About Issuing Banknotes
History of Banknote Issue
The issuance of Australian banknotes has its origins in the Australian Notes Act of 1910. Prior to this, paper currency circulating in Australia had comprised banknotes issued by trading banks and by one State Government. The Act of 1910 made it an offence for any bank to circulate banknotes issued by a State and withdrew their status as legal tender. Issue of banknotes by trading banks was effectively discouraged by the Bank Notes Tax Act, also of 1910, which imposed a tax of 10 per cent per annum on all banknotes issued by them.
The Notes Act of 1910 vested control of the issue of banknotes in the Commonwealth Treasury. In 1920, control was transferred to a Board of Directors of four members, appointed by the Commonwealth Government, with the Governor of the Commonwealth Bank an ex officio member and Chairman. At the same time the administration of the banknote issue was taken over by a special Department of the Commonwealth Bank, although the Bank and the Notes Board were formally independent of one another.
In 1924, with the establishment of a Commonwealth Bank Board, control of the issue of banknotes passed from the Notes Board to the Board of Directors of the Commonwealth Bank. In 1945, the Commonwealth Bank Act formally established the Commonwealth Bank as sole legal issuer of Australian banknotes. In 1960, this role passed to the Reserve Bank of Australia which has assumed responsibility for the central banking (including banknote issue) functions since that time. The Reserve Bank Act 1959 stipulates, among other things, that Australian banknotes be printed by, or under the authority of, the Reserve Bank. Banknotes are printed at Note Printing Australia Limited (a separately incorporated, wholly owned subsidiary of the Reserve Bank of Australia) and distributed by armoured car companies on behalf of banks and other commercial customers.
For three years after the 1910 Act, some of the earlier banknotes circulated as Australian banknotes, having been overprinted by the Treasury as a temporary measure until new designs were ready for Australia's first distinctive banknotes. The first printing works to produce the new banknotes was situated near the docks at the western end of Flinders Street, Melbourne.
In 1912, Thomas Samuel Harrison, an Englishman with extensive knowledge and experience in the field of security printing, was appointed Australia's first banknote printer. After a busy year acquiring machinery and setting up production facilities, Harrison had the first Australian banknote – of ten shillings denomination – ready for numbering on 1 May 1913.
The growth of Australia's economy and its population, with consequent need to provide for a continually rising banknote circulation, made increasing demands on the banknote printer's resources. A larger establishment, in the Melbourne suburb of Fitzroy, was commissioned in 1924. By the early 1970s the Fitzroy premises were no longer adequate and the Bank began planning the construction of a new banknote printing complex at Craigieburn, 25 kilometres north of Melbourne, beside the Hume Highway. Production of banknotes commenced there in October 1981. Note Printing Branch was renamed Note Printing Australia in 1990, and was established as a separately incorporated, wholly owned subsidiary of the Reserve Bank of Australia in 1998.
Since 1913 there have been seven series of Australian banknotes issued. The present series of Australian banknotes is the first in the world to be printed on polymer substrate instead of paper. It consists of $5, $10, $20, $50 and $100 denominations. A $1 banknote ceased to be issued following the introduction of a $1 coin on 14 May 1984. Similarly, a $2 banknote was withdrawn following the introduction of a $2 coin on 20 June 1988.
Australia issued the world's first polymer banknote, a $10 commemorative banknote, in January 1988, to mark Australia's bicentenary. This banknote incorporated radical new technology developed in Australia and set the scene for a new era of banknotes in the world.
