IS PLASTIC THE FUTURE OF MONEY?
Money has always played a crucial role in people’s day-to-day lives and economic activities throughout history. In the past, money was made from various types of metal, paper and leather. Technological advances gave way to the production of the first plastic banknotes in history. Nowadays, many countries have started using plastic banknotes. Plastic banknotes are highly durable, and they offer many crucial features such as protection against forgery and low maintenance cost. In Turkey, plastic banknotes are not in use. This article focuses on the use of plastic banknotes in certain economies and examines the feasibility as well as the advantages of using plastic banknotes in Turkey. The most significant finding of the study is that using plastic banknotes in the Turkish economy will provide crucial advantages in terms of high security, cost efficiency, environmental factors, and tax legislation.
The History and Features of Plastic Currencies
Plastic banknotes have started to be favoured due to reasons such as security factors, higher circulation lifespan, and hygiene. The interest in plastic banknotes leads the production of plastic banknotes to become much more widespread nowadays.
The banknotes that were issued in Haiti in 1974, which were made from Tyvek, a non-pilling, tight, homogenous and soft fabric with a barrier of high-intensity polyethylene fibres, are considered as the first plastic banknotes to have been produced. In 1984, an experiment on printing plastic banknotes was conducted. Within the scope of this experiment, the first plastic banknotes were printed on a white layer, but the experiment failed in terms of security and ink circulation.
The success story of plastic banknotes began in Australia. The $10 banknotes that were issued in Australia in 1966 were regarded as the banknotes with the most sophisticated security features. However, with the emergence of a major forgery threat, it was realised that the $10 banknotes could easily be forged (Reserve Bank of Australia, 2018). Within one year, forged $10 banknotes of very high quality were detected all over Australia. By early 1967, $100,000 worth of forged $10 banknotes were collected by police (Rhodes, 2017).
Faced with this forgery case, the Reserve Bank of Australia put forward the idea of “Can we create the most secure banknote in the world?”, and they reached seven high-level Australian scientists, five physicists and two chemists, to help develop a secure banknote. Initially, the studies conducted to increase the security of banknotes focused on holograms and reached to the conclusion that holograms have better optical effects when they are applied onto a smooth surface. Later on, Neil Lewis, who had retired from Kodak, and David Solomon, an award-winning polymer scientist who worked in Commonwealth Scientific and Industrial Research Organisation (CSIRO), were invited to join the group of scientists (Reserve Bank of Australia, 2018).
The idea of plastic banknotes started when David Solomon received a plastic business card from a Japanese visitor. In 1968, David Solomon suggested the idea of producing plastic banknotes to the Reserve Bank of Australia. Following this suggestion, the CSIRO and the Reserve Bank of Australia accepted to initiate a project to develop polymer banknotes in February 1972. Following a series of developments, the Reserve Bank of Australia formed a partnership with the CSIRO (Reserve Bank of Australia, 2018). David Solomon’s suggestion was realised in 1988, and the production of the first plastic banknotes was conducted in Australia.
How Are Plastic Banknotes Produced?
Plastic banknotes are primarily made from a polymer film. Except for certain areas that are left blank for open windows and other purposes, the polymer film is cooled by using special inks. Next stage is after-treatment and printing processes. During this process, plastic banknotes are produced by using printing plates, laminated polymer and special inks as well as state-of-the-art printing machines.
In the production of plastic banknotes, the background colours and patterns are printed onto both sides of the cooled polymer sheet through the process of offset printing. Principal design elements such as portraits are used during the printing process. The portraits are transferred onto the sheets by using gravure metal plates, which is a process called engraved printing. Both sides of the plastic banknote require separate printing processes. The raised print is one of the security features of plastic banknotes.
Serial numbers are added during the printing process. The serial numbers of the plastic banknotes that are produced contain letters and numbers, and the first two digits indicate the production year. A protective overcoat or varnish is applied to each banknote. Afterwards, printed sheets of banknotes are guillotined and checked. Flawed or dirty banknotes are then taken out of the serial (Reserve Bank of Australia, 2018).
Pros and Cons of Plastic Banknotes
Even though plastic banknotes were primarily developed to make forgery much more difficult and expensive, they also have superior qualities compared to paper banknotes, such as durability and recyclability. It is easy to verify the security features of plastic banknotes, which are difficult to counterfeit. The techniques that are necessary to produce plastic banknotes are expensive. Moreover, the production is labour intensive, and it requires technical expertise, which constitutes a great obstacle for counterfeiters.
Plastic banknotes are resistant to water, dirt and moisture, which makes them more hygienic compared to paper banknotes (Allen, 2013). Just as paper banknotes, plastic banknotes are thin and flexible, therefore they can easily fit into a wallet or a purse. Compared to paper banknotes, plastic banknotes remain in circulation for a longer period of time. The advanced durability of plastic banknotes results helps decrease the number of banknotes that get damaged in circulation; therefore, it saves money by reducing the cost of production for banknotes to a great extent.
Plastic banknotes offer a crucial environmental advantage as they are made from recyclable material. However, there are certain disadvantages to plastic banknotes. They are hard to fold and incompatible with the current automatic teller machines and banknote counters, they have a high cost of production, their slippery surface makes it difficult to count them (Allen 2013), they can occasionally stick to one another, and they are made from a material that can shrink or melt in temperatures over 120 °C; which are all major disadvantages.
United Kingdom and Northern Ireland Switch to Plastic Currency
Northern Ireland’s Ulster Bank introduced its polymer and vertically designed £5 and £10 banknotes. Set to go into circulation as of February 27, the new banknotes will be harder to counterfeit and much more durable compared to paper banknotes. New notes have features such as embosses and the logo of Ulster Bank printed with colour-changing ink so as to increase the level of security.
Rest of the United Kingdom started printing plastic banknotes as of 2016. However, the vertical design is going to be a first. The banknotes are prepared with the theme of “living nature”, and they will be ornamented with images of flowers and animals that are unique to Northern Ireland.
Currently, there are four banks authorised to issue money in Northern Ireland, and it is estimated that the total value of all the original banknotes that have been in circulation since 1929 amounts to approximately 2.5 billion pounds. Even though they are equal to the Sterling in value, these banknotes are not valid outside of Northern Ireland. Therefore, the banks that issue these banknotes will have to make provisions in the Bank of England for each banknote they print.
Danske Bank and Bank of Ireland, which are also authorised to issue money in Northern Ireland, have announced that they are going to introduce plastic banknotes from 2019 onwards. First Trust Bank, however, announced that it is going to stop issuing money and switch to using banknotes issued by the Bank of England. The bank also announced that their banknotes that are in circulation will remain valid until June 2022.
Which Countries Use Plastic Currency?
Banknotes made from multimolecular plastic material called polymer were first used in Australia. The plastic banknotes, which were first put into circulation in 1988, became the only currency as of 1996, and paper banknotes were discontinued. Since then, plastic banknotes have been used by more than fifty countries. In the 90s, Western Samoa, Brunei, Indonesia, Thailand, Sri Lanka, Malesia, New Zealand, Papua New Guinea, Singapore, Kuwait, Taiwan and Zambia are countries that started using plastic currency.
Brazil, China, Bangladesh, Nepal, Nigeria, Israel, Vietnam, Chile, Fiji, Hong Kong, Guatemala and Nicaragua joined them in the 2000s. Canada, Dominican Republic, Mozambique, India, Mauritius, Lebanon, Poland, Trinidad and Tobago, the Maldives, Cape Verde, Paraguay, Honduras, Vanuatu, Costa Rica, and the United Kingdom started using plastic currency in the 2010s.