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Plastic Banknotes: Faulty Reasoning, Out of Tune with the Times

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The environment is now a key issue in the policies of many governments around the world. Recycling and sustainability are growing trends, with the tactless disposal of plastics no longer being considered an acceptable practice.

Contrary to this swelling environmentalism, some countries are adopting plastic banknotes, arguing that their longer lifespan is good for the environment, and that they are more difficult to counterfeit. Not only are these qualities up for debate, such a line of reasoning could have terrible consequences for efforts to rein in the worst aspects of climate change.

The National Geographic recently highlighted the work of researchers who observed that of the 8.3 billion metric tons of plastics that have been produced by humans, 6.3 billion of them have become plastic waste. Worryingly, only around nine percent has been recycled.

“We all knew there was a rapid and extreme increase in plastic production from 1950 until now, but actually quantifying the cumulative number for all plastic ever made was quite shocking,” explained Jenna Jambeck.

This is just one issue among many which together represent a severe risk to the planet. The 2016 Paris Agreement is an example of broad, international engagement aimed at reversing the damage.

Many businesses and investor groups increasingly consider environmentalism on a par with profit generation. And indeed, agricultural and manufacturing practices in many regions of the world are also changing rapidly as our global society adapts its processes in order to save the environment.

Despite this trend, there are a number of countries insisting that changing to plastic money is still a good idea.

Adopters of plastic banknotes.         Notably, banks responsible for significant economies, such as the US Federal Reserve, the Bank of Japan, and the Bank of Thailand - to name only a few - to this day remain unconvinced by the notion of plastic banknotes.  

And yet, Australia has been using plastic currency since the late 80s. Canada has started using it as well, and the UK made a number of headlines when it began the switch in 2016.

While there is a staunch camp in the industry who argue that banknotes printed on plastic are more secure and better for the environment, this is not the opinion of everyone.

In Nigeria, this surely is not the case. The country tested plastic notes in 2007, but the result was far from satisfactory: “The ink on the notes faded under the blazing sun experienced year-round in the African country — and Nigerian bus conductors and other merchants began rejecting the blurry notes,” according to reportage by the BBC.

The Bank of England has been making moves to use plastics increasingly for its lower denomination notes, starting with the £5 note in 2016. Some have asked if The European Central Bank (ECB), the fiscal heart of the most environmentally conscious group of nations in the world, would make similar moves.

The ECB, however, has made clear that it does not feel that the use of plastic in money is the best option. Representatives of the ECB state clearly that sustainably-produced cotton-paper is still the way do it.

The reason for this was put down to environmental, cost and security reasons.

Fundamentally, the issue is environmental.            To make sense of the subject, the supposed advantages of plastic have to be looked at far more critically. While, yes, plastic banknotes can last as much as 2.5 times longer than their paper equivalents, this does not mean that they are better for the environment as, for instance, the Bank of England insists.

According to Dave Keating, a contributor for Forbes, Evergreen Finance London produced a report which “found that the new polymer five-pound notes release […] almost three times more than previous paper notes. That, despite their longer lifespan, correlates to 2.76kg of extra C02 emissions over lifetime.”

The security requirements of banknotes also mean that there are limitations to how much benefit can be derived from longer lasting notes anyway.

On top of this, claims that plastic money will be easily recycled do not hold water. A study being prepared for publication in September has found “that most of Europe’s plastic exported for recycling – mainly polyethylene – is ‘not recycled at all.’”

Instead, the authors say, plastic waste shipped to Asia routinely ends up in landfill or in the ocean. Studies like this highlight that while the winds of society are blowing one-way, certain bankers are pointing their sails in the wrong direction.

“We as a society need to consider whether it’s worth trading off some convenience for a clean, healthy environment,” industrial ecologist, Roland Geyer says. “For some products that are very problematic in the environment, maybe we think about using different materials. Or phasing them out.”