Why use banknotes in the 21st century?
- Privacy, including protection from identity theft
- Does not require electricity or internet access
- Needs no change of habit or additional education to use new technology
- Acts as a storage of value, particularly in difficult times
- Increases margins, particularly for small businesses, due to lower transaction fees
- Can help budgeting
- Sustainable – uses only 17.5% of the energy consumed by the global payments industry, according to the IMF
Electronic payment methods remain out of reach for many
- 1.4bn do not have a bank account¹
- 5bn have poor or no internet access²
- 43% of adults in developing countries have not made a digital payment¹
- 65 countries pay at least a quarter of their adults in cash¹
- Over $400bn needed, mostly in emerging market economies, to get a global digital infrastructure in place according to IMF²
Demand for banknotes is driven by three things:
- To increase the value of cash in circulation
- To transition to a new series of banknotes
- To replace banknotes that have reached the end of their useful life
Value of cash in circulation continues to increase
- 4.9% increase in the volume of banknotes in circulation in 2022
- 96 of 98 issuing authorities surveyed saw an increase in cash in circulation March 2023 vs 2020
- Inflation was over 10% in 71 countries in 2022
- Growth in the absolute number of transactions, caused by a growing and more economically active population, also increases use of cash
Benefits of polymer substrate
Ten years ago De La Rue introduced SAFEGUARD® polymer substrate and remains one of the two substantial manufacturers in this growing market. Compared to paper, polymer banknotes are:
- more durable
- harder to counterfeit, particularly through use of transparent windows
- more easily recycled
- more accessible as they can incorporate durable blind recognition functionality
Banknote series are renewed every 7 to 10 years on average, to remain ahead of counterfeiters. Often the old notes are replaced rather than being allowed to wear out.
Annual demand for commercially printed banknotes (in billions)
De La Rue is the largest commercial designer of banknotes, creating 60% of new designs since 2020. We saw an increase in new design requests in FY23, an early indicator that several banknote series are about to be upgraded.
Notes:
1. Global Findex 2021 survey
2. IMF Spring Meeting 2023: Analytical Corner: Tackling the Digital Divide
