Central Bank Review - Currency...

Central Bank Trends

Currency Research Review Seminar 2013

Summarizing trends from many

conference presentations and

meetings

Summarizing Presentations:

International Commercial Cash Operations

Seminar –

The Cash Cycle Seminar

ICCOS Americas , ICCOS Asia, ICCOS EMEA

Other Conferences:

ESTA (European Security Transport Association)

EFMA (European Financial Management Association)

Banknote – Washington

High Security Print (Cross) Conferences

International Cash Conference – Moscow

CR Review seminars

WAIFEM course (June, 2013)

Currency Research - Review Seminar

Review presentations from many

Central Banks 2010- 2012 Bank of England

Federal Reserve Bank

Bank of Canada

Bank of Lebanon

Bank of Russia

Bank of Kazakhstan

Monetary Authority of Singapore

Armenian Central Bank

Reserve Bank of India

Central Bank of Brazil

European Central Bank

Norges Bank

Bank of Uganda

Czech National Bank

Central Bank of Chile

Bank of Tanzania

Bank of Israel

Reserve Bank of Australia

Reserve Bank of New Zealand

Bank of Nigeria

Reserve Bank of South Africa

Bank of Thailand

Bank Negara Malaysia

Bank of Indonesia

Bank of Austria

National Bank of Belgium


9

Euro cash: the road ahead

Bratislava,11 June 2012

Ton Roos, Director Banknotes ECB ESTA conference


KEYNOTE MESSAGE

International Commercial Cash

Operations Seminar (ICCOS)

Manila, 16 October 2012

Deputy Governor Juan D. De Zuñiga,

Jr.

Bangko Sentral ng Pilipinas

Review presentations from

many suppliers DLR

Goznac

Toshiba

G4S

Cisco

Dutch Currency Association

Fiserv

Transoft

Authentixs

G&D

Crane

Arjowiggins

Obethur

KBA

Sicpa

Securency

SMI

Komori


Central Bank Trends

Three General Themes

1) Production and Issue trends

2) Regulation and circulation trends

3) Outsourcing trends


Production and Issue Trends 1) Redesign , launch issues, public awareness,

visually impaired

2) Coin note boundary, note life

3) Security of the Banknote, design features

4) Demand issues

5) Intellectual property

6) Production issues

7) Standards


Regulation and Circulation

Trends 8) Business practices, cost reduction

9) Contingency planning

10) Low denomination soiling

11) Commercial regulations on circulation

12) Automation, vendor interaction

13) Serial number use

14) Money laundering

15) Philosophical issues, payment methods


Outsourcing Trends Increasing activity

Emerging service companies

Impact of recirculation strategies

Balance control/security/efficiency

Retain responsibility ofr issuance and destruction


1) Redesign , launch issues, public

awareness, visually impaired

How often to launch a new series

“Upgrade” versus redesign

Public awareness regional issues: poorest regions,

diverse geography, language, technology usage

How to accommodate every member of society:

visually impaired,

Health issues “antibacterial coating”


1) Redesign , launch issues, public

awareness, visually impaired Summary

Cost causing upgrading versus new series

Speed causing upgrading versus new series

Public awareness balance with confidence

Use of social technology to publicize new notes

Measurable formulas for decision making

Limited features, maximize education

Trend is faster releases of new series due to technology threats and more spent on marketing

National Printing Bureau

Japan– Banknote Dec 2012

2) Coin Note Boundary , Note

Life Flexicoin , polymer substrates

Counterfeiting highest denomination coins

Public convenience

Cost , cost factors

Coin authentication

Redesign timetables

No clear boundary trend but longer life notes


3) Security of the Banknote,

design trends

Anti-counterfeiting continues to dominate design

Technology improves for everyone including the

counterfeiter

The current trends are to try to stay ahead of the

technology available.


Bank of England

The Bank of England – Singapore Oct

2011:

“Maintaining confidence in the currency is a key

objective for the Central Banks”

“ Three key roles for achieving this :

1 accommodate demand,

2 assure quality,

3 minimize counterfeiting.

2 and 3 are a function of note design”


The Bank of England


3) Security of the Banknote, and

design trends- Summary

Trend to look at what is most cost effective on what denomination, issuing cost and society costs , less features but more expensive features

Trend to protect against scanners and printers (cost 1995 :$10,000+ today $100)

Best new feature of the month sometimes problematic

Trend to measure : survey’s , formulas;

Trend to independent consultant advising vs vendor

Trend to harsher penalties for counterfeiting


4) Demand Issues and Trends Software forecasting models growing in use

Contingency planning is growing stock holdings

ATM growth drives demand

Debit card “cash back” growth

Payment studies showing growth where intuitively decline should be happening

Outsourcing tends to increase stock holding by commercial banks

Legislation of high denomination use no real effect


5) Intellectual Property Trends Who owns banknote design

Cost of proprietary security feature

New companies in detector and authentication field

Who owns sorting IP, development IP

Trend to ask questions , maintain more flexibility and

ownership for the Central Bank

Trend to try to have vendors license for “reasonable”

fees


6) Production Issues Trends Federal Reserve 100

ECB second generation delays

Swiss delays

RB India testing

Trend is to look more on the effect on new security features and banknote design?

Trend is to be more cautious on new features demanding “leading edge” “proven” technology paradox and for vendors for first to introduce in smaller countries.


7) Standards Trends Detector interface standards

IACA Banknote guidelines

Reporting standards

IACA Tendering and Testing standards

IACA Agent and Distributor standards

IACA Payment study standards

Trend is to demand more standardization


Regulation and Circulation

Trends 8) Business practices, cost reduction

9) Contingency planning

10) Low denomination soiling

11) Commercial regulations on circulation

12) Automation, vendor interaction

13) Serial number use

14) Money laundering

15) Philosophical issues, payment methods


8) Business Practices, Cost

Reduction Trends Trend to look at the Central Bank as a business

Society costs versus central bank costs

Trend to implementing a business practice mentality

into bank operations

Negotiations with separate substrate, print, security

vendors or with one vendor

Trend to long term contracts with service level

agreements (note life)


Future Plans

The BSP envisions to further improve

its service level, expand its

operation, and offer a more efficient

cash management service.

Three (3) main objectives:

1. Elevate the level of cash

management services to banks;

2. Strive to a more efficient and cost

effective cash management system;

and

3. Ensure the sustained

implementation of our Clean Note

Policy.

Cash Management

CENTER

9) Contingency Planning

Trends Earthquakes in New Zealand

Tsunami in Japan and South East Asia

Floods in Thailand

Civil unrest in Europe

Currency uncertainty in Argentina 2001,Greece 2012

Financial uncertainty in world centers


10) Low Denomination Soiling Major issues partly due to outsourcing and commercial

costs

Bank of England study with HSBC and Sainsbury

Distribution and collection issues

Substrate, coin, varnish, public education


Presentation at Banknote

December ,2012

11) Commercial Circulation

Regulations Trends Fitness standards

Fitness sorting requirements

Authentication requirements

Coin sorting requirements

Automation requirements

Reporting requirements

And the next new requirement


Future developments in the cash cycle

Greater standardisation

Greater automation

Greater cooperation between cash handlers

Greater degree of monitoring by central bank of private

cash recycling operations

Greater efficiency in the area of cash handling

6 November 2012

Ralph Rotzler, Head of Division for Cash Payments and Cash Processing Machines, Deutsche Bundesbank


12) Automation , Vendor

Interaction Trends Trend is to look at next generation of sorters before

designing notes

Trend is to recognize early vendor and community

involvement is needed in banknote design and release

Trend is to consider technology and reporting

requirements to meet central bank regulation during

note design

Summarizing the trend is much more “community”

involvement from very early stages


13) Serial Number Use Trend Financial

Political

Technical

Commercial application vs. central bank application vs

law enforcement application

Counterfeits, “shrinkage”, soiling uses commercially

Trend is to “study” , vendor push but no pull


14) Money Laundering Trend Regulations to restrict high denomination use

New overheads (costs) for commercial reporting

Cash anonymity threat

Technology to track here now (serial numbers for one)

Trend is to regulate more but have not seen active real

time monitoring (yet)


15) Philosophical Issues,

Payment Methods Trends Can a central bank support cash

Are central banks killing cash

Credit cards “war on cash”

IACA role

Trend is to study

Now some Central banks looking at the question of

“issuing” non banknote currency


Summary of Trends Cash is still growing

Cash is a key element in contingency management and

planning

The trends identified are in constant change

Threats continue in the form of counterfeiting and costs

Alternative media, payment forms and technologies

continue to challenge the use and business case for

cash.


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