Why are countries printing their tickets in other countries?…
The Central Bank of Liberia had commissioned the printing of tickets to foreign companies, and the cash was lost after crossing the main port and airport of the country.
Now there’s an investigation underway.
Meanwhile, the issue of the printing of money also caused many citizens of India to express their discomfort in social networks last month.
A report in the South China Morning Post claimed that China’s state banknote printing and coining Corporation (CBPMC) had won a contract to print rupees.
And this generated concern in India for its possible impact on national security.
The government of India denied the information. They print their tickets in four high-security printers in the country
But both cases have opened up the debate about whether it should matter where our country’s banknotes are printed.
Is this a common practice?
Some countries, like India, manufacture all their cash within their borders. In the case of the United States, it is a legal obligation.
But for many countries, it is actually a common practice to send out some of their money abroad. Some, like Liberia, don’t even have a coin factory of their own.
In fact, there is a group of highly specialized companies that produce cash for most international currencies.
The Rue’s banknote manufacturer estimates that the commercial printing market produces up to 11% of all banknotes.
And the biggest banknote printers are mostly in Europe and North America.
De la Rue, a British company that lost the bid to print this year’s new UK blue passport, is the world’s largest banknote manufacturer.
It produces cash for about 140 central banks. Each week it prints a number of banknotes so large that if a pile were formed with them it could double the height of Mount Everest.
Its competitor, the German company Giesecke & Devrient manufactures banknotes for some 100 countries. The Canadian banknotes Company and Crane, a Swedish-American company, are other important players in this market.
Although it is a big business, it is somehow also quite secret.
The BBC contacted several banknote manufacturers and they all refused to disclose exactly which central banks they work for. Many governments also don’t like to talk about it either.
The discomfort that occurred in India is perhaps understandable because it shows the sensitivity that some people have to the issue of where their money is printed.
“This becomes a topic of nationalism,” says Duncan Connors, an expert on money history at Durham University.
Why does each country not do it for itself?
Basically because it’s a costly and complex process.
The companies that are engaged in the manufacture of banknotes and coins have several centuries of existence. They have a specialized technology and the credibility required in relation to the security of the process.
De La Rue began printing tickets in 1860. First for the Mauritius and then for the rest. It manufactures the new polymer banknotes issued by the Bank of England of five and ten pounds sterling.
For the smaller countries it can be very logical to order the manufacture of their tickets abroad because it may not be worth buying the expensive printing presses if they only need a small number of tickets.
Moreover, they also have to invest in keeping up with technological advances to combat counterfeiting.
A printer of these produces around 1.4 billion of banknotes a year. So if a central bank produces much less of that, then it is not really financially profitable.
In the United States, for example, some 7 billion of banknotes per year are printed.
Solomon Islands, a small state in the Pacific that has about 600,000 inhabitants, hires De La Rue to design and print their tickets.
According to public information freely available, Macedonia and Botswana also resort to the British company.
Is it dangerous for others to print your tickets?
Many of the concerns in India were based on issues of national security, especially as the country has an open border dispute with China.
But are these fears justified?
A striking case was the one that occurred in Libya in 2011. The Government of the United Kingdom decided to withhold some 1.86 billion of dinars (about US $1.4 billion), of which some US $217 million had been printed by de La Rue, which caused a shortage of cash during the last moments of Gaddafi in power.
So, on certain occasions, a foreign government could withhold cash, although it is rare to happen.
And although the Libyan incident caused commotion among industry experts, it did not have much impact on banknote production in other countries.
In theory, a country might be weakened by commissioning the printing of banknotes abroad if the responsible company printed more than required-without the central bank’s permission-generating an excess of cash in the economy. That could generate an unwanted effect: inflation.
And when printing our tickets in a foreign country this could also be aware of the security characteristics of a particular ticket, which would make possible its counterfeiting.
However, there is no evidence to suggest that any of these things are actually occurring.
In addition, there is also a matter of confidence when countries with high levels of corruption print their own banknotes.
“Do you trust people in your own country to print their currency? “, asks Connors.
However, since most of the money is still printed by the States themselves, perhaps that threat is not so great.
“Most countries print their own banknotes and order the production of a small part of the trade industry,” says Guillaume Lepecq, director of the International Currency Association (ICA).
There is No international body to regulate the production of money.
Towards a future without cash?
For the rest, there are many people who are increasingly using cash less often.
Mobile applications and non-contact payment methods have made it easier than ever to dispense with tickets.
The people’s Bank of China (as it is called the central Bank of that country) says that, in 2016, only 10% of the payments in retail stores were made with cash due to the increase in the use of the payment through cellular.
But, despite this, according to the specialized company Smithers Pira, the demand for banknotes around the world continues to grow.
Smithers Pira estimates an annual increase of 3.2% in the global market, which is currently valued at US $10,000 million.
and the regions where the printing of banknotes grows the most is Asia and Africa.
So we are still far from the world without cash.