Education: our money
You see them every day but do you know where South Africa’s banknotes and coins come from? WHO MAKES OUR MONEY?
MONEY comes in different forms. It can be physical cash such as notes and coins, or it can be in electronic format. Electronic money is when the bank’s computer system shows how much money is in your account – you can’t see or touch that money except if you withdraw it from an Automated Teller Machine (ATM) as cash. Let’s find out where paper money and coins come from.
SA’s central bank, the South African Reserve Bank (SARB), is responsible for printing banknotes and minting coins. Two of its subsidiaries make the physical money. All SA paper money (banknotes) are printed at the SA Bank Note Company in Pretoria, while all our coins – including special memorial coins and collectable bullion coins made of precious metals – are minted by the SA Mint in Centurion, Gauteng.
The origins of the South African Mint date back to 1890 when the government of the then South African Republic, aka the Transvaal Republic, established its own mint in Pretoria. Manufacturing of local coins started in 1892. In 1923 the South African Mint was officially founded as a department of the central government. In 1988 it was renamed the SA Reserve Bank. The Reserve Bank also mints bullion coins, such as the Krugerrand, Natura and Protea coins. A bullion coin is minted from a precious metal such as gold or silver and kept as an investment rather than used as ordinary money. The South African Bank Note Company (SABNC) was founded about 60 years ago when the government decided to print SA banknotes locally rather than have them printed overseas. Local production of banknotes started in 1961 when SA acquired a decimal currency unit. The SABNC doesn’t only print all SA’s banknotes, it also prints several of our neighbouring countries’ currencies. The SABNC is scrupulous about security to combat theft and counterfeit money. Its employees are under constant surveillance. Meticulous records are kept of the amount of paper and banknotes in the building. If something is amiss, the mistake needs to be found first before work can continue or anyone can go home.
The company is required to issue certificates of balance to show which paper was used to print which notes, and how much paper was left over. Workers are allowed to have money in their wallets because the serial numbers on notes indicate whether it’s already in circulation or should still be in storage in the company’s vault.
The paper on which the banknotes are printed must be able to withstand a range of conditions as well as handling. People tend to take better care of higher value banknotes than cheaper notes. That’s why R200 notes can last for years, while the average R10 note often doesn’t last longer than three months.
It’s quite a long process to design and de
velop a new series of banknotes. For example, it took three years for SA’s Big Five series to come into circulation. But one aspect of the design can be changed quickly. If the Reserve Bank suddenly gets a new governor, the old governor’s signature on the notes can be replaced on new notes in a matter of hours. Now you know where SA’s money is made. But what happens to old and worn notes? Those notes remain legal tender (in other words can be used as money) until they’re shredded and used as landfill.
If you find a counterfeit (fake) banknote in your purse and hand it in to the police or the bank, you won’t be reimbursed. The reason for this is that authorities don’t want to encourage the production of counterfeit notes as a way of getting real money in exchange for fake money.
But this situation also has a downside. It makes people unwilling to report counterfeit money because they’ll lose out in the process. Usually, they’ll rather try to pass the fake note on to the next person as quickly as possible.
SA banknotes have security features that make it difficult to copy them. You can check these to confirm that your banknote is real. There’s a watermark in the paper – you can see it when you hold the note up to the light. Copying machines can’t reproduce a watermark. A security strip woven into the paper is also visible and in direct light displays the letters SARB.
Genuine banknotes are made of good quality paper. You should be able to tell from its texture if something isn’t right. The printing quality is also hard to match cheaply, regardless of how good the counterfeiters’ scanner is. Genuine notes’ ink is slightly raised on the paper. Hold a note up to the light to see if you can spot all these security features.
The South African Reserve Bank is SA’s central bank. It sets and carries out monetary policy to ensure that the country has an effective financial system. It also regulates commercial banks in order to protect people’s deposits as well as SA’s economy. Lesetja Kganyago has been the Reserve Bank governor since October 2014. Because central banks such as the SARB are allowed to make, issue and destroy coins and banknotes, commercial banks store their cash reserves at the central bank. Banks use these reserves to buy notes from the SARB. The SARB has seven branches in SA: in Bloemfontein, Cape Town, Durban, East London, Johannesburg, Port Elizabeth and Pretoria. The branches see to it that there are enough high-quality notes in circulation to meet consumer demand. They’re also responsible for replacing damaged notes. Another important role of the bank is to maintain the stability of the rand by controlling the inflation rate (the rate at which prices increase over time, changing the value of a rand).