The life cycle of a banknote

Together with the European Central Bank (ECB) and the national central banks of the other euro countries, De Nederlandsche Bank (DNB) is responsible for issuing and circulating euro banknotes. New notes are designed in co-operation and then printed in several euro countries.

Development of new euro banknotes

Although it has been only a few years since the euro was introduced, work is in progress to prepare a new series of euro banknotes. Developing new banknotes is an ongoing process. Intentions are to introduce a new series every seven or eight years.

For every new series, the designers use improved production techniques and materials, for one thing because this will offer better protection against counterfeiting. But the designers also look at usability aspects of the notes: How easy it is to verify the security features? Can the visually challenged recognise the notes? But also: how can notes be kept cleaner?

The series of banknotes now being prepared is a redesign of the first series. The theme, ‘bridges and arches’, is the same and so are the colours. Still, everyone will be able to see at a glance that this is a new series of banknotes.

Banknote production

In the euro area, the national central banks and the ECB are jointly responsible for the printing of euro banknotes. First, the ECB charts the expected need for every denomination. Next, every central bank is asked to have print some denominations.The ECB decides which printers inEuropewill be allowed to print the notes. Of course, these printers must meet the highest of specifications. Whereas DNB has most of its banknotes printed by Joh. Enschedé & Zonen inHaarlem, foreign printers have been engaged as well.

Printing the notes is an elaborate process. First, the paper is manufactured, including the watermark, the safety thread and in many cases also the foil and the golden stripe. Once the paper is ready, the printing process can begin.Printing euro banknotes involves several printing techniques: offset print for the basic design on the front and back sides, plate print for the palpable ink on the front side, screen print for the special inks on the back, and letterpress for the serial number, also on the back. Once the sheets of paper have been printed, they are cut into banknotes.The notes that come out of the cutting machine are checked one by one for flaws in the printing and any dust particles that may have stuck in the paint. Only perfect euro banknotes are fit to be circulated.

Banknote circulation

Some 10 billion euro banknotes are currently in circulation. Naturally, most of them circulate in the euro area, but some are used elsewhere. It is not known how many euro banknotes there are in theNetherlands–probably between 300 and 400 million. Depending on the denomination, the average banknote lasts a few years.

The number of new notes DNB needs every year depends on the growth of the circulation, the number of notes destroyed and the inflow and outflow of notes across the border.Banks order notes from DNB in order to meet public demand. Most notes reach the public via cash machines (AKA ATMs), of which there are some 7,500 in theNetherlands.

The notes are then spent again in shops and elsewhere. Retailers deposit the notes they receive in their banks. Banks in turn deposit the notes with DNB to be sorted, checked and readied for recirculation.In recent years, the rate at which banknotes have been returning to banks and hence, to DNB, has increased. Many 50 euro notes, for instance, are used only once in payment before being returned. For this reason, an agreement has been reached under which banks themselves will check and recirculate more than half the banknotes they receive. They have jointly set up cash centres for the purpose. The checking and sorting is done by machines that meet requirements imposed by the ECB. Unfit and suspect notes are sent to DNB straight away.

Banknote sorting by DNB

The entire banknote circulation in the Netherlands is checked twice a year by DNB, thus helping to maintain public confidence in the euro banknotes. DNB owns a range of sophisticated sorting machines, each of which is able to check some 2,000 banknotes per minute for authenticity, soiling and damage. Soiled or damaged notes are destroyed.