Bank notes to get high-tech makeover

Reviewed By Hitoshi URABE

Article:
"Bank notes to get high-tech makeover"
http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nn20020803a1.htm
The Japan Times

Related Article:
"Plan to redesign bank notes boosts some stocks"
http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20020803a5.htm
The Japan Times

Comments:

Banknotes and coins are what everyone encounters every day, and they have often been considered as a powerful national symbol as well.

On January 1 this year, notes and coins denominated in euro were put into circulation in twelve European countries, which, despite strong contradicting predictions, turned out to be a phenomenal success. In June, the Federal Reserve Board announced that redesigned U.S. dollar bills would be put in circulation by fall 2003.

As if following suite, in Japan, Finance Minister Shiokawa has made an announcement to change the designs of yen notes, as reported in the article. Of the four denominations now in circulation, 10,000 yen, 5,000 yen, and 1,000 yen, which were introduced in 1984, are to be replaced, while 2,000 yen will not be as it was brought in only two years ago.

The reason for the change, according to the announcement, is to cope with increasing bogus banknotes. Recent progress in technology and the dissemination of it has made forging money significantly easier than before. In the case of the U.S., the Federal Reserve Board reports that 39 percent of counterfeit notes found in fiscal year 2001 was computer generated, compared with only 0.5 percent in 1995, a trend that could be assumed similar in Japan. The new notes are to incorporate such fancy technologies as holograms, watermark bars, latent images, and iridescent ink to deceive potential counterfeiters.

Mr Shiokawa, upon revealing of the new banknotes said he hopes that "the new paper money will bring a fresh atmosphere to the public." It must be noted, though, he is also reported to have said that it "will have a simulating effect to the economy." This could be one of his deliberate but fanciful assertions again, pretending naivety to (mis-) lead the public. As anyone with economic or financial background could point out, there could be more cost than benefit involved in such a project.

Immediately after the announcement, stocks of relevant companies soared. Manufacturers of automated teller machines, vending machines, and even the printing ink companies saw their shares rise. Then the industries that are to bear the cost began to express grave prospects; that for each major bank or a vending machine operator, the estimated cost would be in the order of tens of billions of yen. The cost must temporally be borne by the companies, but will eventually be dissipated into the economy at large.

Mr Shiokawa's hope that the new banknotes would refresh peoples' mood, has perhaps been a justifiable motive in political sense to go ahead with the plan. Nevertheless, it leaves a trace of doubt as to whether the plan was thoroughly scrutinized from the economic point of view, whether it would really worth it to counter counterfeiting.