Philippine banknotes will undergo pandemic-related changes in the next years with the introduction of polymer money by April 2022 to address public concerns for a more hygienic, durable and cost-effective, pro-environment, and difficult to counterfeit banknotes.
The Bangko Sentral ng Pilipinas (BSP) has so far made two announcements – in October and last week, Dec, 2 -- on the release of the 1,000-denominated polymer banknotes.
BSP Governor Benjamin E. Diokno said they will begin to circulate the plastic money by mid April 2022.
The design of the polymer banknotes, however, is still being reviewed and it has not yet been approved by Malacanang, said BSP in an email to Manila Bulletin.
Last week though, Diokno said the Reserve Bank of Australia will be in charge of the production of the new banknotes, through its subsidiary Note Printing Australia, which is known for its technology and expertise in the printing of polymer money since it is the first to issue a full series of polymer banknotes.
Diokno did not disclose who will design the polymer banknotes.
“Based on best practices, the transition to polymer banknotes necessarily entails design changes to incorporate the latest security features,” said BSP in an email.
“While the approval process on the banknote design is still pending completion, BSP assures everyone that it remains consistent with the principles of currency integrity, social relevance, efficiency, unified theme, and aesthetics,” the BSP added.
For now, the BSP assures that the overall appearance of the P1,000 polymer banknotes will be as “similar as possible to the existing 1000-piso enhanced New Generation Currency (NGC) banknote.”
Why polymerize?
The BSP will start introducing polymer banknotes for five reasons: it is hygienic and sanitary, and significantly cleaner; for enhanced security because it is harder to counterfeit; for durability because it has a longer lifespan; cost-effectiveness and it is economical in the long term; and it is environment-friendly because it is recyclable.
“Public concerns are making the BSP’s efforts in this regard more urgent,” said Diokno last Dec 2.
With COVID-19 pandemic, it has become normal to sanitize frequently after touching objects including banknotes and coins, therefore circulating plastic money is the answer to this concern.
Diokno said polymer money is more sanitary than paper money because the chemical component of a polymer banknote makes its surface smooth and resistant to dirt, bacteria, and viruses. “Polymer notes can be washed and sanitized without damage, unlike paper bills,” he said.
Polymer banknotes are also a practical answer to counterfeiting problems, although Diokno said the Philippines does not have a major counterfeiting problem to begin with, but that crime syndicates keep improving their techniques in counterfeiting the NGC.
Another primary reason is environmental issues. “Given increasing scarcity of water, energy, and other inputs, our banknotes should be made to last longer, while considering both environmental sustainability and cost-effectiveness,” said Diokno.
Polymer banknotes will last much longer, at least 2.5 times longer than paper banknotes, and could withstand extreme temperatures. Based on the experience of Bank of New Zealand, for example, the average issue cost of paper banknote is 5.3 compared to 1.8 for polymer banknote while the average cost operation is 16.4 for paper banknote versus only 4.4 for polymer.
Diokno stressed that polymer banknotes have a smaller ecological footprint than paper banknotes. “Moreover, when no longer useable due to wear and tear, polymer banknotes can be recycled into various products, such as building components and plumbing fittings,” he said.
Based on studies cited by the BSP, a polymer banknote has a cash cycle or a lifetime ratio of 4.8 times compared to paper which is usable only for eight to 18 months compared to about four years for polymer.
The BSP has been studying polymerization since 2008.
Diokno said quite a number of central banks have already shifted to polymer banknotes in the last 10-15 years.
There are now 57 countries that use of polymer substrates in their banknotes such as Canada, Australia and New Zealand. Malaysia, Vietnam, Mexico, and Fiji are also using polymer banknotes.
The polymer notes’ test run next year will help the BSP discern the domestic demand for polymer money from banks and the public.
The BSP said the limited test circulation will include machine- testing to recalibrate requirements, technical training for bank personnel, and consultations with machine suppliers and the banks.
It said banks “are generally receptive to the shift to polymer banknotes” based on a survey that the BSP conducted recently. It also assured that ATMs and ATM service providers are capable and can dispense polymer money.
Last year, amid the pandemic, the BSP outsourced 62.2 percent of its banknotes requirement and it only printed about 34.7 percent locally. This is in contrast to what is considered “normal times” when BSP will print most of the country’s banknotes requirements. In 2019 it produced 65.7 percent of banknotes and only outsourced 34.3 percent.