Making your money work harder

A lot of brainpower goes into making sure banknotes are as secure, sustainable, and long lasting as possible. Governments have a duty to ensure that local currency is fit for purpose and produced at a reasonable price. Paying too much for the production diverts taxpayer funds from more important things such as building more hospitals, roads, schools, or other vital infrastructure.

Here are the economic facts about paper banknotes:

Paper costs less than the alternatives

Approximately 94% of all banknotes in circulation are paper-based. Why? Because it is significantly cheaper to produce paper currency that lasts, is hard to counterfeit and has minimal environmental footprint, compared to the alternatives.

A small minority of countries use plastic, sometimes called polymer, to produce their banknotes. Plastic banknotes will last slightly longer than paper-based notes, but are significantly more expensive to produce. Despite increases in circulation life, the extra costs of plastic banknotes drive additional costs that are rarely offset.

Paper costs less for banks and businesses

Paper banknotes have a unique texture and tactile quality which make it much easier to count, both for humans and counting machines. On top of that, paper banknotes are less likely to stick to each other, when compared to plastic money. This is important for bank tellers, cashiers, and businesses, because money that is incorrectly counted and accidently given to customers cannot be recovered. Switching to plastic money would require all these businesses to invest in expensive new equipment, training, or processes to deal with the change.

It maximises investment in infrastructure

When you think about it, there’s a lot of infrastructure in place to support our money. ATMs or cashpoints, vending machines, counting machines and so on are all built on specifications for paper money. If a government chose to switch from paper banknotes, all of this infrastructure would have to be updated, to a great expense. On top of that, many central banks print their own money – upgrading commercial printing machines to create money from another substance can be a monumental investment.