All South African paper money is printed by the South African Bank Note Company (SABN), although the company’s managing director, Peter Gloster, points out “in theory what is produced here is stationery. It only becomes valuable when issued by the Reserve Bank.”
Tucked away in an obscure Pretoria suburb, the SABN shuns the limelight, unlike its United States and Australian counterparts.
The US Federal Reserve, for example, offers tours of its printing works and sells memorabilia, including toilet paper made from recycled banknotes and little bottles of shredded greenbacks.
Banknotes have to be tough. They have to be able to cope with high pressures during manufacturing and then survive a wide range of conditions out in the big wide world – including accidental washing.
This is such a prominent risk that part of the quality assurance testing includes internationally standardised washing trials. “We test all new detergents on our banknotes,” says Gloster.
Notes are also put through folding and crumple tests – which include crumpling up a note and repeatedly hitting it with a hammer until it falls apart.
Not unexpectedly, a banknote’s life expectancy is related to its face value. A R200 note could last for years. Gloster estimates
a R10 note probably lasts around three months.
Security against theft and counterfeiting is an obsession at the SABN, which is proud of no security losses at the plant for more than four years. Workers are constantly watched and they watch each other.
Notes and paper are constantly counted in and out of each stage of the production process and often in the middle as well. If the counts don’t tally, no one goes home until they do, Gloster says.
This preoccupation with counting starts early: if the SABN orders one million sheets of paper, that’s exactly the number it will get. At the end of production, the company has to produce “certificates of balance” showing exactly what paper was used where, and what happened to any leftovers.
The company is so confident of its security systems that workers are allowed to carry their own money around the building. The numbering system means the SABN can tell if a banknote in a worker’s pocket has indeed been released into circulation, or whether it should still be sitting in a storage vault with its brethren awaiting collection.
Ironically, Gloster says the biggest risk to any country’s currency is still the backyard printer, despite the advent of high-quality laser printers and photocopiers.
Printers upgrade their security features on a covert basis until the forgers catch up with them and force a change in the banknotes.
Developing a new note series is a lengthy process. It took three years to produce the latest South African “big five” series.
However, showing yet again that no one is irreplaceable, Gloster estimates the signature of Reserve Bank governor Chris Stals could be replaced on new banknotes within hours of his leaving office.
In common with most other countries, South Africa never demonetarises its banknotes. They remain legal until the day they are shredded and used as landfill.
If you’re unlucky enough to get a forged note, you’ll get no compensation for handing it in to the police or banking system, although Gloster says the debate still rages about whether this is the correct approach.
Compensating people means they are more likely to give in forged notes. But it can provide an incentive to use the compensation system as a method of money laundering with fraudulent notes produced simply to be handed over in exchange for the real thing.
However, not providing compensation can reduce detection of fraudulent notes. Given human nature, someone discovering a forged note can be tempted to reduce their loss by passing it on as quickly as possible to another unsuspecting soul.
The Swiss are probably at the cutting edge of banknote technology. Gloster says their latest series has more publicised security features, including microperforations created by laser, than any other banknotes.
According to Gloster, the ubiquitous and mighty US dollar, with its monotone green colour, is perceived to be the most forged internationally accepted currency.
The bulk of the counterfeit dollar notes circulate with the vast number of genuine greenbacks that leave the US annually, never to return, but rather circulating endlessly in far-flung parts of the world such as Latin America and Africa.
There is a worldwide trend for banknotes to be replaced by coins, particularly at lower denominations. In deciding whether to change between notes and coins the Reserve Bank has to balance the benefits of greater durability against the “exorbitant” costs of minting coins compared to printing notes, Gloster says.
The move tends to be counterbalanced by the creation of higher denomination notes.
Gloster says the SABN is a profitable company and faces a full order book next year. It is a wholly owned subsidiary of the Reserve Bank, and a sister company of the South African Mint.
It’s the Reserve Bank which decides how much money should be printed, when old notes should be shredded, and what our notes should look like.
Although it provides the core of the business, the SABN is not confined to only printing banknotes. It also produces other high-security stationery such as share certificates, option contracts, bonds – in fact any document which has an intrinsic value.
Increasingly the SABN is eyeing the overseas market as a way of increasing business.
Worldwide the largest order ever was for 2,3-billion banknotes. It was placed by the Indian government when some of its own printers were being refurbished.
Gloster declines to reveal how much it costs to make banknotes. There are a limited number of places worldwide which make the ingredients for secure banknote printing. South Africa imports nearly everything.
The paper comes from Europe and is specially made for South Africa. It arrives in the country containing different security fibres,
the metallic thread and the watermarks.
The paper is made of cotton pulp rather than wood, which gives increased durability, as well as providing an added security feature.
Cotton-based paper can easily be made dull under ultraviolet light, whereas it would be expensive to do the same with wood-based paper. If the paper were not made dull in this way, it would obscure security features which are only visible under ultraviolet light.
Most of the inks used on banknotes, especially the more exotic fluorescent and invisible ones, are also imported.