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Are notes & Coin so different?

Are notes & Coin so different?

Anyone attending the recent Coin Conference could be forgiven for thinking that this was a banknote conference in disguise, so familiar were the themes and discussions. And the more one thinks about it, the more obvious the similarities become.

Take the old hot potato - the note coin boundary. Yes - there was the debate about the savings from replacing low denomination banknotes with coins. But at the same time, both notes and coins are under attack from alternative payment methods such as contactless cards, especially  for low value payments, so the underlying theme was how best to fight the new enemy rather than one another.

Coins, like banknotes, have been enjoying an unprecedented period of expansion but there are challenges ahead that, if not addressed, could see the ground gained lost very quickly. Both industries are facing massive increases in the cost of raw materials at a time when central banks are looking for savings. The coin industry, for whom the cost raw material component is a much higher element of the overall cost, is addressing this issue head on by introducing new cost- effective ways of making coins without detracting from their appearance and circulation life - much the same as the banknote industry with more durable substrates.

Coins - again like banknotes - are now being counterfeited, especially in the higher denominations. New security technologies are being developed to prevent this - many of them using banknote features for inspiration.  As with banknotes, these technologies have intellectual property and the industry is waking up to the fact that the game plan is changing as a result, since IP may well be a major determinant of success.

Which leads another convergence, in the eurozone at least. Here legislation similar to that for banknotes is being introduced for coins, which will have to be processed by banks and the commercial sector for authenticity and fitness in much the same way that banknotes now are.

Because of counterfeiting and the challenge from other forms of payment, both banknotes and coins are being made to be more attractive to the end users, ie. the general public. This is not just in their appearance, although both industries are working hard in that respect with modern designs, national heritage themes and attractive colours (even for coins, with tri-coloured options, and flip-flop coins with a different colour each side ). And the public are being addressed directly about their coins, just as for banknotes, in extensive public education programmes, which central banks now regard as an investment rather than a chore.

Another major theme common to both banknotes and coins is cost reduction by the optimization of production, management and circulation processes. Producers, sorting and recycling machine manufacturers, cash sorting centres, CIT operators and IT companies are all involved - many of which are involved in both side of the industry - coins as well as notes. And it is in optimisation strategies that focus simultaneously on coins and notes that the greatest opportunities for savings lie - as the presentations from the central banks of Israel, Hungary and Sweden all demonstrated at the Coin Conference.

It is clear that banknotes and coins have a lot more in common than their respective industries would like to think - apart from the obvious one, which is that both are tools for transactions. It is time to recognise the fact that the challenges to the currency industry lie in other forms of payment and especially all forms of transaction cards. The transaction card industry spends huge amounts of money promoting their products, both individually as companies and in associations - the currency industry does not do either. The time has come for change - it is essential for the well being and maybe even the future survival of the industry.

To which we say - time for banknotes and coins to unite.


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