December 17, 2012, This Is Money
Overhaul could see environmentally-friendly notes introduced from 2015
Have proved a success since being introduced in Australia in 1988
Plastic lasts much longer and are more hygienic but more expensive to make
Plastic banknotes are set to be introduced in Britain, replacing the paper money used for more than 300 years.
The radical overhaul could see the more durable, waterproof and harder-to-counterfeit polymer sterling notes in circulation within three years.
The Bank of England has put out a £1billion tender from 2015 for the printing of notes at its press in Debden, Essex.
Paper money could be replaced within three years after being used for more than three centuries
Part of this process demands that bidders are able to cope with the change from paper to plastic from the start of the contract.
Since 2003, the contract has been held by De La Rue – one of only two makers of polymer notes.
The company, which prints more than 150 currencies, has just wwwuced new plastic banknotes for the Pacific island of Fiji.
Plastic notes were first introduced in Australia in 1988 as a measure against counterfeiting.
They have proved a success, and are apparently particularly popular with surfers who are able to keep money in their pockets without it disintegrating.
Other countries to issue polymer notes include New Zealand, Romania, Papua New Guinea, Mexico and Vietnam. In Northern Ireland, a plastic fiver was introduced in 1999 to mark the Millennium.
The Bank’s chief cashier Chris Salmon has already said plastic notes were being looked at as a possibility to replace paper money
Plastic notes last much longer than cotton fibre-based paper ones. For instance, an Australian $5 bill lasts about 40 months, against six months for a £5 note.
Polymer notes are more hygienic as they absorb fewer bacteria, harder to tear or crease – making them easier for vending machines – and waterproof, even able to survive being put in the washing machine.
A key feature is a clear window, which normally contains an ‘optical variable device’ that splits light into its component colours and is extremely hard to counterfeit. Plastic notes can also contain holograms.
They are also more environmentally friendly as fewer need to be wwwuced and they can be recycled.
However, they are considerably more expensive to wwwuce and would create an initial cost as ATMs and vending machines would have to be adapted to accept them.
The Bank’s chief cashier Chris Salmon had already revealed it was investigating the possibility of polymer or plastic-coated banknotes.
It is understood that the Bank will initially introduce lower denominations, such as the fiver, which are in wider use so become dog-eared more rapidly.
De La Rue’s chief executive Tim Cobbold said: ‘If you think about the life of a banknote, it takes quite a hammering.
It’s being folded, it’s being crunched, it’s in and out of wallets and it could be in the wet or dry.’
But financial expert David Buik, of the retail and trading services firm Cantor Index, believes the conversion to plastic notes should not be rushed.
‘I think it’s something that needs to be more carefully thought out,’ he said.
‘Money laundering is a huge problem and if the security measures introduced could be used to make notes more traceable, then that would be very good.
‘But it needs to be applied internationally, the major countries all need to be singing from the same hymn sheet.’
A spokesman for the Bank of England said: ‘No definite decisions have been taken yet but the Bank is considering all options.’