by Tim Shaw, Product Manager, IMX Software
While the US is reported as fast becoming a cashless society, countries such as Great Britain, amongst others hit by today’s economic downturn, is seeing a significant increase in the use of cash. For example, a recent survey by the British Retail Consortium showed that Britons made 60% of transactions in 2007 using cash, and the Bank of England produced 500m new notes in 2007 alone. The research also showed that some members of society are turning their backs on plastic in a bid to reduce the risk of falling into debt or being hit by fraud. Consumers try to keep control of their finances using different methods, but one thing is certain: cash still has its place in today’s increasingly global society, and if anything, its use is set to rise further in many regions.
The average paper banknote costs around £0.03 to produce in the UK and $0.04 to produce in the US.
The world of physical currency trading is not an easy one to understand. There are billions of notes making their way around each country at any one time and every note has been through a rigorous system designed to make sure it is tagged and recorded at every possible opportunity. With banknotes produced, recycled, restocked, distributed overseas, washed and torn, and eventually withdrawn, the story of a banknote’s journey through its lifetime is one which warrants attention both inside and outside of the treasury management profession.
The initial production of banknotes is fully controlled by central or reserve banks (for example, the Bank of England, the European Central Bank or the US Federal Reserve), which retain responsibility for the monetary policy of individual countries or groups of member states around the world. While some central banks produce their own banknotes, others outsource the production of banknotes to specialists such as DeLaRue and G&D, and/or to government-owned subsidiaries such as the Bureau of Engraving and Printing in the US.