Lindsay Boulton, Assistant Governor of Reserve Bank of Australia gives a nice speech on printing securities which also discusses banknotes. He discusses the trends in Asia:
The Asian market for high security printing has experienced generally healthy growth over the past decade. Driven by good economic performance, rising incomes and infrastructure modernisation across many parts of the region, the high security printing market, as measured by the value of production, has experienced average annual growth of around 6½ per cent.That said, rates of growth have been declining, albeit from a high base. From an annual increase of around 11 per cent at the turn of this decade, the market grew by an estimated 5½ per cent around the middle of the decade. Almost all segments, including payment card printing, have experienced slowing rates of growth, with the cheque printing segment reporting outright falls in the value of output.
Factors specific to the different market segments have, no doubt, contributed to the slower overall growth rates. However, the factor common to most market segments is the displacement of traditional printing methods by emerging digital technologies. This is both reducing production costs for existing producers through more efficient printing methods and introducing lower cost alternatives to traditionally printed high security products. The most obvious example is the growing use of mobile payment devices and digital wallets as alternatives to using traditionally printed instruments for making consumer payments.
Two segments of the market in Asia have, however, appeared to have moved against the trend of generally lower rates of growth in the value of production. One of these is ticket printing and is attributed to general upgrades in public transport infrastructure. That said, it is expected that growth in this segment will slow in the next few years as transport operators in Asia migrate from proprietary ticketing systems to more sophisticated arrangements, such as ‘open-loop systems’, in which value information for travel purposes is contained on the chips of consumers’ existing payment cards, and digital tickets are available for use from consumers’ mobile devices.
Interestingly, the other segment is banknote production. Over the past decade, the value of banknote production in Asia has grown from around 4 per cent per year to around 5½ per cent in 2016. Although a seemingly modest increase over the period, it is significant because this segment comprises around 40 per cent of the high security printing market in Asia. It is also significant because it is occurring at the same time as the growth in production volumes of banknotes is slowing, primarily, as I mentioned, in response to the take-up of electronic and digital platforms for making payments. In the past 12 months, the volume of banknotes produced in the Asian region has risen by just 2 per cent compared with the average annual growth rate of around 5 per cent since the start of this decade.
On banknotes, he says polymers are costly but last longer:
Two strategies underlie the demand for more expensive substrates and security features, strategies that reinforce each other.
The first is that, as the growth in production volumes declines, central banks are having their banknotes printed on more durable substrates in order to extend banknote life in circulation and, thereby, reduce medium- to long-term printing costs. Industry estimates suggest that banknotes printed on polymer substrates, for example, cost twice as much to produce as paper banknotes, but last three to four times longer. This was certainly Australia’s experience in the late 1990s, the first few years of printing our banknotes on polymer. Recent estimates suggest that the Australian $5 banknote – our lowest denomination banknote – has a median life of around 3½ years while our largest circulation note by volume – the $50 – has a median life of around 10 years.
The second strategy is that central banks are having more sophisticated security features added to protect banknotes partly because the technology available to counterfeiters is improving and partly because the banknotes are staying in circulation for longer. In other words, banknotes are being printed with advanced security features to protect against current sophisticated counterfeiting techniques as well as as-yet unspecified and unknown techniques that may become available to counterfeiters over longer periods in which the banknotes are likely to be circulating.
In the end:
So there are opportunities and challenges ahead for the high security printing industry. Both seem more acute in the Asian region because of its large population and cultural connection to using physical cash. That is why this conference is important and timely. It is an opportunity to share experiences, consider new technologies and techniques, and, with the benefit of these, discuss and plan strategy for the changes that are likely to occur over the next decade. I encourage you to make the most of this opportunity over the next few days and I look forward to talking with you and sharing ideas and thoughts. I would also encourage you to take in the Melbourne atmosphere. The city has a well-earned reputation for creativity. As always, creativity will be important in order take the opportunities ahead in the high security printing industry.