As the European Central Bank recently unveiled their new €5 “Europa” banknote, Michael Alexander of the London Banknote and Monetary Research Centre was on hand for the occasion and spoke to Ton Roos, Director of Banknotes at the ECB about the new note and what’s in store for the remaining EURO notes still to be re-launched.
Amid the historical and fascinating surroundings of Frankfurt’s Archaeological Museum, officials from the European Central Bank unveiled their new €5 banknote to an international audience of dignitaries and the world’s media. This is the European Central Bank’s second series of banknotes authorised for issue to the EURO-zone’s more than 330 million users and the occasion was an opportunity for the ECB to reiterate their commitment to the world of both the stability & longevity of the €URO as well as the safety and overall security of the continent’s premier currency notes. Attending the ceremony was the current ECB president, Mario Draghi as well as the designer of the new note series – Reinhold Gerstetter among other invited guests. After the note’s unveiling, Mr. Draghi approached a large facsimile of the €5 note and applied his signature to a deluge of photos and applause from the audience.
In the last decade plus, the EURO has undergone many tests ranging from the public’s overall acceptance, continued confidence in this unique modern experiment of monetary union – not to mention fiscal and pricing stability and real concern over inflation which some countries did experience. Since before and after its introduction, critics as well as supporters have raised the question as to whether the EURO can really be the “one size – fits all” currency with a clear and unmistakable answer coming from many of the EURO-zone’s southern European economies – as it has been a fiscal and monetary struggle for them which it seems will continue into 2013.
There are still many challenges ahead – many reforms still needed in some of the EURO-zone countries and some within the zone are much further ahead than others in respect to banking reform, fiscal policy, expenditure, not to mention greater labor flexibility. It has been demonstrated that what works in some markets may not work in others and when we see productivity rise in Germany for instance, it may dip in Italy. I know the EURO-zone will be closely watched this year for signs of real economic improvement as this has become a politically charged issue more than just financial. The next time we all gather for a launch such as this, I would imagine that everyone from politicians & decision makers to the ordinary man & woman on the street will have hoped for a much needed improvement.
MA: I think many people were rather surprised to learn that there is going to be a new series of EURO banknotes as it’s been only 11 years since the actual introduction of the present series, so, I’d like to ask why a new series will be introduced so soon and how long will it take for the EURO-zone to see all of the new designs?
TR: Central Banks all over the world in general have a duty to regularly upgrade or change their banknotes in order to stay one step ahead of counterfeiters. Although you have seen the statistics for the amount of counterfeit notes within the euro area and they aren’t too bad, it’s our responsibility to see that it stays that way. It is essential that European citizens have confidence in their banknotes as a safe means of payment. As you know, the technology for reproducing images is rapidly progressing which means that over a period of time we have to upgrade and improve the design and security features on the banknotes. It has been a little over ten years since the introduction of euro banknotes and coins and this note will itself be in circulation for another ten years, possibly longer. It also means that the ECB issues banknotes to the public which are also easy to discriminate between genuine notes and those which are counterfeit without using any equipment – this needs to be done with sight or touch which was the original objective.
MA: I remember the original slogan “Look, Feel, Tilt” during the first launch …
TR: Indeed, and it is one which we still use to educate the public on banknote security features as it proved to be a very successful approach.
MA: Speaking of security, will the newly designed series include the highest €500 value?
TR: Yes. The seven denominations of the first series of euro banknotes will be maintained in the Europa series, including the high denomination banknotes (from €5 to €500).
MA: Have all of the new designs already been chosen or is this project still “fluid” so to speak – that is to say, are the new and remaining designs still to be decided on?
TR: The designs have been worked upon already, including for the denominations to come. There needs to be a coherence or continuation in the series which is very important to this project. However, there might still be some alterations to these designs and this will depend on the final decisions of the security features for various denominations and also if there are any difficulties during the actual production. Mr. Gerstetter, the designer which the ECB commissioned for the design of the “Europa” series, is now working on the design of the next denominations.
MA: As the euro banknotes are some of the most “security conscious” notes produced, are there any newer or updated security measures or features integrated into the new notes that you can share with our readers?
TR: Since the announcement on 8 November 2012 we are focusing on the main features for the public, that is the watermark and the hologram which of course include the image of “Europa” as well as other images. In the hologram on the €5 banknote of the first series, there is a repetition of the euro symbol and the numeral. We noticed that because of these images are continuous, the hologram was easier to replicate. With the new hologram we have four images with different technologies behind each image. The hologram is “Registered” that is to say that the four images always appear on the same position. Therefore, the hologram and its features will be more difficult to copy exactly. As you can see, the portrait of “Europa” is positioned on the upper half where it will always be seen.
MA: What was the idea behind the portrayal of a person or human figure? I think many Europeans who use the euro were under the impression that depictions of persons either mythical or real were going to be intentionally omitted from euro banknotes?
TR: Portraits have traditionally been used in banknotes all over the world, and research shows that people tend to recognize faces intuitively. The use of the portrait was actually a proposal from the designer, who suggested this as early as 2006 or 2007, as he considered the current series simply didn’t have enough of a “human touch”. Thus, the Eurosystem chose to put a portrait of Europa in the watermark and the hologram of the new series of euro banknotes. This is the reason why the new series is called the “Europa” series. This portrait was chosen because it has a clear association with the continent of Europe, the name of our currency, and also adds a human touch to the banknotes.
MA: But why not just go all the way and include her actual portrait on the face of the note in place of the “Arches”?
TR: It was the Governing Council’s request that the themes continue to be based on the “ages and styles” theme with the main design elements being windows, doorways and bridges. Therefore, the present architectural motifs were kept as they are also representative of the continent. But now, “Europa” is yet another element which, as mentioned before, is symbolic of the continent and of the name of our currency.
MA: It’s been on the minds of many and I’m sure I don’t have to tell you, the euro has undergone quite a battering in the last few years with regard to some of the economies within the euro-zone and most especially that of Greece. Now the depiction of the Greek mythical figure of Europa has been included on the new €5 note, can one take this decision – be it deliberate or subtle – that both the euro-zone and the ECB are wholly committed to Greece remaining in the euro-zone or was this simply a coincidence?
TR: The introduction of the Europa series cannot be related to the current financial and sovereign debt crisis or to any macroeconomic and financial situation of the euro area. The introduction of a new banknote series is a completely separate issue. As I mentioned earlier, the decision to select “Europa” was already made years ago so, and is completely separate from any crisis. The Governing Council has not changed their decision in any way and are committed to serving the euro area in any way they can.
MA: What has the ECB observed as being the single most challenging aspect to the issue of the present EURO banknote series in terms of either the security features, the denominations or the actual design of the notes, can you identify any overall difficulties or problems not previously anticipated before their initial issue and does this new series address any of these problems?
TR: That’s a good question; we were not completely happy with the durability of the first issue of the €5 note – and even the €10. In our press release about the new €5, you will note we have tried to improve the durability of the new note with the inclusion of a coating on the surface which will increase its durability. We have carried out extensive external tests and we are confident this will make a difference. The ECB hasn’t had any complaints from the public about the overall quality of the notes which we regularly monitor, and we notice the quality of the notes can differ from country to country but we believe that the increasing durability of the notes will also help in improving the quality across Europe.
MA: Can you offer any information or prediction on the future of this specific denomination highlighted here today, it’s been suggested by some Central Banks that they would like to see the €5 note either in a longer lasting material such as polymer or even see this value as a coin, what are the ECB’S long-term plans for the €5 and could Central Banks themselves issue a practical €5 circulation coin for their own countries if they wished?
TR: Individual Eurosystem Governments of the euro area could decide on the issuance of a €5 circulation coin (or higher value even). Such coin would be legal tender in the issuing country. Outside the issuing country but still within the euro area, there is no legal obligation to accept the €5 circulation coin as means of payment. We find that the public right now prefer the €5 denomination as a note – coins can be very heavy and the note is simply more convenient to carry and to pass on. To give you some figures, by end-December the amount of €5 banknotes in circulation was €1.61 billion (€1.55 billion by end-December 2011 +3.9%). The ECB has also considered the various substrate materials such as polymer and we are aware of the many countries who do use polymer notes, and those which include longer-lasting fibers in paper notes. We have considered 16 to 18 different substrates and carried out quite extensive investigation on this subject.
MA: So, a polymer note IS something the ECB might consider?
TR: This is a subject the ECB and the Central Banks of the euro area have really spent some years on the research simply because we want to be sure of our choice. All of the investigation and tests we found very useful, and in the end we chose the coating now included on the new €5 note. The coating in our view offers the best balance between what we require out of a paper note. Of course we need a note which has a longer lifespan and also specific security features – with polymer, we would have to eliminate those features which cannot be incorporated into polymer, specifically that of a watermark and we would have to choose those measures specific to polymer. There are other issues to consider, including durability and stability of production of these notes as the EURO is produced at several facilities. These printing facilities are bound by strict quality and technical specifications and should be able to produce huge amounts of banknotes (in the billions) according to the same quality and technical specifications. All this considered, this is what prompted us to include the new coating on the €5.
MA: Has the ECB seen a decrease or increase in the use of banknotes of recent and if there has been a decrease, is this attributed to the general slowdown of the EURO-zone economy or does the ECB believe it is due to the increased use of electronic means of payments?
TR: We have in fact seen since the introduction of the EURO, a continuous increase of both the number or quantity of notes used and their represented value. What you can see in general is the “transaction notes” – those of the 5, 10 and 20 EURO – their overall increase is fairly moderate – between one to two percent on an annual basis. For all euro banknote denominations in 2012 we saw an increase of 5.4% in terms of quantity. There is a much greater increase in the use of banknotes which are also used for “hoarding” – those of the 50, 100, 200 and 500. Especially during the bankruptcy of Lehman Brothers for instance, we witnessed a noticeable outflow of banknotes from the euro area and into other countries – again, the higher denominations. To answer your other question, as far as additional means of payments, electronic means are growing, but what we can see is that cash is still important to the European consumer, its use is also growing but its share is becoming smaller in the total amount of payments. Our studies also show that for retail transactions of small amounts, cash is the fastest and cheapest means of payment.
MA: Speaking of increase of a different kind, The Banks of Latvia and Lithuania are preparing to adopt the EUR by this time next year and becoming the 18th and 19th member states of the Euro-zone, does the ECB do enough to denote those countries who are in the Eurozone with regard to adequately including their names on the banknotes –there is hardly any reference to these countries presently, will this or, should this change with future issues?
TR: You have seen the new €5 note (during the launch) and we will continue with this level of inclusion, there is the map of the continent on the reverse which of course includes Latvia and Lithuania. The initials of the European Central Bank on the new €5 banknote is now shown in nine linguistic variants (instead of five). I am sure you noticed the addition of the Cyrillic alphabet for the word “euro” (EBPO) and this because of the entry of Bulgaria as a part of the European Union.
MA: Lastly, I was present here in Frankfurt and at the ECB for the official launch of the euro currency in 2002 and there was certainly a great deal of goodwill shown for the new currency. Do you think there is still the same enthusiasm originally felt for the EURO 10 or more years ago within the EU or does the ECB recognize that its popularity has decreased – if this is the case, what can the ECB do to change this around?
TR: There was only one opportunity to launch the euro as a completely new currency and we will never get that moment back… the enthusiasm was there before and in January 2002. It was a special moment in the history of Europe and the banknotes themselves are a physical example of the currency we can all use everywhere in Europe. It is clear now that there are other things which are important and the public are looking differently at the banking & government debt crisis. I think we are now in a better position in as much as bringing this situation under control and I am sure that we will enter a more confident and energetic period with regard to Europe, the Eurosystem and of course the euro banknotes.
The Directorate Banknotes at the ECB will continue to support the public as we have done over the last 11 years. This is reflected with the increase of banknotes used in Europe every year. I do not think the Directorate Banknotes at the ECB can play a further role in regaining the enthusiasm for the euro. Although it is indeed our duty to safeguard the integrity of our banknotes and, together with my colleagues in the Directorate Communications, to promote the knowledge on euro banknotes among European citizens.
MA: Ton Roos, – Director of Banknotes for the ECB, thank you very much for your time today as the European Central Bank launched the new €5 at the Archaeological Museum in Frankfurt.
TR: Thank you very much!
I would like to thank Ms. Regina Schuller, head of Press and information Division ECB and Mr. Ferdinand Koenig, Directorate Communications /Press& Information Division for their kind assistance and arrangements with my interview, it is greatly appreciated.
All images – photographed by Michael Alexander