Currency manager: Central Bank of the Philippines

The availability of reliable banknote suppliers (especially when it comes to paper substrate) has fallen in recent years, due in part to disruptions in the global supply chain associated with the Covid-19 pandemic as well as a shift towards polymer bank notes. As capacity has shrunk, central banks have found it increasingly difficult to source sufficient supply to meet their current and future cash needs.

Mary Anne Lim, assistant governor of the currency and securities production sub-sector at the Central Bank of the Philippines (BSP), says the central bank used to be able to tap into the capabilities of at least five reliable commercial paper suppliers. This has now fallen to just three. In response, the BSP had built partnerships with other central banks and reliable commercial entities around the world, with three new partnership agreements standing out.

In October 2024, the BSP signed a memorandum of understanding with Bundesdruckerei, a German federal technology company, to collaborate on currency management and production. This included enhancing the security of banknotes in circulation. A month later, the central bank signed a separate agreement with Banque de France to further strengthen currency security management and production.

These agreements come on top of an existing arrangement BSP has with Note Printing Australia, a wholly-owned subsidiary of the Reserve Bank of Australia, to support the country’s transition to polymer banknotes.

“While there are some similarities in each of these three arrangements, each of the organisations we are working with bring a unique benefit to our cash management operations,” says Lim. “These agreements have worked very well so far, and we are planning to pursue more government-to-government partnerships going forward, providing that such arrangements are both transparent and sufficiently flexible to allow all parties involved to benefit.”

Safeguarding supply

For more than 100 years, Banque de France has carried out its banknote printing activities at Chamalières in the centre of the European country. In 2022, the French central bank said it was investing €220 million ($224 million) in the construction of a more efficient printing facility in nearby Vic-le-Comte, where its papermill is currently located. Banknote printing operations are expected to switch entirely to the new site in 2026.

“We wanted to make sure we could tap into that expanded printing capacity to secure some portion of our own supply,” says Lim.

Besides improving currency supply, the BSP and Banque de France will also collaborate on currency demand forecasting, staff training, counterfeit analysis, digital payments governance, and research and development (especially concerning digital payments, banknote substrates and high-durability alternatives).

The agreement with Bundesdruckerei also centres on cash supply, but with an added focus on improving banknote security. “Bundesdruckerei has been a very good and reliable supplier of security features for official documents for the German government, [including] national IDs, so we wanted to leverage off this expertise,” explains Lim.

The agreement with Banque de France is for paper substrate and paper-based banknotes; while the arrangement with Bundesdruckerei pertains to the production of polymer banknotes.

“This dual approach is part of our strategy to diversify our supplier base and mitigate risks associated with dependency on a single material. By securing partnerships with both paper and polymer suppliers, we are able to manage the risks in currency supply sourcing we saw in recent years and have a stronger ability to meet future currency requirements, irrespective of shifts in global supply chains or technological advancements,” says Lim.

Shift to polymer

One of the biggest initiatives the BSP’s currency department has undertaken over the past few years is the introduction of new polymer notes. To do so, the central bank enlisted the help of an institution that already has a considerable amount of experience with polymer notes, Note Printing Australia.

The first polymer banknote (the 1,000-piso note, worth about $17) was introduced into national circulation in the Philippines in 2022. There followed a rigorous evaluation of the introduction of the new banknotes before more were released. Polymer versions of 500-, 100- and 50-piso notes were introduced at the end of 2024.

“Along with the issuance of our first polymer banknotes we constructed a polymer evaluation framework to determine whether polymer substrate works for the Philippines, whether we can derive the same benefits that other central banks have seen when transitioning to polymer,” says Lim. “So far, the results have been encouraging.”

She says the evaluation framework has been built around several metrics: incidents of counterfeiting, longevity of the banknotes (paper substrate notes only last around 18 months in the Philippines before they become unfit for circulation; polymer notes are expected to last at least three times as long), cost-effectiveness and hygiene (polymer notes offer a less hospitable environment for viruses to breed than their paper counterparts).

On every metric, the Philippines’ new polymer banknotes scored highly. According to data provided by the BSP, counterfeiting incidents documented between 2022 and 2024 stood at one per 19,000 for paper substrate and at just one in 82 million for polymer.

Part of the agreement with Note Printing Australia involves the training of staff from the BSP, so that they understand all the processes involved in the production, handling, storage and disposal of polymer notes. “That is very helpful for us as we are gearing towards building our own polymer production facility at New Clark City,” says Lim, referring to a new community development project currently in the works.

The Central Banking Awards 2025 were written by Christopher Jeffery, Daniel Hinge, Daniel Blackburn, Joasia Popowicz, Riley Steward, Jimmy Choi, Levente Koroes, Thomas Chow and Blake Evans-Pritchard.