$1 billion shredded to make pegs
Reserve Bank turns old notes into plastic items
Nearly $1 billion in notes was destroyed in 2017 as New Zealand’s old banknotes are taken out of circulation.
Hundreds of millions of dollars in banknotes are slowly being shredded into millionaire confetti and recycled into everyday plastic items, such as clothes pegs and pot-plant holders.
The amount of money being destroyed is higher than usual this year as the old series of notes and coins are cycled out and the new Series 7 notes are cycled in, according to Reserve Bank head of currency, property and security Steve Gordon.
About $5.5b is circulating at the moment — in New Zealand and overseas— and hundreds of thousands of notes are destroyed every week.
In 2016, the Reserve Bank destroyed 43 million notes, with a value around $1b.
The money is “granulated” down into “very small sort of confetti-sized bits of banknotes” then sent away to a specialised company that recycles them into plastic items one might find at home.
When the Reserve Bank isn’t getting rid of the old series of banknotes, the most common reason to destroy cash is wear and tear.
On average, about 20m notes are declared unfit for circulation each year.
All this money being transformed into plastic on a weekly basis must be replaced.
New Zealand money is printed much less frequently than it is destroyed, and it’s done overseas.
“It might be every year or two, perhaps, that we would place an order . . . typically being a mass-produced product, when we place an order it’s a big order, maybe 100m or more physical forms.”
A hundred million notes, depending on what types of notes were being printed, could quickly add up to billions of dollars.
The Reserve Bank has a variety of ways to transfer the notes here — and this sometimes involves secretly putting “a fairly small amount” on a commercial flight.
In Reserve Bank language, a “fairly small amount” of money is about $100m in cash, which unsuspecting passengers could find themselves sharing a plane with.
The notes are printed in Canada because it is not financially viable to run a printing factory in New Zealand with money ordered only once a year at most.
Planning an order of money is no small job, but planning a new series of notes is one that might be started 10 years in advance.
Each new design comes with refreshed security measures to combat counterfeiting, Gordon says.
The counterfeit rate in New Zealand is “the envy of the rest of the world”.
Measured in “parts per million”, our country has a counterfeit rate of only one part per million, which can be attributed in large part to the security features of the money.
Despite the increased use of Eftpos cards and online banking, the amount of New Zealand cash circulating here and overseas is growing. One theory why is that low interest rates mean it doesn’t “hurt as much” to hold on to cash. Other reasons could be that New Zealand money is popular overseas, people using cash to avoid tax, and using cash in the “dark economy” for illegal dealings.