Winston Churchill £5 banknote maps broader disruptive trend in security printing

The Bank of England’s decision to print its new £5 banknote on a polymer substrate aligns with one of the most disruptive current trends in the sector according to security print market specialist Smithers Pira.

The number of countries worldwide using plastic banknotes is rising steadily, and has now been joined by the UK – Source: Smithers Pira

The substrate for the notes – which feature a portrait of UK prime minister Winston Churchill – is bi-axially orientated polypropylene (BOPP) produced by Innovia Security at its facility at Wigton in Cumbria.

The new currency was unveiled at the Churchill family’s ancestral home – Blenheim Palace – on 2 June, and will enter circulation in September 2016. It will be joined by a new £10 banknote featuring novelist Jane Austen in 2017; and a £20 denomination showing landscape artist JMW Turner in 2020.

Wider trend

In its most recent technology scoping report – Ten-Year Forecast of Disruptive Technologies in Security Printing and Brand Protection to 2026 Smithers Pira’s analysis maps the broader implications of a shift from cotton paper to plastic notes.

With the UK set to be the 25th state worldwide to adopt them – Smithers market insight identified polymer substrate banknotes as the sixth most disruptive trend for the whole security printing industry across the next decade.

A transition to a polymer substrate requires capital investment, but offers central banks several key advantages.

  • Durability
    Plastic notes are more durable, harder to tear, and more resistant to folding, soiling, and micro-organisms. Furthermore because of their relative rigidness they tend to perform better in ATMs and automated sorting operations.
  • Print costs
    Polymer banknotes can last two-and-a-half to four times longer than notes printed on cotton paper. Thus, although analysis shows plastic currency is up to twice as expensive to produce, reductions in the need to replace notes will translate over time into significant savings for central banks.
    The Bank of England estimates cutting the frequency of replacements and new issues will save it around £100 million over the full lifecycle of its new notes.
  • Defeating counterfeits
    The production of Innovia’s Guardian substrate involves specialist equipment which blows the BOPP film in a gigantic bubble of plastic, 20 meters high, before reforming it. The complexity of this process and its relative unfamiliarity will make it much harder for criminals to copy the new Churchill £5.
    Canada – the first G8 country – to adopt plastic substrates saw a 74% reduction in reported counterfeits in 2015, the first full year after it made its switch.
  • Cleanliness
    Polymer banknotes stay cleaner and are waterproof as the impermeable and non-fibrous nature of the plastic repels dirt and moisture better than paper.
  • Recyclability
    Furthermore the environmental impact of polymer is lower than that of traditional paper. This was most recently demonstrated in two life cycle assessment (LCA) studies by the Bank of England and the Bank of Canada – and includes the option for 100% recyclability of used banknotes.

Lucrative opportunity

Innovia is confident of the enduring appeal of its plastic solution. On 10 April, it announced it was selling its Cellophane brand food packaging film business to Japan’s Futamura Chemical, in order to concentrate on expanding opportunities in banknote substrates sales – where it holds a dominant position (to read more on this topic, please see our press release: Innovia sells Cellophane business to Futamura).

The Smithers Pira report The Future of Global Security Printing to 2020 forecasts a world market valued at $27.5 billion (€30.6 billion) in 2015, increasing to $36.6 billion in 2020. Banknotes account for around 40% of this total market making it the most lucrative segment in the global security printing industry.

The printing of fewer, longer lasting notes would in time be felt by printers in this field with a shift towards shorter production runs, imposing manufacturing challenges on them and their suppliers.

Remaining challenges

A wider shift to polymer notes is not inevitable however, there will be social and technical challenges– and potentially hidden costs – that are likely to slow market roll out. Smithers analysis shows these include the question of public acceptance – with some countries more conservative than others. This is joined by up-front cost considerations, which may push some central banks towards cheaper alternative hybrid paper-plastic, or coated paper substrates instead.

One further challenge for industry is how modern cash cycles will be able to operate with both polymer and traditional paper in automated cash handling equipment. This last question is directly addressed in the forthcoming Smithers Pira technical report – Fit for Circulation: The Future Lifecycles of Currency to 2026.

For full information on Smithers Pira’s comprehensive market data and testing services portfolio for the security print industry please visit our security market reports page.