History of paper money production

The history of banking is as old as civilised man. Records exist of banking facilities in Babylon four thousand years ago, and there is evidence that the Chinese, Greeks and Romans had banking facilities long before the Christian era.

Paper came comparatively late in the history of man. Prior to this, all sorts of materials were used including leather, parchment, clay tablets and various other objects. The first true paper money appeared in China about 700 AD, but several centuries passed before paper was used in Europe.

The Bank of England began issuing notes in 1694. The design was very simple. There were just a few lines of engraved text, promising to pay a specified sum at the Bank's premises. Also on the note were spaces for a hand-written date, number, signature and the name of the payee. The top centre of the note showed the figure of Britannia, but there were few other decorative features. The notes were printed in black. The following year, the Bank ran into counterfeiting difficulties. They promptly arranged for a specially designed watermark to be made. The first watermarked paper was used in a Swedish bank note in1666.

A bank note is only a piece of printed paper, which costs very little to make, and promises to pay a value for goods or services far in excess of this cost. It is clear therefore that the issuing of bank notes must be carefully controlled by an appropriate authority, and they must be designed and printed in such a way that they cannot be counterfeited.

Traditional bank note paper is made from cotton fibre, which is reduced to a thin milky fluid by chemical and mechanical means and with lots and lots of water. The fluid is passed over a fine wire mesh that allows the water to be taken away leaving a thin layer of wet paper that is subsequently ironed and dried.

Embossing the wire mesh, so that some parts of the paper are thinner and some thicker, gives a light and shade image of a portrait that makes the watermark.

The security thread is laid in position on the wire mesh at the same time as the milky fluid is passed over the mesh. The thread then becomes an integral part of the paper.

The planning, printing and production of the New Zealand bank note is a very complex business employing many skilled operators for up to two years before the date of issue.

First of all, decisions have to be made with regard to the sizes of each denomination. Then rough designs are drawn up to incorporate the various things that have to be incorporated, including the watermark, the wording of the text, the value, the picture (people, birds, plants, flowers, etc.), Maori ornamentation (tukutuku patterns) the numbering and colours and the various printing processes to be used.

Once these preliminary details are agreed upon, a group of artists gets together to produce an exact picture of the back and front of each denomination. These are produced in the correct size and the correct colours with the aid of a computer-based design system. This picture is prepared in such a way that it not only includes all the specified requirements, but is also satisfies printing capabilities and security against forgery. The sketch is finally approved by the Reserve Bank of New Zealand, and it then becomes the approved sketch.

The approved sketch is then used to produce single individual printing plates in each of the various colours on each note, back and front. These plates are used to produce single proofs of each denomination and the Bank then approves the proofs. After approval, the single individual-printing plates are used to produce multi-printing plates. These multi-printing plates are made up of 28 or 40 notes. These plates are then used to print millions of copies.

These sheets of notes are then examined in sheet form, and the well-printed sheets are sent forward for numbering in sheet form. The numbered sheets are carefully checked and, if necessary, spoiled notes are replaced by replacement notes with the prefix "ZZ" (NB: The replacement notes with the prefix "ZZ", were only used in the fifth series. In previous decimal issues an asterisk was used after the serial number to show a replacement note had been inserted.) Finally, the sheets are cut up into single notes, examined and checked and then packed into boxes of 25,000 and delivered to the Bank.

During the whole of the production process, from the making of the paper, printing the notes, examining and checking, to the despatch of the notes, a very strict security control system is in operation. Every piece of paper is counted many times during all the processing right up to the delivery of the finished bank notes. All spoiled paper and partly printed or fully printed bank notes, which become spoiled, are carefully checked, recorded, and granulated under the most stringent control conditions. The factory is under close guard day and night. All operatives have a security pass with photograph, signature and name (like a passport). Nobody is allowed in the factory unless they have been scrutinised and checked by the guard on the gate. Electronic devices control the opening and closing of all doors, and concealed television cameras can scan various parts of the factory at all times. At night or on weekends, when the factory is not working, the whole area is under strict security.

The Reserve Bank of New Zealand introduced the first polymer (plastic) bank notes into circulation on 3rd May 1999. The $20 note was the first note to be released. The design of these new notes was similar to that of the existing paper bank note issue of the time. The size of the new polymer issue notes was identical to that of the previous paper note issue.

Although paper notes can incorporate security features such as watermarks and threads, the introduction in the late 1980's of modern sophisticated imaging technologies placed these features under increasing threat of widespread forgery. It was therefore decided to print the next issue of bank notes in the new polymer substrate.

This had the benefit of introducing new security features (e.g. clear/transparent area) as well as producing a note that would last longer and stay cleaner due to the non-porous nature of polymer. There was also a benefit when destroying the notes as the shredded notes could be recycled into other plastic products instead of being buried or burnt. This means of disposal is much more environmentally friendly.

New Zealand's polymer bank notes are produced by Note Print Australia Limited and are printed in Melbourne. The substrate is manufactured exclusively by UCB Films Pty Ltd under a joint venture arrangement. The substrate is a multi-layered structure, which comprises a core layer of polymer film. It arrives at Note Print Australia Limited as a large roll of clear plastic film, very similar to a role of paper newsprint. It is then processed through the following steps: -

1. Opacifying: Two layers of ink, (usually white), are applied to each side of the note apart from an area that is deliberately left clear.
2. Sheeting: The opacified substrate is cut into sheets suitable for feeding into printing presses.
3. Printing: Traditional offset, intaglio (i.e. raised print) and letterpress processes are used.
4. Overcoating: The notes are treated with a protective varnish.

In fact the polymer notes are printed using the same processes that are applied to paper notes. Also incorporated are micro-printing, intricate background patterns, a see-through feature that will match exactly when viewed from either side of the note, visible and invisible fluorescent and phosphorescent features and metallic ink.

There are two transparent windows in the sixth issue note. On the left-hand side of the note there is a transparent fern and on the right-hand side an ovoid shape with the denomination of the note etched on the window. These two windows make it very difficult or too costly for counterfeiting of the note. In future, there is the potential to incorporate a filter in the ovoid window that can highlight an otherwise invisible feature printed elsewhere in the note's design. This would effectively make the note self-authenticating and enable the public to quickly establish if a note is genuine or not.