Recent trends and developments in currency
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The document discusses recent trends in the currency industry, highlighting the ongoing shift towards cashless payments driven by younger generations while noting that cash still maintains an essential role for privacy and inclusion. Key factors shaping the industry include a growing 'war on cash', advancements in minting technologies, an increase in banknote production in emerging economies like India, and challenges posed by recent demonetization efforts. The document emphasizes the need for improved efficiencies in cash handling and the potential for technological innovations to streamline production and circulation processes.
Recent trends and developments in currency
- 1. 1 Recent trends and developments in currency 017 marks the 10th anniversary year 2of The Authentication Times. It is always interesting to take a milestone such as this and look back on what has happened over that period, and how things have changed. And changed they have, in the currency industry! It is even more interesting, however, to chart how thisindustryisprogressing. The key changes that are shaping, and will continue to shape, the industry are the growing 'war on cash' (with payment providers such as Visa and Mastercard, and new entrants such as Paypal, looking to secure a bigger slice of the payments 'pie' at the expense of cash), a more muscular minting industry looking to alter the note/coin boundary in its favour, more complex and durable substrates for banknotes, and a 'rebalancing' of the banknote printing industry (away from Europe towards emerging economies in Asiaandelsewhere). The development and adoption of alternative payment systems will gain momentum. There is much talk about societies going 'cashless' but, to date and with a couple of exceptions, the evidence does not show this is happening, with cash in circulation continuing to grow at, on average,5%peryear. However, if one looks at the demographics of cash less payments, it is the younger generation that is increasingly adopting contact less cards and m-payments. As the older generation moves on, it is inevitable thatcashwilldecline. Will cash still have a role to play in the future? Definitely. As a medium of exchange that guarantees privacy, reliability, convenience and social inclusion, it will always have it place. But perhaps not in the quantities that it does today. China is a good case in point, having hit a high point of around 100 billion notes produced a few years ago. This has more than halved since then thanks to the development of platforms such as WeChat andAlipay as payment mechanisms. China, however, is an anomaly - the demand for cash was staggering, fuelled by a rapidly- developing economy, and its reduction brings the country more in line with usage elsewhere in the developing and developed world alike. By contrast, the world's next most populous country, India, is seeing growing demand and, with it, growing investment in banknote production, particularly as the government is attempting to 'indigenise' as much of this process as possible. It is already self-sufficient in print, but not - yet - in paper or features. This is a 'work-in- progress'. In the meantime, the government's demonetisation late last year laid bare the perils of removing a large proportion of banknotes at one stroke - causing widespread hardship and problems. Although this move was in part an attempt to accelerate the country's move to alternative payments, if anything it reinforced the need for and popularity of cash. Within the industry, the debate between notes and coins will continue, with the mint industry challenging established concepts of the note/coin boundary. It will also continue in its quest for enhanced security that will provide opportunities to chip away atthisboundary. In terms of production, the march of alternative substrates (polymer and composites) will continue – not only because a number of leading currencies have recently adopted these, but because there is now a second supplier of polymer, which is set to galvanise the market, as well as multiplesuppliersof composites. Astrid Mitchell EXPERT’S VIEW Astrid Mitchell has a 30-year commercial career with companies within the banknote, authentication and holographic industries, including De La Rue, Applied Optical Technologies and Bundesdruckerei. She joined the Reconnaissance Board in 2002 and, in addition to her role as Managing Director, is primarily responsible for the company’s activities in currency (including Currency News, The Coin Conference and various directories and reports through Reconnaissance’s joint venture Currency Publications Ltd.) Australia's New Holographic Window
- 2. 2 One of the benefits of polymer and composite substrates is the clear windows they provide offer a new platform for security features. The paper industry has worked hard to provide a paper-based window alternative and we can expect a resurgence of holographic-based optically variable devices on banknotes that exploit the windows in both substrates, reversing the momentum gained in recent years by alternativeopticallyvariablefeatures. On the circulation side, inroads will be made into cash efficiencies and optimisation. It is somewhat bizarre in this day and age that the passage of cash is still so costly and inefficient, and so dependent on multiple (and in some cases manual) processes for counting and reconciliation, given that technological solutions now exist to automate much of this. Whilst 'Big Data' and harnessing this for currency is the buzzword at the moment, in the shorter term at least, organisations that both produce and handle cash should accelerate the adoption of technology and work better with one another to drive out prevailing inefficiencies, better match production and issue with demand, and raise quality - whether in production or notes in circulation. Finally, a defining feature of the currency landscape in the years to come will be the continuing shift in focus of the euro-centric industry, to other parts of the world. The volume requirements are coming from those parts of the world with rapidly growing populations and economies - China was ahead of the game in this respect, but an isolated example. India, Thailand, Indonesia, Philippines, part ofAfrica are all examples of countries investing in banknote production to meet demand and remove their reliance on external, mainly European, suppliers. Needless to say, banknote origination, production and finishing equipment is expensive, so investment is new capacity and capability by such countries is a perfect opportunity to leapfrog legacy systems and equip themselves with the best on offer in the market. EXPERT’S VIEW Currency De La Rue Safeguard England Banknote window feature