Banknotes redesign a normal exercise
THE EDITOR, Madam:
Recently, the minister of finance announced that a new, redesigned family of banknotes would be introduced by December of this year. However, instead of there being a sense of excitement the reaction from the public focused more on the initial expenditure of J$1billion, with the general sentiment being that the expenditure was unnecessary at this time.
While I will not justify or refute the necessity of this expenditure, what is important to understand is that the Bank of Jamaica (BOJ) is responsible for ensuring the country has an adequate supply of new banknotes to support economic activity, resulting in expenditure on new banknotes every year. This is to replace banknotes that are torn, soiled, damaged or otherwise deemed unfit for recirculation, particularly in ATMs. Whether redesigned or not, the supply of new banknotes to the public is a part of the BOJ’s annual expenditure.
That being said, there are general benefits to be gained from the redesign:
1. Banknotes are redesigned to take advantage of new, longer-lasting materials available. The new banknotes will use a polymer substrate, instead of the varnished cotton (used on the $500, $1,000 and $5,000) and hybrid (a mixture of polymer and cotton which feels like cotton, currently used for the $50 and $100). This will reduce the country’s expenditure on banknotes in the medium to long term.
2. The introduction of the $2,000 banknote is expected to lead to reduction in the number of banknotes in circulation, it should be somewhat of a substitute for $1,000.
Importantly, the $5,000 did not have this impact on the $1,000 as it may have been relatively too large in value, and looked a little too similar to the $500.
3. Redesigned banknotes incorporate the latest and most effective security features, to reduce and prevent counterfeiting. This is important as the public must be confident that the monies being exchanged are genuine.
4. Finally, a country’s banknotes are seen as a representation of their culture, identity and what is important at the time of the redesign. It is a reflection of our heritage and a source of national pride, featuring portraits of past leaders, flora and fauna, as well as historical landmarks. This facelift was needed to give our banknotes a more modern look, incorporating more effective security features.
There may be an initial increase in the expenditure on banknotes by the BOJ relative to previous years, as they will probably attempt to inject the new banknotes into circulation in the shortest possible time and will have to embark on a public education campaign.
The expected overall impact of this decision should result in overall savings for the country with respect to banknote printing.