Plastic Currency Notes : Will this change be good ?

• 12 May 2017 | 1575 Views | By Mint2Save

One big problem with the latest system of fiat money is because it is made of paper. It can be easily counterfeited, destroyed and even burnt. Out of these, counterfeit is the most dangerous threat for an economy. Obviously, we have reason new types of currency with increased security features being floated in every few years. This whole replacement process of currency note to plastic currency notes can put the economy under severe pressure and common man has to face the heat.

These few problems with the money with fiat currency demand to be solved as soon as possible. A greater step towards it would be introduction of polymer based banknotes (plastic currency notes). Yes, issuing a note that is plastic made and yet has all the safety and security features. Polymer banknotes not only increase the life of the currency, but also increase the tendency of circulating it without getting the note changed.

These notes were first implemented in Australia, which shifted to polymer based notes in 1996. Behind this remarkable feat, Australia had its reserve bank, CSIRO and University of Melbourne as major contributors.  Since then, a lot of countries including Brunei, Canada, Vietnam have adopted to this currency.

A new entrant in adoption of these new notes is none other than one of the brightest spots in the developing economies: India. However, as of now, it has decided to go plastic in only for Rs. 10 notes. The reason stated by most economists for this selective change is the huge volumes of this currency that are shared.

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India is the brightest spot in world economy.

In this article, we are going to explore the needs, planning and the possible execution of the Rs. 10 note based plastic money.

The recent demonetization of Rs.500 and, Recently in February, 2017, the Reserve Bank of India (RBI) informed that plastic currency note of Rs 10 denomination would be introduced soon as it has got permission from various major departments and the printing process will take place soon.

The government in December, 2016 said in Parliament that minimum one billion plastic notes of Rs 10 denomination would be introduced as a field trial that has a longer life span and last longer than cotton substrate based bank notes. In the Lok Sabha, Minister of State of Finance Arjun Ram Meghwal said in a written piece of paper that the field trial would be conducted in 5 locations of India on the basis of its geographical and climatic diversity. The 5 selected major cities are Jaipur, Kochi, Mysore, Shimla and Bhubaneswar.   

No doubt, but the plastic notes have an average life span of about 5 years and are hard to copy. Plastic notes were first introduced in Australia by the way to protect against counterfeiting. In addition, currency notes made of plastic are cleaner than those of paper ones.

Since many years central government has been trying exploring different solutions over worldwide. Previous month, RBI said that in the 2005 series of Mahatma Gandhi banknotes carry inset letter ‘L’ on both number panels which is bearing the signature of Governor Urjit Patel. In 2017, year of printing will be on the reverse of the note. Along with other features numbers on both the panels will be in ascending size from left to right.

The 10 Indian rupee note is a very common denomination in India as it is one of the first notes introduced in 1996 by the Reserve Bank of India (RBI) as a part of the Mahatma Gandhi Series which is in circulation at present. It is believed that new plastic notes of Rs 10 would be more durable as comparison to the present note but it will be introduced after its trial in 5 cities.

Also the government source said that the older version of the 10 Indian rupee note will remain valid even after the set up plastic 10 rupee note. Though there is no logic to demonetise old Rs 10 notes. Instead, the new plastic notes could be scattered along with the paper bills.

In December 2015, Arun Meghwal said that it was informed by RBI that they have got some banknotes of Rs 1,000 without having any security thread and that were printed at Currency Note Press (CNP) on the paper supplied by Security Paper Mill i.e. (SPM).

An investigation about the same has been initiated by Security Printing and Minting Corporation and the units involved in it (SPM and CNP).

So, due to which Mehgwal said that there must be proper action taken to strengthen quality procedure and online inspection system in the process and special training should be provided to the persons concerned with it so as to avoid such kinds of mistakes in future.

Though, whenever Rs. 10 plastic note would be introduced it will be highly protected so that no one make duplicate of it. This trial in few cities of polymer-based plastic notes is being made to ensure and analyze the climatic and geographical implication on the usage and prolonged existence of the notes.

Challenges

Due to the changing in currency notes in plastic notes can be tricky and difficult, because first it is necessary improve the entire infrastructure. Because at present everyone has saw the problems turn up when ATMs had to be recalibrated due to the demonetization and due to which they could not handle the new currency notes. 

In addition it is also very important to be seen how these notes will perform in India. It is quite a bit complicated to ask that whether the plastic notes would be able to survive the tremendous heat of India. Because of which the trial is taken in 5 cities in different climatic zones to judge out prior before any huge blunder and inaccuracy. This is why the trial of plastic notes is expected to be conducted in five cities— Kochi, Mysuru, Shimla, Jaipur and Bhubaneswar—which are in different climatic zones. If the trial is successful then we may see more plastic notes in India.

India is one of those countries where money holds a lot than just being a medium of exchange which a Plastic Currency can bring a drastic change in.