Future Banknotes/ Future Technology Presented by Gonzalo Santamaria MD – EMEA, Latin America & Caribbean Currency Research Moscow Conference, April 2012

AGENDA  Defining ‘Future’: will it even exist?  Near term developments for Banknotes  ‘Blue sky’ ideas for Banknotes  Developing technologies  Possible future directions for technologies  Conclusions Future Banknotes Future Technology

-WHAT OUR PEERS SAY- In a recent poll taken at ICCOS Miami (March 2012), Currency Professionals from Central Banks, Commercial Banks, Cash Management Companies, Retailers and Casinos results were:  79 % said cash usage would continue to grow for 10 years and 70% said it would continue to grow for 20 years  60% stated cash would still be a dominant form of payment in 20 years Future Banknotes

 In our business lifetime we will see a continued growth in banknotes.  But what will they look like?  Our Prediction… no major changes to look / feel in our generation! Boring we know ! Future Banknotes

Recent developments include :  Longer life substrates  Polymer and hybrid substrates  Self verifying banknote i.e. “window lenses”  OVI’s, Motion Thread, clear windows  Third level covert features  Social media consumer information  Serial number recognition All will be developed more in the next few years Future Banknotes

Looking at just two technological areas:  Serial number reading, today it’s possible to read and verify an individual banknote over the internet using existing infrastructure (Phone and network), no political will to do so. Perhaps the future will have no serial numbers but unique DNA for each individual note.  Today windows in banknotes can be used to fold back and self verify the banknote, tomorrow maybe 3D lenses in the note! Future Banknotes

Longer Term (10 to 20 years) Developing new authentication features and techniques  Using smell or hearing (already touch and sight) Taste? Not likely! A talking banknote “ are you sure you can afford that!”  Banknote DNA  Developing the new real covert feature (think M Feature) that can be easily detected at PoS but remains covert. Future Banknotes

Longer term other aspects might also be considered:  One standard banknote base, country customization  Round banknote “coins”  Smart banknotes that turn on and off value (greatly reducing insurance and transportation costs) after point of sale use, no need for secure storage or transportation!  3D banknotes (3D glasses not needed!) Future Banknotes

Short term :  More third party detectors : development of standards for interfaces. (like CSI Universal Detector Interface 1995)  More point of sale (PoS) detection for both authentication and for monitoring (ICS 2009) of fitness and authentication  Serial number verification, recording at PoS, tracking and verifying via internet Future Technology

Emerging Smart phone applications Smart phone verification and specific features developed for smart phone authentication  Smart phone verification of intaglio  Smart phone verification micro perf, micro print  Smart phone serial number reading Future Technology

 More efficient sorting centers direct from commercial deposits to ATMs (CSI 2000) and unfit destruction  More retail automation, Banks owning cash at retailers  More Cash Management Companies outsourcing from Bank ( Commercial and Central) processing Future Technology

 Destruction at Point of Sale (politics not technology)  Non contact counting and verification (optical and near field magnetics)  Central Banks issuing non banknote currency! (smart cards, stored value cards) …. But that is another presentation! Futuristic Technology

Conclusions: The inventor of the pencil did not invent the pen! Will we in this room see the next “currency” coming before it is here?  For the foreseeable future banknotes will continue with relatively minor improvements and enhancements to keep ahead of counterfeiters and to reduce production costs.  The technology will also not leap forward as a revolution, but instead evolve with efficiencies  The big leap will be smart banknotes and smart phone applications- how they will change the playing field, but that is still some time away. Future Banknotes Future Technology

THANK YOU ICCOS: CURRENCY CONFERENCE: THE COIN CONFERENCE: CURRENCY NEWS: IACA: Future Banknotes Future Technology