Plastic currency notes will soon be a reality in India, with the Reserve Bank of India being authorised to conduct field trials of plastic Rs 10 banknotes.
In a written reply in the Lok Sabha on Friday, Minister of State for Finance Arjun Ram Meghwal said “it has been decided” to conduct a field trial with plastic notes at five locations of the country.
While the minister said that the plastic notes are expected to last longer than the existing cotton-substrate based banknotes, durability is only one of the factors that may have prompted this change in thinking.
Why the shift to plastic?
Over the centuries, money has taken many forms including leather, shells, precious metals, cotton paper and most recently plastic.
After using metal coins for hundreds of years, large commercial transactions around the 7th century forced people to use easier-to-transport paper currency, making it the currency of choice around the world.
But with technological advances in recent years, plastic notes have gained currency because of their longevity. Plastic notes have an average life span of about five years, three more than the existing paper notes.
In addition, plastic notes are difficult to imitate, cleaner, more energy efficient and offer better security features.
One of the disadvantages of paper notes was evident during Holi last week, The central bank had to clarify that while banks would accept notes stained with colours, intentionally colouring or dirtying the currency would not be advisable.
Central banks across the world have for long been exploring different solutions such as plastic notes for easy movement and to combat counterfeiting.
Plastic or polymer notes are currently used in more than 20 countries including Australia, Canada, Fiji, Mauritius, New Zealand, Papua New Guinea, Romania, and Vietnam.
Polymer gains currency
Polymer banknotes were first issued in 1988 by Australia, which in 1996 switched completely to polymer currency notes. The country recently launched a new series of notes, starting with the A$5 bill in September last year which had additional security features.
Polymer banknotes are made from a polymer such as biaxially oriented polypropylene (BOPP).
Such notes incorporate many security features such as metameric inks which are not available in paper banknotes. The ink works on the principle of metamerism, where two colours appear matching under one set of lighting conditions but appear quite different in a different environment.
Polymer banknotes last significantly longer than paper notes, with a lower environmental footprint and a reduced cost of production and replacement.
A polymer banknote contains three levels of security features that cannot be successfully reproduced by photocopying or scanning, making it very difficult to counterfeit. The complexities of counterfeiting polymer banknotes are intended to act as a deterrent to counterfeiters.