The banknote printing industry operates to ensure that every nation has a reliable supply of cash. While its services are indispensable, the industry itself remains largely shrouded in secrecy, with procurement tenders held without much publicity and announcements coming in without much details. This mysteriousness is due to the need to ensure stable flows of cash and protect everyone who uses it – let’s try to get a glimpse of how they do it.
Most of euro banknotes users have heard about the recent news: the ECB is going to introduce new bills. Delve deep into any text of the news, however, and the most you will find is a description of the new design. What about the rest? “We are working on a new series of high-tech banknotes with a view to preventing counterfeiting and reducing environmental impact,” ECB Executive Board member Fabio Panetta said. And that’s all the technical details we can learn. The situation is similar with the new pound sterling banknote: everyone is focusing on the King Charles design, with a short mention of the polymer substrate and compliance to the environmental and financial requirements, without going further.
Note how all particularities, be it security features or the type of ink to be used, are left untold. And, of course, it is unlikely that the news would feature those who are directly responsible for the creation of banknotes, namely security printers and their suppliers. Like any representatives of industries with proprietary know-how, they are not too fond of going public about details of their work – all the more so because the matter here is complicated by the very nature of their products.
That everyday banknote conveniently sitting in your wallet, in whatever currency, seems like a simple, and straightforward means of payment. In a sense, it is true: cash continues to accompany us to this day, passing from hand to hand and helping out when electronic payments fail. Ensuring this ease, however, requires huge efforts based on the principles of threatening cash as a strategic asset of the economy. In turn, these principles are countered by various factors, dealing with which requires as much technical knowledge as trust and the ability to be discreet.
Know-hows and industry-specific technologies
Central banks are the only organizations that have the authority to issue money in cash. At that, most of them do not own or operate their own printing works, data from the Currency Benchmarks 2022 report show. At first glance, it looks like an inconsistency – a bank is responsible for ensuring the cash security, yet it outsources such an important task to someone else. Why would they do it?
“It’s our job to make sure that when you spend a banknote, the person who receives it can trust in its value. An important part of our work is therefore to make sure that the banknotes we all use have state-of-the-art security features, since if counterfeit banknotes are mistaken for genuine ones, this would erode people’s trust in their value,” explains the Bank of England. In today’s world, where anyone can buy a high-fidelity printer, almost any kind of paper and ink, and print their own banknote, it seems like an impossible task – but not for banknote printers.
At the heart of banknote printing lies a complex network of specialized equipment and techniques. These technologies are not readily available for purchase, but closely controlled and held secret to keep counterfeiters at bay, as we see on the example of Koenig & Bauer Banknote Solutions (KBBS), a Swiss provider of security printing equipment: “Despite the availability of high resolution digital printing technologies on the open market, criminal fraternities are technically incapable of replicating the visible, and invisible, printed characteristics present on banknotes printed on our machines. Commercial printing technology cannot reach these levels of precision and excellence,” explains KBBS’s CEO Eric Boissonnas.
Another important consideration is the physical characteristics of the banknote. If the quality is poor, and it becomes more difficult to see whether banknotes are genuine or not, it weakens their effectiveness as a means of payment. To prevent such situations, central banks set their own requirements for the properties of new banknotes: “Banknotes should be able to circulate for a significant period before folding or tearing, and they should be resistant to soiling. Like the paper and printing, security features that make it possible to distinguish genuine banknotes from counterfeits must also withstand wear and tear,” Norges Bank says. Banknote suppliers fulfil such requirements with their own patented and protected know-hows. And this creates another pitfall: no company is able to produce all the components of a banknote from scratch, and in many cases, it is necessary to integrate solutions from several manufacturers into a single product. So how do different companies manage to work together seamlessly and still meet the confidentiality requirements?
Trust and cooperation
The point here is to approach work through instilling trust and cooperation. This attitude is unique to the banknote printing industry, since its participants have a shared responsibility to ensure that their products are secure and cannot be easily replicated, and is partly fulfilled through uniform requirements and common quality management systems.
One of the most prominent examples here is the ECB’s banknote printing orders. The bills are printed at eleven highly secure facilities throughout Europe. A shared quality control system and the pooling arrangement guarantee a consistent standard for all euro banknotes, and hundreds of tests are carried out during the production process to guarantee that a banknote remains the same no matter where it is printed.
Specifications and uniform quality management systems, however, are not enough. In addition to meeting the demands of a wide range of stakeholders, central banks have to deal with an overwhelming array of security feature options and the technical challenges of incorporating them into a single note. Cooperation helps here too, and sometimes companies from different sectors and even competitors have to come together to achieve a single result, as was the case with the Bank of Israel.
Several years ago, a foil-based security features provider KURZ introduced an innovative security feature Kinegram Volume. Later, the Bank of Israel decided to use the feature for its new banknote series. To do this, it set up face-to-face meetings with all the major suppliers into the project. This approach to collaboration between companies, some of which were in competition with each other, helped greatly: “The suppliers’ honesty in addressing these, and their willingness to work as partners, were indispensable in the success of the project,” told KURZ.
Examples like this confirm the importance of working together in a close system. Sometimes such co-operation becomes indispensable in emergency situations: for instance, Crane – the substrate provider for the US dollar – worked closely with the US Bureau of Engraving and Printing to support an unexpected 26.3% increase in dollar demand during the second year of the COVID-19 pandemic. “This required the Crane Currency team to work closely with our associates and our supply chain to meet the increased demand,” says Tod Niedeck, global marketing director at Crane.
Despite the unexpected nature of requests, almost all industry participants are ready for such occasions as cash supply interruptions and possible drops in quality are simply unacceptable, says KBBS: “It is also very important for our customers to be able to manage increases in printing volumes, notably in order to meet the growing demand in many countries, or to prepare for the launch of a new series, without compromising quality.”
Transparency and compliance
The principles of co-operation come to the rescue in such a sensitive issue like ensuring transparency as well. In a way, it serves as a counterbalance to all the secrecy when it comes to spending public money (as currency printing is normally paid for from central bank funds). The need to keep all the secrets under lock and key makes the task even more complicated, and the solution comes in the form of joint initiatives and common standards, such as the industry-specific Banknote Ethics Initiative (BnEI) or the ISO 37001 anti-corruption standard, both designed to hedge risks of unfair market practices and corruption imminent in any closed industry.
Stumbles happen sometimes, but most players are ready to go to great lengths to amend them. For example, this year Swiss hi-tech security ink and traceability solutions firm SICPA has been held responsible for “organizational deficiencies”, which resulted in bad actors taking advantage of the company back in 2015. Instead of appealing the decision, SICPA opted for accepting its responsibility and adopting the ISO 37001 and becoming an accredited member of the BnEI, with the company’s CEO Philippe Amon citing the security printing industry’s mantra: “Compliance with the law and doing business with integrity are not optional”.
Essentially, we see now that the banknote solutions suppliers have their own reasons to be enigmatic – and delving deeper in the industry shows that all the secrecy here serves for the greater good by ensuring that cash remains a trusted and universally acceptable means of payment.