticipated they would save approximately 18 billion ruples over the following decade.

This isn’t the only move the Bank has been making with regards to the ruble. After a volatile year that saw the currency fall nearly 17 per cent from its year high amid fears of a euro zone collapse, the Bank announced this week it would allow more daily fluctuations in ruble trading.

According to the Wall Street Journal, market experts say this step could very well “anticipate higher volatility in the currency due to instability abroad and political uncertainty at home.”

“Ultimately, we think the central bank expects pressures on the ruble to mount in one direction or another due to a variety of possible reasons, including geopolitical risks in the Middle East and euro-zone as well as domestic politics, and is working to increase the flexibility of the system,” Alexei Moiseev, chief economist at VTB Capital, told the Wall Street Journal.

Russia’s central bank has gradually taken a more hands-off stance on managing the ruble as it moves to a policy of inflation targeting and an eventual free float of its currency, the financial magazine reported.

“The regulator last widened the ruble’s trading band on March 1, expanding it to five rubles from four rubles.”

SOURCES:
The Moscow Times: “10-Ruble Banknote Being Printed Once Again”
The Wall Street Journal: “Russian Central Bank Widens Trading Band”

According to an article published by RT.com, central banks throughout Europe are preparing contingency plans evaluating their needs for additional printing capacity should the euro – a singular currency shared by seventeen countries – come to an end.

The Central Bank of Ireland, for example, is assessing the capacity of their banknote facilities where they currently manufacture new euro bills. Last year, Ireland printed 127.5 million 10-euro notes.

“The bank’s printing capacities may not meet demand should the country need to come up with a hasty replacement for the euro,” RT.com said. “Officials are discussing reactivating old printers or
enlisting a private contractor to do the job”

Last week, in a segment that aired on PRI’s The World, banknote manufacturers and economists also said the industry could see some increased businesses if the euro collapses.

But it’s not all good news. A source from the Bank of England told the Wall Street Journal they were “concerned that if the eurozone unravels, the plant would be overwhelmed with orders and would not be able to print pounds. Britain is reportedly considering steps to ensure that such contingency would not cause damage to the UK’s own interests.”

Among other countries, Switzerland, Montenegro, Bosnia and Latvia are all beginning to look at post-euro plans should the currency bloc fail. To do that, RT reports, “they are now casting around for a new reference point – probably the German mark.”

SOURCES:
RT.com: “Plan B: Printing Presses on Standby To Beat Euro’s Demise”
PRI’s The World: “Making Money by Making Money”

That price tag reflects the modifications that will need to be made to sorting and counting machines that are used across the country to handle money, says Julie Girard, spokeswoman for the Bank of Canada.

“In Canada, we have 500,000 machines that accept, dispense or sort bank notes,” Girard said, adding that includes about 75,000 Automated Teller Machines (ATMs).

The new bills are drastically different than the old cotton-paper notes that are still in circulation. The new series is made of polymer, a plastic substrate, and is equipped with multiple new security features such as a transparent window embedded with a metallic image, in an effort to curb counterfeiting.

Polymer is more durable – 2.5 times (seven years) longer than its cotton-paper counterpart – and weight approximately ten per cent less than the current bills.

In November, business leaders throughout the country criticized the new notes precisely because of the cost they would incur. Ted Bronsan, president of John Poulet Cheque Writer Service, said the new security features would pose some problems for small businesses.

“Probably 99 per cent of the market uses money counters with optics,” Brosnan explained to CTV.

However, Girard says the benefits of the new notes outweight the problems – and the costs – that these businesses will see, noting that this is a short-term problem with long term remunerations.

“We knew the transition was going to be a little more involved with polymer but the security and all the benefits were really important,” she said. “Polymer is what makes those benefits possible.”

The new $100 bill, the first in the polymer series, was released in November. The next bill in the new series to be released will be the $50 bill and will enter into circulation in March 2012. The other denominations in the series, the $20, $10 and $5 bills, will all be in circulation by the end of 2013.

SOURCES:
UPI: “New Canadian Banknotes Cost Banks $100M”
CTV: “Polymer Bills Could Cause Businesses Headaches”

This week, Jason Margolis, host of The World on Public Radio International (PRI), caught up with some of these manufacturers who echo the sentiment, saying “there’s still a need for cold, hard cash.”

At a mill in Dalton, MA, Crane & Co. produces about 18 million pounds of paper per year for the US Bureau of Engraving and Printing. Doug Crane, owner of the family-owned business that has been producing banknotes since the US revolution, says it’s a good time to be in the currency business.

“The demand sort of ebbs and flows, and certainly there’s been a stronger demand on currency and on certain denominations in particular since the economic uncertainty has really spread across the world,” he tells PRI.

Chad Wasilenkoff, CEO of the Vancouver-based specialty paper manufacturer Fortress Paper, agrees with Crane’s assessment. Fortress Paper produces banknotes for many countries, but one of their most notable clients in the country of Switzerland for whom they produce the Swiss Franc. Wasilenkoff says the instability of world markets is driving business.

“People are reluctant to keep as much money in the banks, and they’re pulling it out and going back to the old form of sticking it under the mattress,” he says. “With the global crisis going on, these printing presses are running fast and furious around the world, so it’s very robust times there.”

And it’s not just banknote producers that say cash is as popular as ever. In the PRI piece, Michael Walden, an economist at North Carolina State University, tells Margolis says in times of crisis people turn to cold, hard cash for security.

“I think people in these times like to simply have more cash on hand. I think that just fulfils a basic primal need we have when there is heightened financial fear,” he says.

The economic situation in Europe could also prove to pay off for banknote producers. If the eurozone collapses, countries could once again revert to their old currencies and re-create their reserves.

“Demand for bank notes would definitely go up,” Wasilenkoff says.

SOURCE:
PRI’s The World: “Making Money by Making Money”

Officials from the UAE Central Bank say that the new banknote was necessary not only to stay on top of counterfeit efforts in the region but also to meet the demand of a growing population.

“The Central Bank’s move reflects that there has been a considerable growth in the domestic economy and the money in circulation is getting enlarged. It seems the people, businessmen and the economy as a whole feel the need to use larger bills that show their increased purchasing power and increased number of financial transaction,” Dr Mohammad Amerah, an Abu Dhabi-based economist, told Gulf News.

“The new security features on the note will curb counterfeiting,” Amerah added.

Included among these new security features is a see-through window on the front of the bill and an optically variable stripe showing the national emblem, falcon head and denomination value that changes colour depending on the angle.

In addition to these features, the silver thread once found on the back of the Dh500 note has been replaced with a broader window that reads “UAE 500” that changes colour depending on the angle, and the metallic ink around the UAE emblem on the front of the old bill will be replaced with multi-colour ink and a multi-colour hidden image will be featured on the bottom left side of the bill.

The dirham was put into circulation on May 19, 1973 and the current Dh500 note was issued in 1982, meaning that this is the first new Dh500 design in almost thirty years.

The new banknote will enter into circulation on Tuesday, November 29. Banks will continue to receive the old banknotes according to the Central Bank’s regular procedures.

SOURCES:
Gulf News: “Central Bank Introduces New Dh500 Note”
The National: “New Dh500 Banknote Coming Into Circulation This Week”

A big selling point for polymer is increased durability. According to the Bank of Canada, the new polymer banknotes will last 2.5 times longer than its cotton-paper counterparts. That means the life span of a $20 bill – Canada’s most widely circulated denomination – is expected to reach at least seven years.

Being more durable means reducing costs. The less currency a central bank has to produce to replace damaged bills, the less they have to spend in the long run.

Using plastic bills also ensure a certain degree of environmental responsibility as well according to Stane Straus, a polymer researcher.

“Many of these [paper notes] are actually made of cotton – US paper bills cotton are 75% cotton, which takes large amounts of pesticides and water to produce,” he told BBC News.

In contrast to paper notes, plastic notes are recyclable at the end of their lifetime.

Due to their plastic make-up, polymer banknotes remain cleaner and last longer in the face of hot temperatures. For this reason, they are often produced in countries with hot climates.

“The tropical climate is a challenging environment for banknotes, especially because of high humidity and high temperatures,” Straus said. “This causes paper notes to absorb moisture, thus becoming dirty and limp quickly. Polymer notes, on the other hand, do not absorb moisture. You could say that polymer notes beat paper notes in terms of cleanliness and durability in all climates, but this particular advantage of polymer notes stands out even more in tropical climates.”

Of course, the main advantage of polymer banknotes is security. Polymer notes are considered by the industry to me more secure therefore less likely to be counterfeited.

Canada’s new $100 contains several state of the art security features such as raised ink, a large transparent window that also contains a colour-shifting metallic portrait, hidden numbers in the transparent window that match the note’s denomination, transparent text, a frosted maple leaf window that also contains hidden numbers, among others.

SOURCE:
BBC News: “Who, What Why: Why Don’t More Countries Use Plastic Banknotes?”

The problem with the new $100 banknotes lies in its design, according to Ted Brosnan, president of John Poulet Cheque Writer Service. The see-through security features could lead to problems with currency counters, he said.

“Probably 99 per cent of the market uses money counters with optics,” Brosnan explained to

Julie Girard, Bank of Canada’s spokesperson, said this is a problem the national bank planned for leading up to the release of the new banknote series, but insisted that the benefits of the new notes outweighed the problems.

“We knew the transition was going to be a little more involved with polymer but the security and all the benefits were really important,” she said. “Polymer is what makes those benefits possible.”

The polymer substrate used to manufacture the new banknotes means the latest series will last up to 2.5 times longer than previous cotton-based notes. Polymer also allows for high-tech security features – such as the see through panels on the new $100 note – to be embedded in an attempt to thwart
counterfeiting.

The next bill in the new series to be released will be the $50 bill and will enter into circulation in March 2012. The other denominations in the series, the $20, $10 and $5 bills, will all be in circulation by the end of 2013.

SOURCE:
CTV: “Polymer Bills Could Cause Businesses Headaches”