In a radical overhaul which could see the end of paper banknotes within three years, the Bank of England has suggested that we could be using plastic money by 2015. In a move which was first introduced in Australia in 1988, where plastic money was first used as a measure against counterfeiting, the UK could see the end of paper money for the first time in over 300 years.
The plastic notes have proved to be a great success in Australia and are not only harder to copy from a counterfeiting point of view, but are also much more environmentally-friendly than standard paper ones. Plastic notes also tend to last much longer than paper ones and they are more hygienic, but they do cost more to manufacture.
It had been reported that the Bank of England has put out a £1billion tender from 2015 for the printing of notes at its press in Debden, Essex. Part of this process submits that bidders have to be 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 plastic notes. The company, which prints more than 150 currencies, has just produced new plastic banknotes for the Pacific island of Fiji.
Plastic banknotes have proved to be a great success in Australia, largely thanks to surfers who like to keep their money with them whilst they are out on the ocean, and without it disintegrating. The UK would not be the only country to follow Australia if it did go ahead with the production of plastic banknotes, other countries that are already using them include New Zealand, Romania, Papua New Guinea, Mexico and Vietnam. In Northern Ireland, a plastic five pound note was introduced in 1999 to mark the Millennium.
It is thought that one of the main reasons plastic notes are being looked at as an alternative is because of their durability, as they tend to last much longer than cotton fibre-based paper ones. For instance, an Australian $5 bill lasts about 40 months, whilst a £5 paper note lasts only around six months. They absorb fewer bacteria, are much harder to tear or crease, which makes them easier to use for vending machines, and are waterproof, being able to survive being put in the washing machine.
The key feature however is the counterfeiting measure of a clear window in the note, which normally contains an ‘optical variable device’ that splits light into its component colours and is extremely hard to counterfeit. They are also more environmentally friendly as fewer need to be produced and they can be recycled.
The only problem with plastic banknotes would be the initial production and the change over for current ATMs and vending machines to be able to accept them properly. It is thought that the Bank would introduce a lower denomination first, such as the five pound note, and then progress to the higher notes.
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.” Some experts however, do not agree with changing over to plastic notes, as financial expert David Buik, of the retail and trading services firm Cantor Index, explains: “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.” The Bank’s chief cashier Chris Salmon has already said plastic notes were being looked at as a possibility to replace paper money.