Polymer banknotes for China

NOTE: This article was submitted to the Shenzhen Daily. It was printed in an edited form in 2018.

As an Australian, I have spent 20 years living with polymer banknotes in my life. The $5 note has been made of plastic since 1992 and all bank notes in Australia have been made of plastic since 1996.

This has resulted in a vastly reduced rate of counterfeiting money in Australia – it has been too hard to do, and as the criminals catch up in terms of technology, the central bank is already working on the next generation of bank notes with new and improved security measures. In April of this year, the Reserve Bank of Australia announced a brand new $5 note, which includes a window from top to bottom. These notes will enter circulation in September this year.

I have often wondered why China has not headed down the same path. We hear such regular news about counterfeit money floating around the system. I am sure all the readers have heard anecdotal stories about people getting fake banknotes from an ATM, and being unable to put them back into the ATM to get real ones.

In late April, I got stuck with a fake 50 renminbi note that I was finally able to get rid of – something that I was surprised I had not had more issues with after nearly 3 years.

I applaud the efforts of the People’s Bank of China with the introduction of the new 100-renminbi note, with the stronger security measures. I have not heard any reports of criminals counterfeiting those notes yet, but I fear that it is only a matter of time before an enterprising group does so.

That is why I believe that it would be appropriate for the People’s Bank of China to consider towards polymer banknotes. There appears to be consideration towards removing the 1 yuan note from the circulation to make the 1 yuan coin standard across the country. Personally, I believe this should be continued for the 1 and 5 mao notes, as I find them annoying in my wallet, and the coins are, in my opinion, far more efficient.

What are the costs associated with such a move? Obviously, there are costs associated with changing the machinery that makes the bank notes, but those costs are one-offs. It is more expensive to make each individual bank note, however the bank notes do tend to last longer. 

The fact that the People’s Bank of China would not have to print as many after the initial run to replace the damaged or destroyed notes makes this a cost effective alternative to traditional paper notes. In addition, the polymer notes can be made of recycled plastics, which encourages additional recycling activities at a national level.

I believe that polymer banknotes should be investigated by the People’s Bank of China to replace the traditional paper banknotes to improve security of currency and reduce the cost of printing money across a large and varied economy.