The Bangko Sentral ng Pilipinas (BSP) will circulate an additional one billion pieces of the P1,000 polymer banknotes this year, double than what the BSP ordered from an Australian printer in 2021 of 500 million pieces.
BSP Deputy Governor Mamerto E. Tangonan said the fresh one billion polymer banknotes will be delivered in batches, following the acceptance of the Filipino public of the plastic-based banknotes.
Apparently, there is a higher currency requirement especially for polymer compared to the initial order of 500 million pieces of P1,000 polymer banknotes.
“It’s being delivered on a staggered basis,” said Tangonan.
He also said the cost of outsourcing polymer is more manageable and less expensive.
The BSP’s printing complex in Quezon City currently has no capacity to produce polymer money, thus the need to outsource polymer banknotes from Note Printing Australia, a subsidiary of the Reserve Bank of Australia.
The BSP paid Note Printing Australia P3.7 billion to produce, supply and deliver 500 million pieces of P1,000 polymer banknotes from 2021 to 2023.
Meanwhile, Tangonan said the ongoing BSP study on the sustainability of polymer banknotes has yielded some interesting preliminary assessment. The polymer notes have been on a test run since April 2021, with an initial release of 10 million pieces.
He said preliminary results of the study showed that the use of polymer is hygienic and sustainable, but as to its durability, the review on that is still ongoing.
The BSP official has already disclosed previously that the BSP has developed a polymer evaluation framework that consist of empirical studies to assess objectively if the reported benefits of polymer use is true. This cover the following evaluation: carbon footprint analysis (lifecycle analysis); microbial contamination analysis; perception surveys and sentiment analysis; and banknote lifespan analysis.
Tangonan said the review will conclude in 2025 but initial findings are enough to convince them to order another one billion banknotes for circulation in the next two years.
Based on the circulation tests, he said there is a “sense of durability” but the review is not done. In terms of sustainability, polymer banknotes have a lower greenhouse gas emissions of under 40 percent, or “40 percent lower than paper” said the official.
Tangonan said they are still proving that a polymer banknote is durable. So far, he said none of the polymer notes were returned as unfit notes to the BSP, if the basis is “normal wear”.
In a 2022 Senate hearing on polymer and currencies, BSP officials including Tangonan said the central bank will save as much as P2.4 billion in circulating polymer banknotes which has a longer lifespan compared to paper-based money.
They also noted that the use of polymer would result in lower replacement cost and higher production cost savings.
Tangonan reported that based on data on the actual 2021 volume of new banknote withdrawals by banks from the BSP and lifespan assumptions ranging from 2.5 times to 4 times longer than that of paper, the estimated production savings amount to P1.2 billion to P2.4 billion.
He said the “higher production savings would redound to higher net profits, 50 percent of which accrues to the National Government.”
Tangonan noted that with a longer lifespan, banknote issue expenses “could be reduced by 40 percent to 60 percent per experience of other central banks.
There are 56 countries that use polymer banknotes. He said Bank of England had documented reduced production costs by 25 percent or about £100 million in savings over a ten-year period while Australia had $1 billion net savings over the past 25 years since it switched to polymer money.
The central bank plans to circulate more polymer banknotes in different denominations such as P500 and P100 in the future, especially if the public will adapt well to the use of polymer.