From September 2016 a new £5 note will be introduced in the UK.
Ending 320 years of paper money, the new £5 will be unusual in that it will be the UK’s first plastic bank note. It will feature Winston Churchill, and will be followed by Jane Austen £10 in 2017, and a J M W Turner £20 by 2020.
It is the beginning of the Bank of England’s switch to plastic bank notes. Officially called polymer notes, plastic bank notes are manufactured from a transparent plastic film and then coated with a layer of ink. The polymer notes produced by this process are considered to be cleaner, more durable and (vitally) more secure than paper notes. The material and the process allows for the inclusion of clear “windows” to protect against counterfeits. The bank notes are made in such a way that makes them harder to copy and counterfeit.
Polymer bank notes are also more environmentally friendly than their paper counterparts because they last up to two and a half time longer. The Bank of England claims that this longer lasting durability will offset the higher production costs of the manufacturing process, and overall save an estimated £100m. Regarding durability, in laboratory tests, the polymer banknotes only begin to shrink and melt at 120C. As such, they are expected to survive a washing machine spin cycle when left in a trouser pocket– although they could possibly be damaged by a hot iron.
Despite those advantages, introducing the new notes will not come cheap. With the introduction of any new bank note, there are inevitable production and related costs. With the new Churchill £5, the new process means that those costs alone will be much higher. In addition, the new polymer notes will land shops, banks and other businesses with an estimated bill of £236m. ATM’s, vending machines and similar will all need to be recalibrated to take the new polymer notes, which are actually 15% smaller than the current £5 notes. Some of those machine and systems will need to be replaced entirely.
The key thing is that the new polymer notes will help counter fraud, and be more durable. It is a very good way for the Bank of England to carry out it duty and role in safeguard the British currency. Fraud and counterfeit money costs UK economy many millions every year – the new plastic notes will help.
The Bank of England regularly takes thousands of counterfeit (or old) notes out of circulation annually. Surprisingly, the venerable £1 coin is the most heavily counterfeited, with an estimated 30-40 fakes in circulation in 2010. According to the Bank of England, 243,000 counterfeit banknotes were taken out of circulation in the UK in 2015 with a face value (as counterfeits, the notes are valueless) of £5m. This is a very small proportion of the genuine banknotes in circulation – which averages at over 3.3 billion notes with a face value exceeding £65 billion. £20 were the notes most copied in 2015, with 168,000 taken out of circulation.
The Bank of England and the Royal Mint both work with agencies such as the Serious Organised Crime Agency and the National Crime Agency to combat such counterfeiting, which costs the UK economy millions every year. The introduction of the new polymer notes over the next few years should go a long way in combating such activities, as they are much harder to counterfeit.
Amidst an increasingly digital world, the new polymer notes finally herald the end of the humble, venerable paper banknote.