History In The Headlines

Will Paper Money Go the Way of the Dinosaur?

By Elizabeth Nix
Paper money has been around since 7th century China. Today, however, in some parts of the globe paper currency is going the way of typewriters, VCRs and other once-common objects that have become obsolete. This week, the Bank of England, the United Kingdom’s central bank, announced plans to start printing money on polymer, a thin, flexible plastic film, in favor of the paper notes it has been issuing for more than 300 years. Some two dozen other nations, including Australia and Canada, already have made the switch from paper to plastic. Find out what’s behind the move, and learn whether the United States intends to get in on the trend.
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The main reasons countries have opted for polymer currency are security and durability. These banknotes are tougher and more expensive to counterfeit than money printed on traditional cotton-based paper, and include security features such as a transparent window. They also stay spiffier longer because they’re more dirt- and moisture-resistant, and are at least 2.5 times more durable than paper currency. Proponents of polymer notes also tout them as eco-friendly and less expensive than paper notes over the long haul because they last for a lengthier amount of time.

The Bank of England, which was founded in 1694 and is the world’s second-oldest central bank, announced that its plastic currency won’t look much different than its existing paper counterparts. Although the new stuff will be about 15 percent smaller, it will continue to include a portrait of the British monarch on the front and an image of a historical figure on the back. The Bank of England’s inaugural polymer bill, a 5 pound note, will debut in 2016 and sport the face of former Prime Minister Winston Churchill. The following year, a 10 pound note featuring 19th-century novelist Jane Austen will be rolled out. So far, Great Britain is the world’s biggest economy to announce a switch to polymer notes.

The pioneer in polymer banknotes was Australia. Starting in the 1960s, researchers in the Land Down Under began developing new technologies to combat counterfeiting, which was on the rise thanks to the advent of color photocopiers and other scanning devices. In 1988, the nation’s first polymer note was issued, and by 1996, Australia had moved entirely to polymer currency. Canada unveiled its first polymer banknote in 2011 and by November 2013 had a full set of polymer bills in circulation. The Bank of Canada reported that 2012 counterfeiting rates have plummeted by 92 percent in comparison with peak levels in 2004. To date, approximately two dozen other countries have introduced polymer currency, including New Zealand, Mexico, Singapore, Fiji, Mauritius and Morocco.

One country that doesn’t look like it’ll be abandoning paper for plastic anytime soon is America, where paper currency was first issued by Massachusetts Bay colonists in 1690, partly due to a scarcity of coins, which were then the main form of money. Although officials at the Bureau of Engraving and Printing have reportedly investigated polymer banknotes, it appears that for now paper money is here to stay. In fact, just this past October, the Federal Reserve launched a new $100 bill, the second most-common bill in circulation after the $1 bill. The redesigned $100 note includes such counterfeit-fighting features as a 3-D security ribbon and color-shifting ink

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Categories: Money