Currency Notes

• Author: Ping Wang

Currency Notes The Future Is Plastic Finance & Development, June 2016, Vol. 53, No. 2

Ping Wang

For countries concerned about the environmental impact of their currency, a switch to polymer notes makes sense

As countries sign on to the Paris Agreement on climate change and strive to become more sustainable, many are considering the environmental impact of their currency as well as its durability and security.

Money has been made from a variety of materials over the years—from leather in China during the Han Dynasty, to shells, precious metals, cotton paper, and most recently, plastic. The materials reflect the social and political climate of the time as well as available technologies and resources.

For centuries, people in China used precious metal coins strung together through a center hole to conduct transactions. But with larger commercial transactions in the 7th century, there was a move to the easier-to-transport paper currency. In the 13th century Marco Polo reported back to Europe from his travels on the use of paper rather than coins, and Europe’s earliest modern paper banknotes were issued by the Bank of Stockholm in 1661.

Paper quickly became the currency of choice around the world and remained so for centuries. But with recent technological developments, plastic film notes offer additional security features along with longevity and energy efficiency.

Move to plasticPolymer banknotes were first issued in 1988 by Australia, which now uses polymer exclusively and is about to launch a new series of notes, starting with the $5 bill in September. Polymer is now used in over 20 countries as diverse as Australia, Canada, Fiji, Mauritius, New Zealand, Papua New Guinea, Romania, and Vietnam.

The Bank of Canada began its move to polymer banknotes in 2011, after assessing the environmental impact of producing paper and plastic bills. A life-cycle assessment examined the effect—including primary energy demands and the potential for global warming—of each stage of production, from growing the cotton to produce the banknote paper or producing the raw material for polymer notes through the destruction and disposal of worn notes.

In all categories and phases, polymer outperformed paper. For example, the study found, a polymer bill promises a 32 percent reduction in global warming potential and 30 percent reduction in primary energy demand compared with paper. Most important, polymer notes last more than twice as long as paper notes—and higher...