CLOSE to $200 billion in notes that are currently in circulation are set to be withdrawn 'over time' as the Bank of Jamaica (BOJ) gets ready for the introduction of new polymer notes in the country.
Finance Minister Nigel Clarke first publicised during the budget debates in March that new polymer notes will replace the existing ones which are mostly made of cotton this year.
Jamaica currently has five notes in circulation — $50, $100, $500, $1,000 and $5,000 notes. A sixth, the $2,000 note will be introduced this month. The $2,000 note is being introduced in order to make it easier for the settlement of cash transactions.
According to the central bank, as at November 16, 2022, there were 252 million pieces of notes in circulation in Jamaica with a total value of $198.3 billion. Of that, the majority $161.75 billion is in the hands of the public, while $43.2 billion is held in banks.
Dr Wayne Robinson, senior deputy governor at the Bank of Jamaica (BOJ), shared, "An equivalent amount of new series is available to replace the current series. Note, however, that the current series of banknotes will remain legal tender until Bank of Jamaica makes a decision regarding demonetisation of same."
The BOJ indicates that both Jam-Dex — its central bank digital currency (CBDC) — and physical cash will co-exist in the payment space in the near to medium term for those persons wishing to still use cash as a means of payment.
The power of polymer, new security features
The BOJ notes that the upgrade of Jamaica's banknotes is aimed at enhancing the security of the banknotes to combat counterfeiting, noting "counterfeiters are now using more sophisticated technology to threaten banknote security worldwide. The Bank of Jamaica has enhanced the integrity of our banknotes by incorporating state-of-the-art security features in the new series."
The notes are also expected to better satisfying the needs of the visually impaired. Each of the current banknotes has one feature which is dedicated to the visually impaired, that is either large numbering or tactile printing, recognised through touching and feeling.
It is noted that because of the cotton substrate used, the effectiveness of these features on the current banknotes decreases over time. Consequently, this new banknote series includes an upgrade of the substrate which will allow for the longevity of the features for the visually impaired. In a March interview, deputy governor for banking, currency operations and financial markets infrastructure at the BOJ Natalie Haynes said the polymer substrate will last an average of six years compared to the cotton substrates which last four years. The fact that the polymer substrate lasts longer is expected to bring savings to the BOJ.
"As a result, going forward, the banknote order quantities will be lower, with less frequency relative to current practice, thereby yielding cost savings to the central bank. Should the need arise for destruction of banknotes, arrangements are being made for disposal of the polymer waste without compromising the environment."
Haynes in March said the BOJ spends about $1.4 billion to order banknotes each year though she would not be drawn to say how much these new notes will cost. However, she admitted then that the initial cost of ordering the new notes will be higher given they are more expensive to produce and there are now six denominations instead of five.
The new notes will also aim at ensuring a clear distinction between the different denominations. The BOJ notes, "There are currently concerns among members of the public that the $500 and $5,000 banknotes are not easily distinguishable especially in low-light conditions. The redesign of the banknotes ensures that each denomination is clearly distinguishable given the distinct colours."