The Future for Polymer Banknotes John Colditz Head of Note Issue Department Earlier versions of this paper were presented at the CSI Currency Conference Hong Kong - 1994, and the Pacific Rim Banknote Printers' Conference Sydney - 1995

Introduction

Thank you for the opportunity to talk about the Australian experience with polymer banknotes. It is a subject very close to my heart for two reasons. First, I have been closely involved in the project for many years. Second, and more importantly, polymer notes are a great success story.

All of Australia's banknotes are now produced using polymer substrate. We are very proud of this Australian technology and we believe it can benefit many other countries as well as ourselves. Interest from other countries is very high. This is starting to result in more polymer notes being released in countries other than Australia. For example, Note Printing Australia (NPA), the Division of the Bank which prints Australia's banknotes and which developed much of the technology, has recently supplied Brunei with polymer notes for three denominations. Thailand has released a commemorative polymer note and NPA is currently printing a circulating polymer note for Thailand. Papua New Guinea has ordered a third reprint of a circulating polymer note.

Obviously, NPA cannot be the note printer to the world and many countries are interested in acquiring polymer substrate and technology to be able to print their own polymer notes. You may be interested to know that the Reserve Bank has now formed a joint venture company, Securency Pty Ltd, with the Belgian plastics company UCB to market internationally the polymer substrate. Securency is offering samples of press-ready polymer substrate, without charge, to countries with their own banknote printing facilities so that they can undertake printing trials. Such trials are now being undertaken at printers in many countries in Europe, Asia and the Americas. And there are others in the queue.

I strongly believe that the long term future for polymer banknotes is particularly rosy because the potential of polymer is enormous. What the world has seen of polymer notes so far is only the tip of the iceberg of what can be done with the technology. I know this is easy to say and sceptics may not be easily convinced. Consequently, as well as outlining our experience to date, I will also give you a glimpse of what that iceberg might look like just below the surface of the water. I believe you will find this very exciting.

I am, of course, aware that the interest in polymer in some countries stems from a desire to increase the durability of their low denomination notes. I want it to be clear that increased durability was not our primary objective in developing polymer notes. But it is of value when production capacity is limited, when there is pressure to change a low value note to a coin, or where there is pressure to reign in the cost of the note issue.

In Australia, we have experienced a quadrupling of the average life of our low denomination notes. Our higher denomination polymer notes have not been in circulation long enough to be precise about their longevity, but indications are that we will see similarly impressive performance. I cannot promise that these results will translate exactly to all other countries. Views on quality are very subjective and likely to change over time. But I believe that polymer equivalents to any country's current paper notes would significantly increase durability.

We hear occasionally that some paper manufacturers and note printers are actively discouraging central banks and note issuers from switching to polymer. If that is so, we suppose we can understand their position, bearing in mind that orders upon them stand the prospect of significant reduction by a move to polymer. Any suggestion by them that polymer does not perform well is totally incorrect.

Challenges

Central banks face a number of challenges. In particular:

• how to deal with better and greater numbers of counterfeits;
• how to achieve more cost effective note issues.

In Australia we responded to the first of these challenges in an innovative way through the introduction of polymer substrate. That response has also addressed the second challenge even though that was not an original objective. There is no doubt that innovation brings with it risks. Are those risks worth taking? The potential counterfeiting problem we believed we would face in the future if we did not make a radical change was sufficiently great that we thought those risks were worth taking. Fortunately, polymer notes have been a resounding success.

To justify a radical or fundamental change in an area like banknotes requires the new technology not just to be the equal of the old but better. The new technology must also have a long term future; that is, it should be just starting its evolutionary development so that those who invest in it are confident that the investment will pay dividends in the long term.

While it is feasible for a country to have some of its banknotes on polymer substrate and others on paper substrate, I believe that over time all notes will gravitate to a common substrate. If polymer substrate is to achieve wide application, people need to be convinced of the security value of polymer substrate, not just its durability benefits. To date, many people have been sceptical of the security value of polymer even though they acknowledge that the clear window is a simple yet very effective security feature.

Consequently, before outlining to you our experiences with polymer notes in actual use, I want to first give you an insight into why polymer provides a security advantage over paper substrate.

A Glimpse of the Future

I mentioned earlier that what the world has seen of polymer notes so far is only the tip of the iceberg of what can be done with the technology. What might that iceberg look like just below the water line?

Part of the future of polymer notes lies in realising that the clear window, as well as being a security feature in its own right, can act as an aid to be used with other features in the note to produce unique effects. To illustrate this, let me give you a few simple examples that the research people are developing:

1. The clear window, or part of it, or one of a number of windows that could be in a note, can be made a lens to form a magnifier or unscramble scrambled indicia. I know that the microprint on notes of many countries is very small. How much use is it? Who carries a magnifying glass in their pocket? But if the note had its own magnifying glass built into it, it becomes a whole different story.
2. The clear window can form a colour filter to really make use of the security potential of metameric inks. Many countries use metameric inks but they are not understood, and the effect created by, say photocopying a note, can be so subtle as to go unnoticed. Again, the picture changes dramatically if the note has its own special filter built in which is optimised to the metameric inks being used.
3. The clear window and the thickness of the substrate can be combined with printed images to create moiré effects that generate dynamic images. Imagine a moiré designed to create a moving denominational numeral.

What we are creating is in effect the sophisticated "self-validating" banknote.

These are just a few examples whereby effects unique to polymer, and not possible with paper, can be created. They add dramatically to the time required, cost and difficulty a counterfeiter must face in reproducing them. But, more importantly, they bring to the person in the street access to easy methods of authentication which previously would have required an extra device such as a magnifying glass, a lens, or an alternative optical source.

What is polymer?

Many people are still unsure of what we mean by a polymer banknote. People often say to us, after examining our notes, that they are paper/plastic laminate, or that they are all paper except for the clear window. This is not the case. A basic polymer note is created from a substrate which starts as a roll of clear plastic film rather than the traditional fibrous rag banknote paper. In simple terms, the clear substrate is processed through the following steps:

• opacifying - two layers of ink (usually white but they can all be different if desired) are applied to each side of the note, except for an area(s) that is deliberately left clear;
• sheeting - the opacified substrate is cut into sheets suitable for feeding into printing presses;
• printing - traditional offset, intaglio and letterpress processes are used; and
• overcoating - notes are coated with a protective varnish.

More sophistication can be added by including unique security features at different stages of production.

Australia's Actual Use Experience

The genesis of Australia's involvement with polymer banknotes dates from a long time ago, 1966 in fact. In that year Australia moved to a new series of paper banknotes which included what was then considered to be state of the art security features. The worst fears of an issuer were realised when, within one year, high quality counterfeits of the $10 denomination were produced and widely circulated. Not surprisingly, the confidence of the Bank in existing banknote technology was severely shaken. So much so that the Bank took the view that traditional banknote technology had a limited useful life and the problems could only get worse with further advances in reprographic techniques which were then on the horizon.

The Bank's response to this experience was to look for radically new security devices which could be applied to banknotes to give the position of strength back to the issuing and note printing authorities. Many different devices were looked at, but the potential of optically variable devices (OVDs) was identified in the early 1970s. Many different types of OVDs were developed and experimented with, but the one finally most effort went into was the class of OVDs call diffraction gratings. With the focus on OVDs, interest moved to substrates made from laminates of clear synthetic polymeric materials as these were considered a more suitable carrier for such devices given their greater stability and smoother surface characteristics.

Once work on such substrates started, it was quickly realised that they offered many other advantages. Immediately obvious was the ability to opacify most of the note with print while leaving a portion clear. This meant that devices like OVDs would be seen from both sides of the note, and the surrounding transparent area could be an important security feature in its own right. Also, the substrate could be permanently embossed and, if done in the clear window, could create a further unique security feature. A laminate also offered the potential to incorporate features inside the note such as OVDs and threads. Many other features were developed to trial stage.

Thus, the primary purpose for developing polymer note technology was to enhance the security of notes against counterfeiting. While counterfeiting in Australia is a relatively small problem by the standards of some countries, the increasing potential for counterfeiting of paper notes to become a major problem was an important reason why we turned to polymer for our new series of notes.

Following the encouraging results from a field trial of the new technology in 1988, the Bank decided to release a new series of notes using the new polymer technology.

In Australia, polymer notes have now replaced paper notes of every denomination. With over 18 billion cash transactions each year and with widespread machine processing of notes, Australia is the living proof that polymer notes work in a general functional sense, and work well. The risks associated with the change in technology were justified and have paid dividends. Others now have the opportunity to capitalise on what is now proven technology.

The Bank's confidence in the technology is purely a result of the pleasing way polymer notes have been accepted and are performing in widespread use. Performance can be reviewed under four headings:

• security;
• durability;
• functionality; and
• environmental.

Security

As I have said, the primary purpose for developing polymer note technology was to enhance security. We are confident that the threat of counterfeiting can be reduced significantly with the use of polymer banknotes instead of traditional rag-based paper notes. The hard facts are now starting to emerge to back up this confidence. Our counterfeiting statistics are now heading downwards at a rapid rate. It is still a little early to be conclusive as, during the introduction of polymer notes, we had an upsurge in counterfeiting of most of the old series paper notes prior to their replacement. Clearly, counterfeiters were taking their final opportunity to have a go at the older style of notes. These are now starting to be cleared out of the system and we look to be heading towards a lower plateau.

We do not fool ourselves into thinking that polymer will eliminate counterfeiting. In fact we have had a few counterfeits on paper of our polymer $50 note. But, put in perspective, the polymer $50 note has been on issue now for nearly a year and is Australia's most popular note and of reasonably high value. The $50 counterfeits were the work of "professional" counterfeiters but were relatively crude and easily detected by the public. They were all printed on paper using a colour copier. The clear window was simulated ineffectively by cutting a hole in the paper and sticking a piece of plastic across the hole.

Polymer notes appear to have stopped the "casual" or crime of opportunity counterfeiter totally. As we have introduced the last denominations on polymer, the rate of counterfeiting, which is still based on the old paper notes, has been coming down dramatically.

The advantages we see arising from polymer notes in the fight against counterfeiting are:

• making it more difficult, time consuming and costly to counterfeit by increasing the range of skills and steps required;
• making it easier to recognise a counterfeit;
• providing a platform for new and varied security features which can be introduced when needed.

Polymer substrate offers considerable advantages in these areas and there is no doubt in our minds that polymer notes are relevant for other note issuers and printers around the world. It is interesting to now see paper suppliers trying to incorporate polymer features into paper. To us, these attempts to imitate polymer notes and their unique features are the best form of flattery we could receive. They indicate that the security advantages, of the clear window feature for example, are now recognised The patent literature shows clear windows being stuck into paper substrate or created through laminates of paper and polymer (just like counterfeiters would do!).

The emergence of an alternative supplier of a polymer substrate, albeit with a different type of polymer to the one we use, is also an important development giving credibility to the technology, and it will undoubtedly provide stimulus to further innovation because of the competition.

The threat of counterfeiting is still increasing, in part, because of the rapid advancements in reprographic technologies that are available to the counterfeiter. Further advances will come as the aim of the producers of such technology is full, accurate colour reproduction of photographic quality. This will limit the value of print as a security feature and will increase the importance of security derived from the substrate and from add-ons such as foils.

Paper-based substrate technology is very old, with advancements generally occurring only at the margin. It has served its purpose well, but is now showing its age. This could be regarded as too harsh a view. But we do not think so. The future of security for paper notes is reduced to add-ons. However, there are limits to the effectiveness of add-ons on paper because the surface is rough, the fibres fracture, and there can be chemical attack from the paper side. Graphic arts materials which simulate foils, thin films and other OVDs (including OVI) are becoming increasingly available commercially. For such features to be effective as counterfeit deterrents it will be necessary to use them in more imaginative ways in the future. Also, while some countries have taken the approach of putting one of everything in, we take the view that such notes become too complex.

For us, all of this indicates the importance for note issuers/printers to look for new and novel features. A paradigm shift is needed for note issuers/printers - one has already occurred for the counterfeiter. A new technology which has started its evolutionary life is more relevant because it will present a formidable array of challenges to the counterfeiter over the long term.

Of course, a change such as we have made is a very major change to make, involving bold decisions and a certain amount of risk taking. But these things are needed if we are to stay ahead of the counterfeiter. If we fail to stay ahead, the consequences are fairly horrendous. At the extreme, banknotes will become useless because the person in the street cannot easily tell a counterfeit from the real thing. We will then stand a very good chance of achieving a cashless society.

Importantly, polymer notes offer a long term future because they will accommodate new and varied security devices which will just not be possible with paper notes. We have not had to use the full range of security features possible with polymer so far, as the use of the simple transparent window (with printing and embossing within it), in conjunction with "normal" printed security features, have done a very effective job for us.

As the same printing processes are used for paper and polymer banknotes, all security features printed on paper can also be applied onto polymer. These include intaglio, offset and letterpress printing for features such as tonal portraits, latent images, micro-printing, intricate background patterns, see-through registration, visible or invisible fluorescent or phosphorescent features, and the use of "metallic", metameric or metachromic inks. The polymer substrate is also an excellent surface for the application of optically variable ink (OVI), as it enhances its colour shift characteristics.

Durability

The success of polymer notes is important not just for countries who face a counterfeiting problem. For many countries, the cost of the note issue is of more concern than counterfeiting.

Polymer notes have turned out to be more durable than our original expectations, lasting around four times as long as their paper counterparts. For example, the paper $5 note had an average life of just 6 months, whereas experience has shown that it is over 2 years for the polymer $5 note. Similarly, our paper $10 note had an average life of just 8 months, whereas it has risen to over 4 times that with polymer. While life depends on one's subjective view on what is an acceptable reissuable quality, we believe our estimates are based on a high standard.

The durability advantage of polymer is now well recognised. This has forced paper manufacturers to rise to the challenge; we are aware of attempts by paper manufacturers to enhance the life of paper notes by such means as mixtures of rag and plastic fibres. But imitations in paper notes are not, and cannot be, a match for the superior qualities of polymer notes.

The increased durability of polymer notes is a consequence of various characteristics including:

• the protective overcoating applied to polymer notes, plus the non-porous nature of the substrate, which means that the notes do not absorb moisture (oils, sweat, beverages, etc) like paper notes. These same properties also mean that the notes do not stain or accumulate dirt as easily as paper notes do;
• the non-fibrous nature of the substrate, which means that it does not break-down physically with repeated folding as occurs with paper notes which, in part, causes paper notes to go limp;
• the toughness of the polymer substrate, which makes it much more difficult to initiate a tear in a polymer note compared to a paper note. (It is true that once a tear is initiated in a polymer note it propagates more easily than in a paper note; but the initial toughness appears to be the overriding characteristic in circulation).

The results of a survey of public acceptance and performance conducted at the end of the trial of polymer note technology in 1988/1989 indicated that:

• 88% of those surveyed perceived a major advantage of polymer notes was their resistance to damage;
• 87% appreciated the notes' cleanliness.

Our experience shows that the cleanliness aspects of polymer notes are much appreciated by the public and cash handlers.

The different characteristics of polymer notes outlined above mean that polymer notes wear differently to paper notes. Consequently, the criteria used in manual or machine processing for deciding if a note is no longer fit for reissue are different to paper notes. Our primary sorting criteria for sorting paper notes were either soiling (which correlates well with limpness) or mechanical faults (tears, holes, etc). For polymer notes the primary criteria are ink wear and mechanical faults. Polymer notes do not soil like paper notes. Therefore, the traditional soil reflectivity detector is of little use.

The polymer substrate is proving so robust and durable that the inks used to print the notes eventually show signs of wear. Therefore, we have developed an ink wear detector which can be fitted to high speed counting and sorting machines such as CVCS. Mechanical faults also remain a relevant sorting criterion for polymer notes as they develop the same ones as paper notes.

The increased durability of polymer notes means that they can be more cost-effective than paper notes. While they may cost more to produce than paper notes, their extended life can mean reduced note issue costs over time. Alternatively, the savings from the extended life can be used to offset the higher costs for more advanced security features.

It is true that a move to polymer notes may involve costs in addition to just the notes themselves. As is obvious from my earlier comments, new fitness detectors may be required for high speed note sorters. (Existing infra-red soil detectors and limpness detectors may be applicable to polymer notes and obviate the need for new ink wear detectors.) Other costs may also arise, including those incurred by the private sector associated with any required changes in work practices, machine adjustments (eg ATMs), and short-term loss of productivity that can come with change. The cost effectiveness of polymer notes can also be impacted if they lead to excess capacity in note printing facilities. There are also secondary effects such as the impact on paper suppliers.

Functionality

By functionality we mean how well the notes handle in general use - in both manual and machine processing areas.

Australia now has had a reasonably long experience with high volume transaction notes in circulation, being actively used in the same way as were paper notes. The first note released in the new series, the $5 note, has now been in use for over four years. The $10, $20 and $50 notes have been in use for 3 years, 2 years and 1 year respectively. The $100 note was released in May 1996. In Australia, around 18 billion cash transactions occur each year.

For manual handling, it is true that polymer notes handle differently in some ways to paper notes. The main handling differences between polymer and paper notes which have been identified relate to the impact of what we call the fold and unfold properties of the polymer substrate. The polymer is more difficult to fold, but once it is folded it is more difficult to flatten. Views on the significance of these differences vary considerably. For some, these differences have no impact but for some others there may be initially an impact on the ease and speed of counting.

Experience is showing that once our intention to continue with the polymer notes was made clear, people started taking it seriously and adjusting rather than resisting the change. Resistance to change is an issue in itself. If asked, when polymer notes were first introduced, the majority of people would have said they preferred paper notes to polymer notes. If asked now, after all notes have been changed over, I believe the majority of the population would prefer polymer notes to paper notes. We are now receiving feedback that this is the case. Interestingly, but not surprisingly, young people accepted polymer notes much more readily than older people and prefer them to paper notes.

The significance of handling differences between polymer and paper notes can be easily exaggerated from a few press articles that appeared. Unfortunately in Australia, we have a press which tends to look for negatives if it can find them. I read with some interest a letter to the editor of the numismatic magazine 'Banknote Reporter'. The writer reported that after spending two weeks in Australia he had not seen any polymer notes in circulation. This was at a time when four out of our five banknotes were polymer! The only note that had not been converted at that stage was the high value $100 note. To us this indicates that the differences in performance between polymer and paper notes can easily be distorted.

Another measure of the popularity of polymer notes is the number of written and telephone complaints the Bank has received about handling characteristics. Bearing in mind that Australia's population is about 18 million people, we received very few complaints when the $5 was introduced - only 86 in all. When the $10 was introduced the following year, we received only 59 complaints, with people getting more used to them. The $20 note introduced in 1994 attracted only 6 complaints. The community reaction to our new $50 and $100 notes has been very positive. Someone has said that for every complaint you receive, you should allow for another 10 who have not bothered to write or phone. If we do that, you can see that polymer notes are well and truly accepted in practice. Now that the entire series is in circulation, people can appreciate more easily the benefits which arise from polymer.

It is difficult to know whether, with the aid of hindsight, we should probably have introduced polymer notes differently. A new substrate, a new series with new designs, and new sizes - was this too much change for the community to accept at the one time? But we have well and truly hit the home stretch now, and polymer notes are working extremely well in Australia. For other countries contemplating the use of polymer, there are a variety of ways polymer notes can be introduced depending on the particular local environment, and we would be happy to offer advice based on our experiences.

It is important to recognise that handling differences with polymer are manageable. They can be accommodated with simple changes in handling techniques or work practices. This is not to say that we think we currently have the ideal polymer banknote. We expect polymer substrates will evolve in regard to their handling characteristics the same way as security features will evolve. The choice of the particular plastic or combination of plastics to form the polymer substrate to use is not an easy one. We experimented with many varieties in the development of the technology. While polymer substrates with more paper-like properties can be developed, and a competitor of ours has one, they can have some disadvantages which are not always immediately obvious. Rigorous testing is needed to ensure that improved fold and unfold properties do not come at the expense of other advantages. Potential improvements are continuously being evaluated and simulations (based on lessons learnt from extended use) are used to identify improvements and potential problems.

Another area of difference between polymer and paper notes is feel. Polymer notes are said to lack some of the texture which paper notes have. This is despite the use of intaglio print and overcoating of the notes. Again the extent of this difference can easily be exaggerated. We have conducted some interesting tests on people's ability to differentiate a polymer note from a paper note. The ability to distinguish one from the other changes dramatically if the subjects are deprived of being able to see the notes.

Despite this, the height of the intaglio print and the feel of the overcoat on Australia's notes have deliberately been made progressively rougher as the series has been released. The public has appreciated these changes. Further substantial improvements to the overcoating are being tested. What is important with the feel of polymer notes is that it does not have to be the same as paper notes but that the public believes it is unique, as most counterfeits are initially detected by the public by feel.

Machine processing capability for banknotes is increasingly essential in our fast-paced, modern world. The Australian experience with polymer notes in the full range of machines is very positive. In one way, this is a little surprising as it needs to be remembered that all machines have been designed to handle paper substrates.

The success of ATM processing of polymer notes can be gauged by the fact that ATMs in Australia are the dominant means of dispensing cash to the public (Australia has one of the largest ratios of ATMs per head of population) and commercial banks would not be prepared to put their ATM systems at risk with a note that could cause problems. Also, the use of polymer notes in ATMs requires the suppliers'/maintainers' endorsement of those notes in their machines. Such endorsements have been readily forthcoming, and feedback from some of them is that the performance of polymer notes in ATMs is superior to paper notes. Also, banks are now reporting less down time from the machines than when they were processing paper notes. In Australia, every ATM is now dispensing only polymer notes. Experience has proven that ATMs will handle readily either paper or polymer notes or a mixture.

We were very encouraged by the response of suppliers of ATMs when we first approached them. For example, after some initial hesitancy about whether we were serious, ATM manufacturers quickly realised the potential of polymer notes to become the norm in the future, not only for Australia but for the rest of the world. Suppliers evaluated the suitability of their machines for processing polymer notes in their major European and US test centres as well as locally to identify any modifications required. If any modifications were required, they generally were simple and related to static issues. These were not dissimilar to static problems with paper notes. Consequently, the solutions identified were easily implemented. Many ATMs are in fact operating using polymer notes without any modification at all. The belief that ATMs needed to be modified was based on the initial very conservative approach by suppliers which was quite understandable.

It is a similar positive story with other equipment. For example, note acceptors are widely used in automated ticketing for public transport, vending machines and in the gaming industry. High performance is critical to such systems. Polymer notes are being used successfully in these systems. Desk-top note counters are widely used by the commercial and banking sectors for the bulk counting of cash.

An additional benefit for machines arises from the cleanliness of polymer notes. Belt paths and sensors do not get covered with dust and ink as quickly, resulting in lower maintenance requirements.

We have had good results with processing polymer notes through our CVCS machines for four years. We run 22 CVCS machines (upgraded by CSI) around Australia, and it is true to say that while productivity in this area declined a little initially with the advent of polymer notes, it is now higher than what we were achieving with paper notes. To put that into perspective, paper note throughput was averaging around 350,000 pieces per day per machine. The rate initially for polymer notes was around 250,000; this has now risen to around 400,000.

It is our understanding that polymer notes process efficiently in note processing machines of other suppliers as well. On some machines, the shredders are not sufficiently powerful to cope with the extra strength of polymer, and granulators need to be fitted.

Climatic conditions don't appear to affect performance of the notes. In Australia, we have the full range from tropical, in our northern areas, to very cold, in our snowfields. They work well in both extremes.

Environmental

As environmental awareness becomes more important internationally, it is increasingly significant that polymer note waste is recyclable. At the end of their useful life, polymer notes (and the waste from production) can be granulated and recycled into useful plastic products such as compost bins, plumbing fittings and other household and industrial products. This is a major benefit and an aspect which has appealed very strongly to the Australian public.

Summary of Achievements

In summary, we see our achievements as:

• proving that polymer notes are a viable alternative to paper notes in every day use;
• developing a more secure banknote which offers the potential for many new security features;
• proving that polymer notes are significantly more durable and cost effective than paper notes; and
• the ability to recycle our waste product.

Moving to polymer notes has been a very exciting time for us. There is absolutely no doubt that polymer notes are working in Australia (and a growing number of countries), and working well. We are glad to have been a part of this success story and strongly believe that polymer is the way of the future for banknotes.

The Future for Polymer Banknotes

Our challenge for the future is to continue to make polymer notes better in terms of bringing on line the more sophisticated security features which polymer substrate allows and leaping even further ahead of the counterfeiters.

The future looks very rosy indeed. Based on our experience, we are firmly committed to polymer notes. So much so that we are investing further to improve the technology.

We see an expanding user base for circulating, not just commemorative, polymer notes. The completion of our new series of notes seems to have been a watershed for others. Overseas interest in polymer notes and polymer note technology has increased significantly in recent times. Other countries are now willing to take the technology seriously. Extended use of polymer notes in Australia has significantly reduced the risks associated with using the new technology.

We are very keen to see polymer notes succeed more widely because we believe that this will quicken the pace of further developments (polymer notes are also forcing traditional paper and ink suppliers to come up with improved products to try and stay competitive). We are also encouraged, rather than disappointed, by having competitors supplying alternative types of polymer substrate. This gives credibility to the technology, and the competition should also result in a better polymer note. But, at the moment, we believe we have the advantage over others due to the extended use experience. I can't understate the importance of this. Anyone using our substrate, or improvements that flow from it, has access to and the benefit of this experience. Based on that experience and simulations, we believe that some alternative polymer substrates will develop serious handling problems with extended use in circulation.

Earlier I gave you a glimpse of what the future might hold for new security features for polymer notes. The future for polymer banknotes? For some time now we've been saying "Polymer notes are the banknotes of the future".