Called “MintChip” the proposed system would be a virtual payment method accessible through microchips, microSD cards and USB sticks.

“The easiest way to describe it is that it’s a small chip like you would find in your phone,” said Christine Aquino, the mint’s director of communications.

“Imagine a whole new breed of transactions that are smaller, faster and virtually everywhere. That’s where MintChip comes in – Using a chip, you securely load value onto a smart phone, USB device, computer, tablet or cloud – or maybe even some future device that doesn’t exist yet,” a promotional video released by the mint described.

No personal information would be required to use the system and only small-value transactions (anything under $10) could be used.

Though the conception has been developed, the software has not. That’s why the mint is offering $50,000 for winners of a contest aimed at developing smartphone apps and other ways of demonstrating MintChip’s benefits as a payment system for consumers, an article in the Leader-Post reported.

The winners will be chosen by a panel of business leaders including mint CEO Ian Bennett and Google’s vice-president of payments, Osama Bedler in September.

According to the Leader-Post, Marc Brule, the mint’s chief financial officer, will disclose more details about MintChip at an upcoming speech in Toronto later this month during a Forum on “Canadian Payment Innovations” sponsored by the The Canadian Institute business think tank.

SOURCES:
The Leader-Post: “Mint Promotes Digital-Chip Currency”

The government said the one-cent coin costs too much produce and was described as “a burden to the economy” in a pamphlet released on Thursday.

According to an article published by the CBC, it costs the Royal Canadian Mint 1.6 cents to produce every penny.

“The government estimates it loses $11 million a year producing and distributing the penny, and that doesn’t include the costs and frustrations for businesses and consumers that use them in transactions,” the CBC reported. “A 2008 report by Quebec-based bank Desjardins estimated the penny’s existence cost Canada’s economy about $150 million in 2006. Canada’s big banks alone handle more than nine billion pennies a year, which costs them $20 million annually to process.”

The government said the penny has decreased to about 1/20th of its original purchasing power, but a report issued by the Bank of Canada in 2005 said the elimination of the penny wouldn’t lead to any inflation.

The one-cent coin will still hold their value, and consumers can still use the currency in transactions though under the new “penny plan” prices across the country will be rounded up or down to the nearest five-cent increment.

New pennies, however, will not be produced by the Mint so as coins get returned to financial institutions across the country, they will be recycled into their base materials leading to an eventual phase-out of the one-cent coin.

The Mint typically produces 7,000 tonnes worth of pennies each year, the CBC said.

This announcement comes in the same week the new $50 polymer bill was introduced into circulation. By the end of 2013, all Canadian denominations will be polymer notes. The new $100 bill was introduced in November.

SOURCE:
CBC: “The Penny’s Days Are Numbered”

Dr. Perks Ligoya, Reserve Bank of Malawi (RBM) Governor said that the new banknote will be in circulation in the next six months at a news conference in Blantyre on Friday.

Ligoya said “We are introducing a complete new series of banknotes; in the process will have a new banknote of K1, 000”.

The new series of banknotes are “much smaller in size,” he said.

Ligoya said “The move is aimed at easing the pressure on inflation, the rise in the cost of basic goods and services”.

Ligoya said that “we have done this in order to reduce the cost of printing money as the sizes of the currencies have been significantly reduced. At the same time we have also increased some additional security and visually impaired-friendly features”.

The new K 1,000 banknote will be the largest one in value, economic commentators observed.

SOURCE:

Nyasa Times: ‘Malawi announces new K1, 000 bank notes’

Nearly 82 billion drachmas ($320 million) in banknotes were unaccounted for when the deadline for withdrawal ended on March 1 by the Bank of Greece, said Kathimerini daily. Drachma coins had an acceptance deadline of March 2004.

Most of the higher-value banknotes that were worth 10,000 and 5,000 drachmas have been cashed in over the past 10 years, but many 50 and 100- drachma notes were kept as souvenirs by Greeks and millions of tourists who visited the country over the years, reported the newspaper Kathimerini daily.

On January 1, 2002 the euro replaces the drachma as Greece’s legal tender.

The drachma was first introduced by ancient Greeks, and was introduced by the modern Greek state in 1832 after the Ottoman Empire- the country’s war of independence.

Greece on Friday completed a deal with private creditors to erase 107 billion euro’s of it’s debt in a bond swap of unprecedented value that is crucial for its economic survival.

SOURCES:

France24: ‘Greek drachmas worth 240 ml euros unclaimed as swap deadline ends: report’

Business Report: ‘Millions of Greek drachmas unclaimed’

Kathimerini daily

Increasingly sophisticated techniques with counterfeiters are throwing up a huge challenge to authorities and money exchange houses with to forge notes with most of the security features used in real currencies, said forensic experts in Dubai.

If Scotland gains independence, they will have to choose whether or not to continue using the British pound – the currency used throughout the United Kingdom. Other options could see Scotland joining the euro or launching its own currency.

Scottish National Party (SNP) leader Alex Salmond said the most likely scenario would see Scotland retaining the pound temporarily.

“This would allow Scotland to control taxes, spending and borrowing while the Bank of England would continue to set monetary policy,” Reuters reported this week.

However, supporters of Scotland’s quest for independence aren’t all sold on the idea of retaining ties to the Bank of England.

“The answer to the currency question goes to the heart of what independence really means, because the lesson from the eurozone crisis is that sharing a currency means compromising, co-ordinating and losing independence, rather than gaining it,” wrote Douglas Fraser, BBC News Business and Economy Editor in Scotland.

Still, the most likely scenario proposed by the SNP is that Scotland would hang on to the British pound until they could join the euro. Doing this poses several challenges, according to Andrew Hughes Hallett, professor of economics at St Andrews University.

First, Scotland would have to go through the process of joining the Eurozone and ensuring that the Scottish currency (the pound) maintained a degree of stability against the euro for the last two year.

“How to maintain a stable relationship with the euro when you don’t have your own currency and when the inherited currency does not have a stable relationship with the euro. This would be messy,” wrote Hallet.

The least likely scenario seems to be that Scotland would launch its own currency should independence occur, as the country “has no gold or foreign exchange reserves,” said economists.

SOURCES:
Reuters: “Pound, Euro or Groat: Scotland’s Currency Options?”
BBC News: “Salmond’s Rate of Exchange”

The Bristol Credit Union and the Bristol Pound Community Interest Company (CIC) are at the helm of the project and anticipate that the new currency will be available by May 2012.

The initiative to install a local currency will foster a stronger sense of community interdependence, said Ciaran Mundy, the director of the program responsible for bringing about the Bristol Pound (£B).

“Big companies just hoover up money from a local area. Money goes into their financial system and typically out into London and into the offshore sector,” she said in an interview with the BBC. “As more and more shoppers and businesses spend the Bristol Pound, it will keep more of people’s hard earned wages in our communities to be spent again. [It] is also a powerful way to promote local businesses trading with each other.”

The £B will have the same value as sterling but will use a new series of banknotes that will be designed by citizens in the community. £1, £5, £10, and £20 notes will be issued.

The Bristol Pound won’t be the first local currency in the UK. Other regions such as Totnes, Lewes, Stoud and Calderdale have all undertaken a similar initiative.

However, according to the Digital Journal, Bristol differs from these other regions because they will be the “first to have the backing of a fully regulated financial services company [which] gives customers who open an account with the credit union a useful security of deposit guarantee.”

In addition to this, the Bristol initiative is also breaking ground because it will also allow businesses to make online payments to other traders and the local council has agreed to accept business rates payments in this currency.”

“People in Bristol who love the range of independent traders will be putting their money where it matters and reduce the need for lorries constantly moving goods up and down the country,” said Mundy.

SOURCES:
The Digital Journal: “Bristol Announces Launch Of Its Own Currency, The Bristol Pound”
The Telegraph: “Bristol To Have Its Own Currency”

Though no specific details have been provided, the company said last week that the paper used for making banknotes was not being printed on par with company standards.

“It is apparent that some paper production has failed to meet certain quality specifications,” a spokesperson said in an article written for the UK’s Sky News.

The company produces banknotes for 150 countries around the world but has not confirmed that any “inferior” banknotes have made their way into circulation.

The quality of paper can play a big role in ensuring the security of a banknote in order to prevent it from being counterfeited. Unlike writing paper, for example, banknote paper is produced from different types of pulp blends.
Thus, cotton based banknote paper has a unique feel different from other papers. This feel is considered to be a trigger, leading people to know whether or not the banknote is fake.

Banknote paper is also the first place producers go to include security features. Intaglio printing (raised printing) is embedded on the paper allowing consumers to instantly recognize whether a banknote is genuine by simply examining its tactile functions.

Details about how long the plant was producing inferior paper are not known. Other banknote producers around the world are not reporting any problems with the quality of their outputs.

In addition to banknotes, De La Rue also supplies security documents such as passports, authentication labels and fiscal stamps, but has not said there was a problem with these products.

SOURCES:
Sky News: “Printing Error May Undermine Banknotes”
This Is Money: “Banknote Production Suspended Due To Paper Flaws”
Polymernotes.org: “Mould-made cotton bank note paper and plastic substrate alternatives”