The true cost of UK currency
Replacing currency is a costly business.
Britain’s plan to introduce shiny new durable polymerized bank notes to replace the traditional paper notes has already proven costly for both the Treasury and local businesses. Naturally, currency experts have been salivating over the new £5 notes that were introduced into circulation in September 2016—made from material thinner than paper, these new notes are 15% smaller than their paper counterparts, and are relatively ‘indestructible’, seemingly resistant to the general wear-and-tear of daily use, as well as being washing machine-proof.
However, what are the costs involved in creating these new ‘super’ notes? Whilst the Bank of England were hesitant to put an exact number on the cost of revamping the new £5 note, they vaguely suggest that the notes cost “around 50% more” than paper notes.
Although a costly new addition to the British currency, the Bank of England has defended its pricey choice. Financiers estimate that these notes will save in the order of £100m in printing costs over 10 years because of their durability, rationalising that it costs the bank between £35-40m each and every year replacing crumpled and ripped notes in circulation. Furthermore, it’s said that the old-style £5 had a lifespan of just one year on average before needing to be destroyed, compared with higher-value currency, which lasts 200% longer (with a lifespan of around 4 years). According to The Telegraph, a huge £12.7bn worth of notes were destroyed by the Treasury in 2010—a quarter of all the notes in circulation at that time. This amount of money equates to 882m notes at a weight of 882 metric tonnes (the weight of nearly 3 Boeing 747 aeroplanes).
Whilst it seems like no great hardship to replace banknotes, take a step back and the bigger picture looks a whole lot more expensive. Automated machines would all require being manually emptied and recalibrated to accept new legal tender—all of which would require a significant output of manpower. To put this into context, The British Parking Association quotes that it could cost up to £50m just to adapt Britain’s parking meters alone. Taking account of all automated machines that would be affected by these new notes, this figure has jumped a massive 357% to £236m to incorporate all businesses who will have to shell out to recalibrate every machine that accepts or dispenses currency to receive the new, smaller polymerized notes.
Chief Executive of CMS Payment Intelligence Brendan Doyle, cited in The Guardian: “The Bank of England has not adequately acknowledged the potential disruption and costs to the cash supply industry and retail sectors—there will be huge operational challenges for all merchants, particularly those who operate ATMs and vending machines”. It’s estimated that, all in all, just changing one banknote could cost in excess of £236m.
However, far from being dismayed about such a significant outlay, it seems that polymer is very much the future of English currency. Mr. Churchill made his debut on the much-maligned £5 note in September 2016, legendary novelist Jane Austen will adorn the new £10 note when it becomes legal tender a year later in September 2017, and romanticist landscape painter J.M.W. Turner will grace the new £20 note, estimated to be in circulation by 2020.
Shiny new currency seems to be the order of the day, with The Royal Mint soon following suit to introduce a new 12-sided dodecagonal £1 coin in March 2017. It will produce 1.5 billion new coins that The Royal Mint calls “the most secure coin in the world”, which is bimetallic, will contain a latent image almost reminiscent of a hologram, micro-lettering around the lower rim, milled edges, and hidden high-security features. The reason for the change is that, aside from the traditional rounded £1 coin being nigh on 35 years old (after first being minted in 1983), approximately 1 in 30 (3.3%) of all £1 coins in circulation are counterfeit.
However, maybe one day this will all be redundant: technical manager at vending machine repair company TVS Paul Sucksmith mystically surmises: “Probably in about 15 years’ time, there will be no machines with coin mechanisms on them”. The future may well be bank cards and contactless payments, so in the end does it really matter what our bank notes look like?