New Zealand’s Reserve Bank is keeping a very close eye on developments in Australia where the companies that make our bank notes are under investigation over allegations of bribing third world officials in order to win their business.
The comment from Reserve Bank Governor Alan Bollard that he is monitoring the situation comes as the central bank announced it will begin releasing new bank notes from 2014 after an upgrade to enhance security features and durability, while modernising the design of the notes.
The polymer material currently used to make New Zealand's notes is made by Securency, which is half owned by the Reserve Bank of Australia. The notes are then made by Note Printing Australia, which is 100% owned by the RBA.
Earlier this month, Australian Federal Police arrested six former executives of Securency and Note Printing Australia, including their former CEOs in the biggest bribery scandal in Australian history.
“We will be watching where those cases go. We can’t talk any more about them now they look like they’re going to be in front of the court," Bollard told a media conference on Thursday afternoon.
“Clearly we’ll be watching that and that does have the potential to impact our choice of suppliers, but that’s out in the future," he said.
The Reserve Bank’s head of currency Alan Boaden said there were a number of suppliers in other countries which made polymer like Securency, in case the Reserve Bank decided not to use the Australian provider.
Bollard added there were also other composite materials nowadays which were comparable to polymer.
See an announcement from Securency here made on July 1 after Australian Federal Police laid charges against the company. Securency was charges with three counts of conspiracy to influence foreign officials. Two charges related to Indonesia, and one charge related to Malaysia.
New NZ notes on the way
Reserve Bank governor Alan Bollard launched the project to upgrade New Zealand's bank notes today, which would update all five notes currently used – NZ$5, NZ$10, NZ$20, NZ$50, and NZ$100 notes.
Famous faces on the notes would not be changed, Bollard said.
The Reserve Bank commissioned Nielsen in 2010 to survey the public on their perceptions of the notes, finding they were generally satisfied with the colours, design and themes of the existing notes, and were happy with the range of notes.
“However we are planning to modernise the designs as modern printing techniques will allow us to give the notes a new look,” Bollard said.
Central banks around the world generally upgraded their bank notes every 10 to 15 years, Bollard told a media conference. Upgrades were implemented to stay ahead of counterfeiters.
“This upgrade will ensure our bank notes benefit from the technical advances that have been introduced in bank note security over the last 12 years,” Bollard said.
New notes would be progressively introduced from 2014 at the earliest and co-circulated with existing notes, Bollard said.
'We'll make money on it...'
Roughly speaking the upgrade process would cost about NZ$2 million, plus the cost of printing the notes, although notes were being printed all the time, Bollard said.
“The biggest cost is note printing. These notes will probably be a bit more expensive than existing notes, but not very much more expensive," Bollard said.
“The other side to that of course is that we sell the notes to the New Zealand public at face value, so in fact the government and the taxpayer end up getting a very significant return from the dividend from the Reserve Bank," he said.
(Updates with more on Securency charges, comments on cost)