New Banknote Series – Challenging the Convention

Industry custom and practice dictates that a new series of banknotes should be issued every 7-10 years. That span fluctuates depending on who is saying it (some say 5-7, others 10-12). We don’t know who established that nor how was it determined. As we couldn’t answer these questions, we set out to see whether this convention was being followed by the industry. And to determine if it is still appropriate.

But where to start? We needed data! Purely by coincidence, we happened to have virtually ready for release a new industry database on all circulating banknotes in the world, including year and reason for issue. What better time to test than now to see if the industry conventions were being followed.

We researched three periods – 1) 1995- 2004, 2) 2005-2014, and 3) 2015-2024, for both new series introductions and banknote upgrades (individual banknote changes within the series) to determine to what extent notes are being redesigned, or upgraded, in line with the so-called convention.

We also examined the other ‘industry- accepted norm’ that countries with their own (state) printing works (SPWs) change their series less frequently than countries who import their banknotes.

96 out of the 167 countries issuing banknotes introduced one or more complete new series in the last three decades, just over half. 11 of those were before 2005, 31 between 2005 and 2014, and 52 from 2015 to 2024. Had all countries followed the norm, then all 167 countries would have changed their series at least once and some twice.

In the period 2015-2024, 61% of new series were issued by countries with SPWs compared with 55% for countries without, which also is contrary to the perceived industry norm.

A review of upgrades showed that 70 out of 167 countries upgraded their banknotes in the three decades, changing 298 out of the 1,044 denominations. This again is below the number expected using the current industry norm.

Overall, 25% of countries neither upgraded nor redesigned any of their banknotes in the periods reviewed.

From the data extracted, the general conclusion can be drawn that the introduction of a new series is now mostly determined independently from the industry frequency convention.

There are number of different reasons for introducing a new series. They range from the death of a monarch or head of state whose portrait appears on the currency, redenomination (generally the result of hyperinflation), a change in substrate (notably from paper to polymer) to extend the lifetime of notes, adopting a more logical and cost-effective currency structure (adjusting the note/coin boundary and/or introducing new denominations), or simply the desire for a more modern appearance that better reflects the country’s circumstances, aspirations and the image it wants to project to the world. Or a combination of these.

But the main, overriding reason for changing notes – whether upgrades or a complete redesign – is security. And this is where the original convention probably came in – almost certainly during the 1990s when counterfeiting started becoming a major issue thanks, largely, to the arrival of digital reproduction technology that put the tools for creating counterfeits into the hands of the many.

A number of counter-strategies were deployed – clean note policies, greater involvement of law enforcement and public education all being key. But central to all was the development and introduction of new security features – predominantly overt features with effects that change according to the viewing angle and can be explained to the public with minimal education or special tools.

The fact that redesigned notes could also be smaller (ie. cheaper), fresher in appearance, incorporate features for the visually impaired, etc., were all opportunities on the back of enhanced security, rather than the rationale for a series makeover.

Needless to say, there have been major advances in banknote technologies in the past two decades – substrates (not just polymer, but more durable paper and composites), security features (overt, covert, machine-readable and forensic), digitisation in design, pre-press, print and finishing technology – all of which have reduced lead times and speeded up the process of producing new series, enhanced security, improved quality, extended lifetime, and reduced costs.

But just as there are compelling reasons to keep ahead of the counterfeiters by regular upgrades or redesigns, there are some compelling reasons against.

Longer series life can enhance public education on counterfeit detection, is better for sustainability, and reduces the overall cost of new note issue for the private and public sector.

These counter-arguments are predicated, however, on the basis that the notes are secure, durable and, increasingly, sustainable in the first place. So, it is a little surprising that only 298 out of 1,044 denominations were upgraded or redesigned in the three decades.

As for the question of whether the 7-10 years is still appropriate, it certainly was. Notes didn’t last as long so either the quality was poor or the replacement costs were high, and counterfeiting used to be a major problem. In the 2000s, some major economies were reporting counterfeit ratios in excess of 400 ppm (they have subsequently tumbled and it’s rare now for a country to have a ratio into three digits). But that was then, and this is now – as the saying goes. So, the answer – these days – is probably not.

But what is appropriate is vigilance by the banknote issuer within their country, as well as regionally and globally, to monitor threats and developments, and to act based on this knowledge to ensure their banknote series is secure, durable, cost effective, and presents their country positively to its people and the world.

If the population likes, respects, uses, and has confidence in the currency, they will have succeeded.