Wednesday, Feb 1, 2023
International Finance
Banking and Finance Magazine

100 days left of paper £20 and £50 banknotes

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The paper £20 note will no longer be accepted as legal tender after 30 September 2022.

The Bank of England has said that people have just 100 days left to use the paper £20 and £50 banknotes, which are still in circulation. The legal tender status of the notes will expire on September 30, 2022. The Bank of England has urged people to utilize or deposit them at their bank or a post office before the end of September.

Even though the majority of the paper £20 and £50 banknotes in use have been replaced with new polymer versions, there are still more than £6 billion of paper £20 notes featuring economist Adam Smith, and more than £8 billion of paper £50 banknotes featuring entrepreneur Matthew Boulton and engineer James Watt, in circulation. The total value is over 300 million individual £20 banknotes, and 160 million paper £50 banknotes. The £50 banknote completed the bank’s ‘family’ of polymer notes. Now all the notes below £50 are printed as polymer and not as paper.

Like the £20 note, which entered into circulation in 2019, the new £50 note incorporates two windows and a two-colour foil that designers say will make it very difficult to counterfeit. There is also a hologram image that changes between the words ‘Fifty’ and ‘Pounds’ when the note is tilted from side to side.

Alan Turing was selected as the new face of the £50 note in 2019, recognition for his pivotal role in breaking the Enigma code in World War II that historians say may have helped shorten the conflict by at least two years, saving millions of lives.

Bank of England Governor Andrew Bailey said, “There is something of the character of a nation in its money, and we are right to consider and celebrate the people on our bank notes.”

“Turing is best known for his code-breaking work at Bletchley Park, which helped end the Second World War. However, in addition, he was a leading mathematician, developmental biologist, and pioneer in the field of computer science. He was also gay, and was treated appallingly as a result.”

During World War II Turing worked at the secret Bletchley Park code-breaking center, where he helped crack Nazi Germany’s secret codes by creating the “Turing bombe,” a forerunner of modern computers. He also developed the “Turing Test” to measure artificial intelligence.

After the war, he was prosecuted for homosexuality, which was then illegal, and forcibly treated with female hormones. He died at the age 41 in 1954 after eating an apple laced with cyanide. Turing received a posthumous apology from the British government in 2009, and a royal pardon in 2013.

Meanwhile, according to Sarah John, the head cashier at the Bank of England, switching from paper to polymer in recent years has been a significant breakthrough since it makes banknotes more durable and difficult to counterfeit.

“The majority of paper banknotes have now been taken out of circulation, but a significant number remain in the economy, so we are asking you to check if you have any at home, he said. “For the next 100 days, these can still be used or deposited at your bank in the normal way”, he added.

John said there are various concerns regarding the old £20 note among people, like what happens if one passes the deadline for exchanging the note and how to exchange the old currency. On this, John said that many banks and some post offices will accept the old £20 notes as a deposit into a bank account even after the deadline. The Bank of England will always exchange the old paper notes, so people who missed the deadline won’t be left out of pocket. He also said to exchange old bank notes after the deadline; an individual can send them to the Bank of England by post.

However, the Bank of England warns that people should be aware that banknotes are sent at their own risk, and encourages people to take appropriate measures to insurers against loss or theft. The Bank said in order to send them by post, people have to fill out a postal exchange form and have to provide photocopies of ID and proof of address.

Switching to polymer can prevent forgery?
The UK’s new polymer bank notes are cost-effective to produce, incredibly durable, and contain advanced security features that could never have been implemented using traditional cotton-based currency. But the question being asked by law enforcement and document examination professionals is whether switching to polymer prevents criminal gangs and counterfeiters from producing fake currency worth millions?

According to figures collated by the Bank of England, approximately 347,000 individual counterfeit notes were taken out of circulation in 2016, with the vast majority of those being discovered by the banking system during the process of counting and sorting notes for re-circulation. Notably, of the huge quantity of notes seized, £5 and £10 notes (the first two denominations to switch to polymer) only accounted for 6.9%. The vast majority of fakes identified and seized were counterfeit £20 notes (297,000 notes with a face value of £5.9mn), a note that is not scheduled to be ‘upgraded’ to polymer until 2020.

The end of counterfeits?
When the Bank of Canada launched polymer banknotes in 2012, a reduction in fake notes was recorded immediately – 28 notes per million in circulation, down from 34 notes per million the previous year.

In Australia, where plastic notes were introduced more than 20 years ago, the switch to polymer was equally successful. However, more recently the number of counterfeits in circulation has begun to rise. In 2016 there were reports that Australia was being flooded with fake $50AUD banknotes ‘so good they fool the banks’.

Need for innovation
Given enough time, criminal gangs will always find the resources necessary to produce fake currency. The once state-of-the-art security features used in the design of Australian polymer banknotes are now under threat. During the 20 years that the Reserve Bank of Australia has been producing polymer currency, there have been significant advances in digital imaging and printing technology that have allowed the counterfeiters to catch up.

In Australia, the quality of counterfeit $50AUD notes is such that they pass all of the bank’s checks. In this situation, the only option is to withdraw the aging notes, introduce new security features, and once again upgrade the security of bank notes.

Cycle of innovation
According to John, innovation is the key to keeping forgery under control. “What keeps counterfeiters at bay is not the substrate that currency is printed on but the cycle of innovation that keeps security printers one step ahead of the criminals that produce forgeries. In order to achieve this, there must be a constant development of new security features and an advancement of the technology used to detect and examine counterfeits,” John said.

History of polymer note
The world’s first polymer banknote was the $10 commemorative note issued in January 1988 to commemorate the Australian Bicentenary. It was developed by the Reserve Bank of Australia (RBA), Commonwealth Scientific and Industrial Research Organisation (CSIRO), and The University of Melbourne.

Made from the polymer, biaxially-oriented polypropylene (BOPP), these notes incorporate security features difficult to include in paper bank notes. They are also more durable, harder to tear, more resistant to folding, more resistant to soil, waterproof and washing machine proof, easier to process by machine, and are shreddable and recyclable at the end of their useful lives, which are 4-5 times longer than paper banknotes.

“The traditional printed security features applied on paper can also be applied on polymers. These features include intaglio, offset and letterpress printing, latent images, micro-printing and intricate background patterns. Polymer notes can be different colours on the obverse and reverse sides. Like paper currency, polymer banknotes can incorporate a watermark (an optically variable ‘shadow image’) in the polymer substrate. Shadow images can be created by the application of Optically Variable Ink (OVI) enhancing its fidelity and colour shift characteristics. Security threads can also be embedded in the polymer note, they may be magnetic, fluorescent, phosphorescent, microprinted, clear text, as well as windowed. Like paper, the polymer can also be embossed.

Polymer notes also enabled new security features unavailable at the time (1988) on paper, such as transparent windows, and diffraction grating. Since 2006 however the development of the paper transparent window technologies by De La Rue (Optiks) and G&D (Verify) have reduced that advantage.

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