Touted for years as a modern, innovative and environmentally-friendly solution, the polymer (plastic) banknote is struggling to convince central banks around the world. Although designed to be more durable and environmentally friendly, they have come under criticism from many groups around the world for failing to live up to their reputation. Pro-polymer ecological arguments are already growing out of date, and, bar just a few, have failed to persuade some of the world’s largest economies to move away from traditional paper notes.
More environmentally-friendly?
In the context of a global move towards net zero, the choices of central banks in the years to come will be consequential. Banknote production involves a series of processes that have a real environmental impact due to carbon emissions. Critics often point out that the production of polymer banknotes, actually plastic banknotes, involves the use of non-renewable sources derived from fossil fuels, with the production process subsequently leading to a harmful level of greenhouse gas emissions. Indeed, recent studies have shown that the production of polymer banknotes leads to almost three times as much carbon emissions as cotton banknote production. Cotton has proved itself as a material with sustainable efficiency, which actually removes more CO2 from the atmosphere than it emits.
The sustainability of cotton is why so many central banks continue to promote its use. De Nederlandsche Bank (DNB), for example, has extolled the economic as well as ecological virtues of cotton: “Since 2019, all our new banknotes have been made entirely from sustainable cotton. The sustainable cultivation of cotton is more environmentally friendly than traditional methods, in which many chemicals, such as weed killers, are used. And in sustainable cotton cultivation, farmers and cotton pickers get better wages.”
Indeed, the sustainable production of cotton is what has made it more appealing to central banks with serious ecological concerns. Euro banknotes, for example, are also made of cotton, but only cotton produced as a by-product of yarn production. In fact, by the end of 2023 all new euro banknotes will be produced with 100% sustainable cotton, according to the European Central Bank. The ECB rejected a move to polymer bank in 2014, around the same time the Bank of England signaled its intent to introduce a £5 note made from a polymer substrate. “We have seen with great interest what the Bank of England does and also what other central banks have been doing around the world, and we are studying their experiences,” said then ECB executive board member Yves Mersch at the time. “The outcome of our studies was that we would remain with … the current series,” he added.
And what about plastic pollution? The impact of plastic on the environment, both for flora and fauna and the human population is widely documented. Banknotes manufactured using polymer substrates only add to this negative cycle of synthetic pollution, not only because of the chemicals and additives used during their production, but because in many countries the recycling infrastructure is seriously limited, meaning that at the end of their lives, these banknotes would somehow end up polluting the environment directly.
Moreover, some central banks have highlighted concerns that polymer banknotes may be particularly susceptible to environmental or climatic conditions that may affect their usability. The Reserve Bank of India (RBI), for example, shelved its plans to introduce polymer notes due to concerns that the notes would have trouble withstanding Indian climatic conditions, characterized by high temperatures.
More secure?
Durability, of course, does not equal sustainability. This is one reason why 95% of the world’s central banks have so far stuck with cotton for the production of their banknotes. The problem is striking a balance between sustainability, eco-friendliness, durability and security. Pro-polymer voices constantly tout polymer notes as more conducive to providing a better surface for the latest banknote security features in the framework of the global struggle against counterfeiting, but no study suggests that this is the case. Indeed, some industry voices remain steadfast in their conviction that cotton is a better material for security features.
“The production of a fiber-based banknote from cotton is impressive because of its complexity. During the individual processing steps [it also offers] the possibility of embedded security features at a density that other substrates cannot achieve,” said Astrid Drexler, Product Manager for High-Security Paper at Louisenthal.
Furthermore, counterfeiters have been catching up. Many critics of polymer notes argue that despite their advanced security features, they are not entirely immune to counterfeiting. Sophisticated counterfeiters are developing new techniques to replicate these banknotes, potentially undermining public trust and confidence in the currency. The Reserve Bank of Australia published a study in June 2022 highlighting this: “After some 25 years since their introduction, it is now easier for counterfeiters to produce high-quality counterfeits and the NNS series of polymer banknotes has become more susceptible to counterfeit attacks. By 2015, polymer had become the predominant substrate used in counterfeiting, and counterfeiting operations using polymer were typically producing a relatively high volume of counterfeits that were of reasonably high quality.”
In truth, there is a real existential dialogue taking place within the banking sector about the real-world effects of the continued surge in polymer note production. The pro-polymer brigade should take a step back and really consider the long-term effects of the continued use of plastic substrates. Whether more durable or not, plastic is plastic.
