Whether it is pulling out paper bills or swiping a credit card, most of the transactions man engages in daily use currency. Indeed, money is the lifeblood of economies around the world. Currency refers to paper money or coins that are in circulation. But currency is actually only a small piece of the monetary economy and just one consideration when looking at the total money supply. Because of its importance, every country makes efforts to secure her currency to maintain citizens and outside user’s confidence in it. Part of the measures is to update the certain features of currency notes for security reason or counterfeiting among others. This update or change could also be by reason of death as exemplified by the recent death of Queen Elizabeth 11 of the United Kingdom. This may happen soon. But the one about town now is the Naira; Nigeria’s currency that has just been redesigned, Writes Chris Ubah. F ollowing the death of Queen Elizabeth 11 on September 8, and the ascension to the throne by her son , King Charles 111, almost all the instruments bearing her portrait are about to be changed in the United Kingdom and some countries that have affiliations with the kingdom. One of these instruments is her portrait which has appeared on the British currency, the Pound Sterling, since 1960, eight years after her ascension to the throne. For many centuries, the portrait of the reigning British monarch has regularly appeared on the UK currency notes and coins. And, recently, reports say the Bank of England is about to replace the portrait of the Queen with that of her son who is,
now, on the throne. This announcement has sparked a rush by citizens and holders of the currency to change the notes before new ones go into circulation. Meanwhile, the first coin featuring King Charles III has already been unveiled and is set to be in public usage by the end of the year. Aside from the death of the British monarch, are there other reasons or factors that could necessitate the re-designation of currency notes (including coins) of any sovereign entity or country? Just, recently, the European Central Bank (ECB), the official central bank of the European Union (EU), announced plans to redesign Euro banknotes, working with European citizens in a process that is expected to lead to a final decision in 2024. Euro, which is the currency that circulates in 19 EU member countries that are part of Eurozone which was launched in 2002. These countries include Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. Croatia will become the 20th member on 1 January 2023. If the UK wants to effect a change in her currency notes because of the death of her monarch, while EU countries want to do the same for Euro currency notes not on account of any death of eminent any personality, it means there are other salient and cogent reasons that may precipitate the need for a change or redesign of currency notes and coins. Some of the major reasons are counterfeiting and security of currency notes. Every country has it as a duty to secure her currency. The business of counterfeiting of currency notes has been a serious problem across the world and times. During World War II, the Nazis forged British Pounds and the U.S.Dollars. Today, some of the finest counterfeit banknotes are called Superdollars because of their high quality and imitation of the real U.S. Dollar. There has also been significant counterfeiting of Euro banknotes and coins since the launch of the currency in 2002, but considerably less than that of the U.S. Dollar. Some of the ill-effects of counterfeit money on society include a reduction in the value of real money; and an increase in prices (inflation) due to more money getting circulated in the economy, an unauthorized artificial increase in the money supply; a decrease in the acceptability of paper money; and losses, when traders are not reimbursed for counterfeit money detected by banks, even if it is confiscated. These are some of the reasons that propel the need for countries to protect their currencies. They may decide to do so periodically along with other features. The management of the United States Dollar provides a classic example of currency notes re-designation that is not necessarily propelled by death .In the U.S. , some of the reasons adduced for currency notes re-designation include advanced counterfeit deterrence, security and testing activities. For instance, the current denomination sequence and planned issuance dates of the Dollar note bills have been in development with the Advanced Counterfeit Deterrence Committee since 2011: $10 (2026), $50 (2028), $20 (2030), $5 (2032) and $100 (2034). This sequence addresses risk mitigation and counterfeiting concerns. In short, in the U.S. just like in many other economies, currency re-designation is largely propelled by the need to ensure confidence in a currency by avoiding counterfeiting. Currencies need to be secured. According to analysts, currency notes must be resistant to increasingly sophisticated counterfeit attacks. In other words, security is the primary purpose of currency notes redesign. They said careful integration of exclusive security features is the critical foundation to keep currency safe, secure and to ensure the stability of any economy. Modern technology allows for higher-quality counterfeits. New features, closely aligned with and integrated into new design, are developed to address this threat. More than a decade of research and development, followed by years of optimization and integration testing into the banknote, is required to ensure the successful deployment of these features into the U.S. currency, for instance. Once security features are selected and successfully integrated into designs, new equipment and raw materials may also be required. New equipment or raw materials require a comprehensive procurement process as well as extensive acceptance testing to ensure they meet rigorous manufacturing and quality standards at production volumes. Answering question on why the U.S. periodically redesign its currency, the Federal Reserve Bank (FRB) , which serves as the central banking system that country says “we redesign the U.S. currency to stay ahead of counterfeiting threats and keep counterfeiting levels low.” The FRB, together with its partners at the Treasury Department, its
Bureau of Engraving and Printing, and the United States Secret Service, continuously monitor the counterfeiting threats for each denomination of U.S. currency and make redesign decisions based on these threats. An inter-agency committee makes recommendations on design changes to the Secretary of the Treasury, who has final authority for U.S. currency designs. Studies reveal there have been several redesigns of U.S. currency over the years, but none of them have been significant. “Instead of periodically updating the look of the currency, the FRB just updates the security features to decrease the threat of counterfeiting,” says the U.S. Treasury Department. American currency leaving the U.S. Treasury today looks shockingly similar to what was being printed decades ago. According to analysts, some of the reasons for the older design of present-day U.S. currency have to do with security. There are several security features implemented within the currency, such as security threads and colour-changing ink. If one takes a look at a $100 bill, for example, one will see a textured, blue strip that is designed to make it more difficult for counterfeiters. The brown bell on the right side of this security strip changes colour if it is tilted. Additionally, $100 bills of today include four different shades of ink, which give them their green colour. This makes it extremely difficult for counterfeiters to replicate American currency. The currency can still be more simplified in its design yet maintains the same security features. On April 21 2010, for instance, the U.S. redesigned $100 bill and the FRB was to begin issuing the new bill on February 10, 2011, but the release was delayed until October 2013. The U.S. Treasury had made no plans to redesign the $5 bill using colours but recently reversed its decision after learning some counterfeiters were bleaching the ink off the bills and printing them as $100 bills. The new $10 bill (the design of which was revealed in late 2005) entered circulation on March 2, 2006. The $1 bill and $2 bill are seen by most counterfeiters as having too low a value to counterfeit, and so they have not been redesigned as frequently as higher denominations. The UK is, now, due to replace the Queen’s portrait with that of King Charles’ on its banknotes and coins. MoneyReport learned it will be a similar process for the 35 other countries that feature her portrait on their coinage. There have been five different portraits of the Queen on British banknotes and coins since she took the throne in 1952. Now that her son Charles is king, British money will be replaced with his portrait. King Charles III’s portrait will be featured on British money, but it will likely take many years. The process of replacing the Queen’s portrait with the new monarch’s will take a number of years due to the number of banknotes currently in circulation. There are currently more than 4.7 billion Bank of England notes in circulation, the bank said on its website,and more than 29 billion coins in circulation, according to the Royal Mint. While the Queen succeeded her father King George VI in 1952, she did not appear on a Bank of England note until 1960. She initially featured on a £1 note with a portrait designed by Robert Austin. The portrait was criticized for being a severe and unrealistic likeness, according to the Bank of England. A new portrait of the Queen designed by Reynolds Stone was featured on a £5 note
in 1963 and £10 notes in 1964, the Bank of England added. The most recent portrait of the Queen for banknotes was designed in 1990 by Roger Withington. Euro banknotes are facing a redesign for the first time since their launch two decades ago, with a plan to make the currency “more relatable to Europeans of all ages and backgrounds.” The monetary policy of all countries in the Eurozone is managed by the ECB and the Eurosystem which comprise the ECB and the central banks of the EU states who have joined the Eurozone. President of the European Central Bank (ECB), Christine Lagarde, told the Guardian of UK, that Euro banknotes were “here to stay” despite an increase in cashless payments during the coronavirus pandemic. “They are a tangible and visible symbol that we stand together in Europe, particularly in times of crisis, and there is still a strong demand for them,” After 20 years, it is time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds.” Lagarde said the process will mark the first big overhaul of the imagery used on the Euro banknotes since the currency started
circulating in physical form in 2002, when notes ranging from €5 to €500 replaced the currencies of 12 member states including the French franc, German mark and Italian lira. “We want to develop Euro banknotes that European citizens can identify with and will be proud to use as their money,” said ECB Executive Board member, Fabio Panetta. “The process to redesign the Euro banknotes will run in parallel with our investigation on a digital Euro. Both projects aim to fulfil our mandate of providing safe and secure money to Europeans.” After completing the design process, the Governing Council will authorise the production of new banknotes and decide on potential issuance dates. The latest study on the payment attitudes of consumers in the Euro Area (SPACE) showed that cash remained the most popular means of payment for in-person retail payments in 2019. Despite the increase in cashless payments during the pandemic, the demand for cash has risen owing to cash’s crucial role as a store of value. As part of its Cash 2030 strategy, the Eurosystem is taking concrete steps to guarantee that cash continues to be available and accepted as a means of payment well into the future – including following the possible launch of a digital Euro. A fresh look was given to the banknotes in 2013 to include more up-to-date security features, including a watermark portrait of the Greek goddess, Europa, although the original “ages and styles” theme remained. Japanese currency, the Yen, is the thirdmost traded currency in the foreign exchange market, after the U.S. Dollar and the Euro. It is also widely used as a third reserve currency after the U.S. Dollar and the Euro. On April 9, 2019, Japan’s Ministry of Finance announced new designs for the ¥1000, ¥5000, and ¥10,000 notes, for use beginning in 2024. All the three Yen note bills will get new features. Due to the discovery of a large number of counterfeit Series D banknotes at the end of 2004, all Series D banknotes except ¥2000 were virtually suspended on January 17, 2005, and officially suspended on April 2, 2007. According to a news release from the Japan’s National Police Agency, the police seized 11,717 counterfeit Series D banknotes (excluding the ¥2000 denomination) in 2005. However, they seized only 486 counterfeit current issue banknotes, namely Series E ¥1000, ¥5000, ¥10,000, and Series D ¥2000. The banknotes, which are redesigned every 20 years. Counterfeiting probably costs Japan only $1 million a year in direct losses. Most fake bills, generally 1,000-yen notes, are swallowed by vending machines, Japan’s ubiquitous mechanical purveyors of drinks and cigarettes. Introducing the new currency will cost hundreds of millions of Dollars, partly to issue 10 billion new bank notes, and partly to modify the 1.8 million vending machines in Japan. The high cost suggests another agenda, which appears to be flushing out hidden money. The currency shift, according to reports from Japanese media, is an attempt to bring into the economy trillions of Yen that Japan’s elderly keep stashed at home. “The trick in Japan is to unlock the mattress money, the futon money,” Jesper Koll, chief economist for Merrill Lynch Japan, said. “In Japan, coins and notes account for about 15 percent of national income, which compares
to 6 percent in Germany and 3 to 3.5 percent
in America.”
Until Japan’s banking crisis a decade ago, 7 percent of the national income was held in
cash. Now, with the banks increasingly stable, the government hopes to lure some of
the $700 billion in mattress money into
banks, or better yet into consumer
spending and investments. Although the old notes are to be
withdrawn from circulation
two years from now, there
is no fixed date for their
sunset as legal tender.
Even so, Japanese authorities evidently
hope that the prime
minister’s visit to the
Bank of Japan will
send a signal to people hoarding cash that
they should turn in their
money. About two-thirds
of cash in Japan is held by
people over 65 years old. The
act of bringing cash to a bank
may prompt some to spend it. “I
hope it will help put the economy on
a firm recovery path,” Mr. Koizumi said
at the central bank, recently. Also, Toshihiko Fukui, the central bank governor, told
reporters: “I believe the new bank notes will
lift people’s spirits and contribute to forming
a new, dynamic Japanese economic society.”
“Because there is so much cash out there
in the underground economy, they may not
want to trade it in for cash, they may want
to buy things,” Robert Alan Feldman, chief
economist for Morgan Stanley Japan, said of
the criminal cash hoarders. “The problem is
that there is no particular deadline to turn
in your cash.” Another sceptic said: “You
can play around with changing notes. But
will the cash actually go into the economy
or back into the mattress? That is the million-dollar question.”
Almost all countries of the world control
their respective money supplies through their
central banks. As the FRB controls the money
supply in the U.S., so also the Peoples’ Bank
of China (PBOC) controls the money supply in China, the second-largest and fourth
fastest-growing economy in the world, as of
April 2022. The nation has a unique socialist
open-market economy. The
government retains tight control but remains
open to free-market forces. As a manufacturing and export-driven economy that receives
tremendous amounts of FOREX capital for
its exports, the Chinese currency FOREX
rates also impact the country’s money supply.
On November 12, 2015, the PBOC introduced into circulation a new version of its
100-yuan banknote, the highest denomination available in the world’s second-largest
economy with added golden touches that
the government said was harder to forge.
The note, worth just under $16, retains its
overall red colour, with Communist founder Mao Zedong. More security features were
added, including widening the security strip,
to make it “easier for machines to read and
more convenient for the public to distinguish
the authentic notes from the fakery.
Counterfeiting is rampant in China with
the
country’s
own currency no exception,
despite numerous crackdowns by authorities. In the 1990s,
the portrait of Chairman Mao Zedong was
placed on the banknotes to combat counterfeiting, as he was recognised better than
the generic designs on the renminbi notes.
Police in the southern province of Guangdong announced in recent years that they
seized piles of forged 100-yuan banknotes
with a face value of 210 million yuan in a
raid, according to reports. The measure is
against the backdrop of growing complaints
of counterfeit notes being received specially
from the ATMs. The design of the new note
is largely the same as the 2005 series but have
enhanced security features
There are over 4.7 billion Bank of England
currency notes in circulation worth around
82 billion Pounds. Queen Elizabeth was the
first monarch to appear on Bank of England
bank notes in 1960, so there is no precedent
for what will happen during a turnover in the
monarchy. The cost of creating new moulds
to accommodate King Charles would be
“relatively negligible,” said analysts, who estimated that phasing out the currency with Queen Elizabeth will be a two- to four-year process. According to reports, King Charles’ ascension is occurring as the Bank of England continues to replace paper bank notes with polymer ones to prevent fraud and reduce the transmission of germs. In 2016, the bank introduced a five-pound polymer note that featured Queen Elizabeth and Winston Churchill, the former prime minister. One other factor in the timing of King Charles currency as the king gets to approve the image. There are 29 billion British coins in circulation with Queen Elizabeth’s visage and on all of them, she faces to the right. Since Charles II’s reign in the 17th century, new kings and queens have faced the opposite direction of their predecessors on coins, with the exception of Edward VIII, who preferred to face left. Unless the new king expresses a different preference, he will be facing left. One expert says the coins were more expensive to produce than bank notes because they were more durable. He was reluctant to put a figure on what production of the new coins might cost — estimating around $600 million — but noted that it would take multiple years to phase out older coins, and the total tab could fluctuate significantly. With Queen Elizabeth’s death, a raft of changes will be taking place including changing the currency of multiple nations, though it will take some time. The number of countries headed by Elizabeth II varied during her 70 years as queen, altogether seeing her as sovereign of a total of 35 independent countries during this period. In her capacity as Queen of the UK (including the British overseas territories), she was also monarch of three Crown Dependencies—the Channel Island of Guernsey and Jersey (as the Duke of Normandy), and the Isle of Man (as the Lord of Mann)—and, in her capacity as Queen of New Zealand, she was monarch of two associated states— the Cook Islands and Niue—after they acquired this status in 1965 and 1974, respectively. With the planned change in currencies that feature the queen’s portrait, including Australian, Canadian and Belizean dollars, will also be updated with the new monarch, but the process could take longer, because it is much easier to enforce a new design in the country where it originates, than in other countries where different jurisdiction may take place. In Canada, significant design changes to the notes have occurred since 1935, with new series introduced in 1937, 1954, 1970, 1986, and 2001. In June 2011, newly designed notes printed on a polymer substrate, as opposed to cotton fibre, were announced; the first of these polymer notes, the $100 bill, began circulation on November 14, 2011, the $50 bill began circulation on March 26, 2012, the $20 denomination began circulation on November 7, 2012, and the $5 and $10 denominations began circulation on November 12, 2013. All banknotes from series prior to the current polymer series are now considered unfit for circulation due to their lacking of any modern security features, such as a metallic stripe. Financial institutions must return the banknotes to the Bank of Canada, which will then destroy them. Individuals may keep the banknotes indefinitely. The Bank of Canada said its current 20 Dollars banknote, made of synthetic polymer, is designed “to circulate for years to come”. “There is no legislative requirement to change the design within a prescribed period when the Monarch changes. “In general, when a new portrait subject is chosen for Canadian money, the process begins with drawing up a fresh design, and a new note is ready to be issued “a few years later”, the bank said. As part of the Commonwealth, reports Toronto Sun, “our coins and bills might be subject to change every time the monarch changes, the direction in which he or she faces on a coin is reversed. It is customary, as soon as one monarch dies, for the Royal Canadian Mint to begin replacing the currency, both coins and paper money, with the new one.” The banknotes will not be replaced overnight, but gradually phased out of circulation as new ones with Charles’ image replace them. The same will happen with stamps, although there’s already a republican move afoot to replace the mon
arch on both banknotes and stamps, according to a Toronto Sun.
“The stamps and coins of an independent
nation on the eve of its 150th anniversary
should celebrate its own people and achievements, not those living in the palaces of a foreign nation,” the Sun quoted Wayne Adam,
of Canada’s Republic Now, as saying in 2016
The Reserve Bank of New Zealand said it
will issue all of its stock of coins depicting the
queen before new ones go out with Charles’s
image. The queen is also featured on the 20
dollars bill, which is made “infrequently”
and there is no “plan to destroy stock or
shorten the life of existing banknotes just because they show the Queen”, the bank said.
“It will be several years before we need to
introduce coins featuring King Charles 111
and longer until stocks of $20 notes are exhausted,” it added.
Coins and notes bearing an image of
Queen Elizabeth will gradually change, to
be replaced with money bearing the face of
the new monarch, King Charles III. Reports
said that the face of the late Queen Elizabeth
II will soon stop adorning Australian coins
and the $5 note. Since 1953, there have been
six different portraits of the Queen issued
on our coins, slowly showing the process
of ageing. The 2018 coin is the most recent
version, but others still remain in circulation.
The new coins will use an image supplied by
the UK Royal Mint and are likely to feature
King Charles III facing left, the opposite way
to his mother.
This would continue a royal tradition dating back to Charles II in 1660. Australian
authorities said there would be a number of
portraits in contention; however the winner
would ultimately be selected on what looked
“regal, appropriate and realistic”. It will take
some getting used to. Since 1966, more than
15billion Australian coins have been minted,
almost all of them featuring an image of the
Queen. In the aftermath of her death though,
Australians still using actual currency will
need to get used to seeing a new face.
What are the cost-benefit implications of a
currency redesign? The costs will most certainly include social and political costs and
benefits, not just financial and commercial
costs and benefits. Money plays a critical role
in any every economy. It determines such
things as the general price levels, aggregate
national income, production and productivity, labour and capital employment levels,
exchange rates and the balance of payments.
For instance, the cost of the current Canadian polymer $20 bill is approximately 23 cents
per unit. According to the Bank of Canada,
this is about double that of the previous series of paper notes. Presently, there are about
1.05 billion $20 Canadian bills in circulation,
totaling close to $21.1 billion. Despite the additional cost of printing polymer bills, their
longer lifespan makes the change from paper
currency a more economical one. The timeline for coins to change is also unknown, but
the Mint manufactures 1 billion circulation
coins per year in its Winnipeg, manufacturing facility.
Experts say the redesign of Japanese Yen
will be a boost to the economy because
it will create demand in a range of industries also. The Japan’s Daiichi Life
Research Institute estimates ATM manufacturers will earn more than $3billion
replacing or remodelling about 200,000
units at banks and convenience stores.
The ATM manufacturers are expected to
experience a boost in business when the
Japanese government and Central Bank
issue new high denomination currency
notes in 2024 in a bid to stamp out counterfeiting and energize the economy.
The new bills will “brighten up people’s sentiment.” and “affect the social
mood… because it serves as an incentive
for ink and printing industries.” Vending machines and ATMs will have to be
adapted to accept the new notes, which
will include holographs and other new
features designed to thwart counterfeiters.
The revamped currency could boost
Gross Domestic Product (GDP) by more
than 0.4 % points. Benefits would be
some 2 trillion Yen in a very rough estimate mainly thanks to demand for ATMs
and vending machines. Dai-Ichi Life Research Institute estimates that about 960
billion Yen will be spent in the coming
two years on upgrades of ATMs and other equipment, pushing up the GDP by
about 0.1 %. These projections include
317.3 billion Yen in printing and related
costs, assuming that each bill would cost
17 Yen to print. Modifications to ATMs
will add 330.7 billion Yen and upgrading vending machines will add another
312.1 billion Yen to the economy.
One estimate puts the cost of modifying an ATM at 300,000 Yen, including
software changes and the replacement of
sensors that check for note authenticity.
With about 152,000 ATMs installed in
financial institutions, post offices and
convenience stores nationwide, the final
bill likely will run to more than 45 billion Yen. Each of the major commercial
banks probably will have to pay about
5 billion Yen to complete the necessary
modifications.
“When 2,000 yen bills were brought
out in fiscal 2000, our sales increased
by 5 billion yen to 6 billion yen. This
time, though, there’s really no comparison. It’ll be huge,” an official of Omron
Corp. said. The company has more than
20 percent of the market share in ATMs
and about 40 percent in the ticket machine market.
Oki Electric, an electronics maker that
also makes ATMs, soared 16.74 percent
to 279 Yen as the most active issue by
volume on the first section of the Tokyo
Stock Exchange on Aug. 5 after climbing
13 percent in August 2.
In UK, changing queen to king on
banknotes, coins comes at a cost. According to experts, it could cost about
350 million pounds (€403 million or
$402 million) to stick King Charles’ head
on UK banknotes and coins and take
several years.
The Bank of England says it costs approximately 7 to 8 pence to produce a
banknote. There are some 4.7 billion
banknotes in circulation in the UK. So
the cost to replace these can be estimated
at around 350 million pounds, according to Joe Trewick, a writer at The Coin
Expert said. “The Royal Mint does not
disclose how much it costs to produce
new coins, but with 29 million currently
in circulation to replace, we can assume
the total cost will also be several million
pounds,” Trewick told DW. This cost will
not be needed upfront.
