BSP revives plan to use polymer banknotes

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has revived plans to use plastic or polymer to print banknotes that are more hygienic, environment friendly, durable and secure than the cotton and abaca fiber composite being used now.

In a virtual press briefing, BSP Deputy Governor Mamerto Tangonan said the central bank is currently preparing for a limited circulation test of a polymer version of the P1,000 bills in the first half of next year to assess whether the benefits claimed by other central banks hold true under Philippine conditions.

“The test will help us determine the effects of polymerization on hygiene and public health, environmental sustainability, as well as the lifespan, durability, and counterfeiting rates of our money. It will also allow us to collect stakeholder feedback and observe changes in currency handling behavior,” he said.

Countries using polymer banknotes include Australia, New Zealand, Mexico, among others.

Tangonan explained the polymer banknotes are less likely to host viruses and bacteria due to their smooth and non-absorptive surfaces compared to cotton and abaca. These could also be sanitized without damage, compared to paper banknotes.

“Since the start of the pandemic, sanitizing frequently touched objects, including banknotes and coins, has become a widespread need among members of the public,” he said.

Furthermore, Tangonan said polymer banknotes are more sustainable and environment friendly owing to smaller carbon footprint, lower water and energy usage as well as less environmental toxicity.

Compared to the usable life of the current paper banknotes ranging from 0.8 to 1.8 years depending on the denominations and usage factors. He said polymer banknotes last at least 2.5 times longer, thereby reducing the environmental impact associated with regular production of banknotes.

Unlike paper banknotes that are shredded or burned, polymer could be recycled once they are retired.

“Polymer banknotes can withstand extreme temperatures, and have been found to last 2.5 to four times longer than paper money. They are also water and dirt-resistant, and more conducive to wet market conditions,” he said.

Tangonan also said the polymer banknotes would have a different set of security features, making them more difficult to counterfeit.

“More importantly, polymer banknotes are difficult to counterfeit due to the complexity of their printed images and the advanced technology used in incorporating security features,” Tangonan explained.

Citing the experience of the Bank of New Zealand, the percentage of counterfeits per million banknotes processed fell to 0.3 percent when it shifted to polymer banknotes from 2006 to 2008 compared to 3.9 percent under paper banknotes from 1995 to 1998.

Average issue cost also fell to 1.8 percent from 5.3 percent, while average cost of operations was brought down to 4.4 percent from 16.4 percent. Likewise, destroyed banknotes in relation to volume in circulation also declined to 12.1 percent from 60 percent.

In 2009, the BSP announced its plan to issue polymer banknotes, but was derailed due to strong opposition from lawmakers, citing the impact on the country’s abaca industry.

Aside from the pandemic as the major reason for the shift to plastic money, Tangonan said the proposed change in the composition of the banknotes would have minimal impact on the abaca industry.