JAMAICANS will have to wait until late this year before getting their hands on the refreshed banknotes, including the new $2,000 note, that were unveiled on Tuesday by the Minister of Finance Dr Nigel Clarke.
“We expect to start issuing them in the last quarter of this year, more towards the end of November into early December,” Natalie Haynes, deputy governor for banking, currency operations and financial markets infrastructure at the Bank of Jamaica (BOJ) told the Jamaica Observer, even though she would not be drawn into revealing the cost of the redesign and printing of the updated banknotes.
“The cost is always dependent on the features of the banknote, as well as the quantity you are ordering. It's not always fair to compare the cost of current banknotes to new ones...” Haynes told Sunday Finance.
“The cost of printing the notes depends on the printer,” Haynes continued as she remained guarded about the cost of refresing of the currency. The current notes in circulation are printed by three entities, the UK-based De La Rue, US-based Crane Currency, and German-based Giesecke+Devrient, which prints the current $50 and $100. Of the current notes De La Rue does the $5,000, $1,000, and $500. But some $500 notes are done by Crane Currency.
Haynes insists that the security features and material used to make the notes impact the price. “The substrate of the new banknotes last 50 per cent longer, so as we go along, the BOJ won't have to order as many banknotes each year, as it is doing now.”
The substrate refers to the base material on which the notes are printed. For the current notes — $50, $100, $500 and $1,000 — the substrate is mostly cotton, while the $5,000 is made mostly from a polymer substrate which is stronger. The difference is that notes printed on cotton substrates last an average of four years, while those printed on the polymer substrates lasts six years.
“We spend about $1.4 billion each year to order banknotes. The volume varies based on the quantity of each denomination purchased.” She said the central bank in the past also kept a buffer stock of currency notes and coins “to last about six months for any unforeseen circumstances”. The expectation is 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.
Haynes added that when the new notes are being issued, they will be in circulation alongside the old notes until most of the old notes are out of circulation. The public was also told not to rush to bring in the old notes because they will be exchanged over time.
“Each time a bank redeems the old notes and send to the BOJ, we will not be sending them out. So we have to ensure we have adequate stocks,” Haynes continued.
How long the BOJ expects the country will be using only the new notes is indeterminate. Haynes illustrated her point by outlining that, even though the $2 note has been demonetised since 1994, BOJ data show that substantial quantities were never redeemed by the formal banking sector with the presumption that they are either lost, destroyed, or being kept as souvenirs.
The central bank, however, said part of the reason for transitioning to the new design was the need to introduce a new denomination between the $1,000 and the $5,000.
“First of all, the introduction of the $2,000 was informed by the science, we never just get up and say we are going to issue a $2,000 note. The $5,000, which was introduced in 2009, has seen poor take-up by the Jamaican public. That places a lot of pressure on the $1,000 bill, Haynes began, in explaining the rationale for the introduction of a $2,000 note.
“The cost to print a banknote has nothing to do with the value of the Jamaican dollar, it is what goes into it. They are of the same size, the same shape, security features are basically the same, and they are printed on the same paper. So when we have to produce 20 of the $1,000 rather than four of the $5,000, the cost of printing notes goes up. So, if the $2,000 comes in, hopefully more people will be willing to use it as opposed to the $1,000 and then we will print fewer $1,000 notes and save and take some of the pressure off the $1,000.” Haynes added
“People run away from the $5,000 notes for various reasons. Some people say they mix it up with the $500 note because the colours are similar, especially in dim light, and some say they don't like it because losing one means losing a lot of money.”
“When a certain percentage of your currency in circulation is, for example, the $1,000 note and you have a note of a higher denomination, something is wrong, the demand should really be towards that of the higher denomination. So we say we will introduce a denomination between the $1,000 and $5,000 notes. There is a principle called dynamic decimal triplet, the one, two, five. You notice no country has $3,000 notes or $7,000 notes? Also, with the current banknotes, the features on them for the blind deteriorate when the notes are older and the blind person is not able to identify different notes. However for polymer, those features remain identifiable to a blind person even when the notes are old.
“The $2,000 was introduced because the bank did not want to introduce a new note in an old design and didn't want the $2,000 to look different from the others, so the decision was made to rework the family. Jamaica's notes have maintained the same basic design, even with the switch from pounds to dollars in 1969. Haynes points out that apart from security features, they look basically the same as the pounds that were in circulation in the country up to 1969 and the notes that were issued from then until now.
However, questions have arisen about whether the new $50 note that will feature Paul Bogle will be printed with the picture said to be US inventor Thomas L Jenning?
“The Institute of Jamaica tells us that the image the BOJ is using of Paul Bogle is a true representative of Paul Bogle, why should I believe something else that I see on Google?” Haynes replied.
She insists that the Institute of Jamaica is the recognised authority on Jamaican history and not Google, and so the institute's word will be what the central bank relies on.
And what about coins?
“That is not on the cards right now, so whoever is on the coins will remain. When the decision is taken to say change it, then we will see what we are going to put on those four coins. But, for now, there is no intention to spend any further money on that because it comes at a cost.” In previous years, the one, five, and 10 dollar coins, which previously had octagonal heads were refreshed to make them circular “because they were getting stuck in machines”.
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