Damaged Banknotes Policy
The Reserve Bank of Australia aims to have only good quality banknotes in circulation in order to maintain confidence in Australia's currency by making it more difficult for counterfeit banknotes to be passed or remain in circulation.
It is not possible to remove damaged banknotes from circulation immediately any damage becomes obvious – nor is it necessary when the damage is only minor. Minor damage does not prevent ongoing use of a banknote or affect its value. The Reserve Bank works with banks, other authorised deposit-taking institutions (ADIs) such as building societies and credit unions, and cash centre operators such as armoured car companies to remove damaged banknotes from circulation as soon as practicable.
Unfit Banknotes
A genuine banknote that has become worn or sustained minor damage in circulation is classified as unfit. These banknotes can continue to be offered and accepted in transactions and are worth full face value.
Unfit banknotes may have any of the following defects:
- small pieces missing or small holes accounting for less than 20 per cent of the banknote;
- tears of any size;
- heat damage affecting less than 20 per cent of the banknote;
- tape on them or have been stapled; and
- graffiti, stains or marks.
The RBA asks banks, other authorised deposit-taking institutions and cash centre operators, to remove unfit banknotes from circulation when they are returned to them by their customers.
Incomplete Banknotes
When damage to a banknote is such that a significant piece of the banknote is missing, it is classified as incomplete. In these cases, the Reserve Bank needs to take into account the possibility that pieces of the banknote may be presented for value separately. If several pieces of the same banknote are presented, the Reserve Bank's policy is for each piece to be worth a share of the value in proportion to its size. The combined value paid should be the face value of the original banknote. The value of incomplete banknotes is determined as follows:
| If less than 20 per cent of the banknote is missing: | Full face value is paid. |
|---|---|
| If between 20 and 80 per cent of the banknote is missing: | Value is paid in proportion with the percentage remaining, e.g. half face value if half the banknote is present. |
| If more than 80 per cent of the banknote is missing: | No value is paid. |
Importantly, the presence or absence of specific features such as the serial number(s) is not a factor when determining value. Because full face value is not paid on incomplete banknotes, care should be taken when accepting incomplete banknotes. There is no obligation to accept an incomplete banknote when offered in payment/change.
Badly Damaged or Contaminated Banknotes
Banknotes with unusual or significant damage are classified as badly damaged/contaminated banknotes. These include banknotes where:
- severe heat damage prevents the verification of security features or affects 20 per cent or more of the banknote;
- significant damage casts doubt on their value or genuineness; or
- it is contaminated with chemicals, blood or other substances.
The Reserve Bank pays value for banknotes based only on the visual presence of a banknote. If, for example, a banknote is reduced to ash in a fire, it is unlikely that any value will be paid. If part of a banknote remains, the value is determined on the same basis as for incomplete banknotes.
Further Information
The Reserve Bank provides a Banknote Sorting Guide to authorised deposit-taking institutions (including banks) and cash centres to assist with sorting banknotes.
Common questions about damaged banknotes are answered in the Question & Answers About Banknotes section of this website.
For further information, contact the Reserve Bank:
Phone: 1800 633 220
Fax: +61 2 9551 8021
E-mail: nienquiries@rba.gov.au
or write to
The Head of Note Issue
Reserve Bank of Australia
GPO Box 3947
SYDNEY NSW 2001
