Paper money obsolete by 2011

The Carillon, Vol. 52, Issue 21 | March 18 – 24, 2010

“Will that be plastic … or plastic?” That may become a new cliché at cash registers across Canada as plastic polymer banknotes will soon replace the current cotton-paper banknotes. Finance Minister Jim Flaherty announced in the federal budget on March 4 that the new series of banknotes will be released in late 2011.

Julie Girard, a spokesperson for the Bank of Canada, said that this shift represents greater security, significant savings, and a more environmentally-friendly currency. The new series has been in the works for a while, as it takes years to design and produce a series, but the Bank anticipates printing the bills within the next 18 months.

Australia was the first country to adopt plastic money for general circulation back in 1992, and since then six other countries have fully converted their currency to plastic. These banknotes are made from the polymer biaxially oriented polypropylene (BOPP), which is more durable, harder to tear, waterproof, and more resistant to folding and soil. They’re even washing-machine friendly.

Girard declined to comment whether the polymer supplier will be Securency International Pty. Ltd. Australia is investigating Securency in the wake of allegations that the joint venture’s overseas agents offered kickbacks to foreign government officials to secure contracts. She also declined to comment on security features, themes, and designs, citing security reasons.

“The issue is about 18 months away, so the more information we provide now, the more information we’re providing to counterfeiters, and that might give them a leg up.” However, she was able to say that the new bills would be harder for criminals to reproduce and easier for Canadians to authenticate.

“One of the reasons we’re putting out a new series … is because we’re trying always to stay ahead of counterfeiters. Another benefit of this new series is that they’re going to be easy to authenticate, which means that the general public, retailers, financial institutions, etc. will be able to authenticate or make sure that they’re holding genuine banknotes and not counterfeits.”

Anti-counterfeiting measures create concrete savings for Canada’s economy, as counterfeits devalue the currency and encourage inflation. Companies are not reimbursed for counterfeits. “Last year there were 67,000 counterfeit notes passed in Canada for a value of $3.4 million,” said Girard.

Like many environmentally friendly products, plastic money will cost the Bank of Canada more upfront, but will save money in the long run. “The new notes printed on polymer will mean that the notes are going to be more durable,” said Girard.

“They’re going to last longer than the current cotton-based paper. Essentially, this will reduce the overall costs associated with the production of a series of banknotes, and therefore lessen its impact on the environment, because we’re going to be producing fewer notes … These notes are going to last about two to three times longer than the current notes [so] there will be a reduction in costs over the life of the series.”

Since 1983, Canadian bills have been printed on paper made from 100 per cent cotton, which is more durable than paper made from wood pulp. Different bills have different lifespans, depending on how often they’re used. Five-dollar bills, because they’re used most often, last between one and two years, while $100 bills last from seven to nine years.

“The average number of authentic notes out for circulation right now is almost 1.5 billion notes, and the value of those notes is about $51 billion,” said Girard. If each bill weighs roughly one gram, then there are approximately 1,500 tonnes of cotton tied up in Canadian currency.

“The current cotton series is shredded and brought to a secure landfill. The new notes – because they last longer, less notes printed, recyclable – will reduce the impact,” said Girard. The Bank of Canada removed 250 million worn notes from circulation in 2008, which translates into roughly 250 tonnes of cotton that was thrown away.

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