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CONTENTS

JULY 2007 I VOL 5 I NO 7

Reproducing Currency News is an illegal infringement of Currency Publications Ltd's copyright.

Euro Countdown for Malta and Cyprus 1

Swiss Paper Maker Goes Public 1

Comment: PreventingCounterfeiting - Prudence or Over Reaction? 2

The Global Role of the Euro 3

Profitable Year for Goznak 3

Royal Mint Coins Profits 4

People in the News 4

Obituary: Werner Reinhart 4

Company and Market Round-Up 5

Euro Counterfeiting Static 6

UK Counterfeits Drop 6

Polymer Symposium in Mexico 6

On the Record: Anwar Galimullaevich Saidnov, National Bank of Kazakhstan 7

New Effects for Security Dots 9

Banknote of the Month: First New Series in 25 Years for Saudi Arabia 10

Note and Coin News 10

New Publications 11

Conference Diary 11

India in Polymer Banknote Trial 12

Euro Countdown forMalta and CyprusThe European Union hasgiven Cyprus and Malta thego-ahead to join the euro-zone in January 2008, bothcountries being deemed tohave met the legal and eco-nomic requirements (theso-called convergence cri-teria) for euro membership.The approval was given byEuropean finance ministerson July 10, following recom-mendations for acceptanceby the European Commis-sion which were endorsed by the Euro-pean Parliament.

The finance ministers also set anexchange rate of €1 to 0.585274 Cypriotpounds and 0.4293 Maltese lira when the

two countries swap their existing coinsand bank notes for the euro.

The arrival of Cyprus and Maltabrings to 15 the countries now participat-

Continued on page 2

Continued on page 12

Swiss Paper MakerGoes PublicThe owners of Landqart - the exclusivesupplier of banknote paper to the SwissNational Bank and the only mill outsidethe European Union to be qualified foreuro paper supply - have launched a suc-cessful IPO on the Toronto StockExchange, and raised C$40 million tofund expansion plans.

Landqart, founded in 1872, wasacquired by US paper and pulp manufac-turer Mercer in 2001 for $2.7m and soldin August 2006, along with the technicaland non-woven wallpaper-base paper

manufacturer Dresden Papier, to theCanadian-based Fortress Group forC$15m, consisting of C$7.5m convertibleloan stock and preferred shares with aredemption value of C$7.5m. The twocompanies – Dresden and Landqart - hadpro forma sales in 2006 of C$123m (ofwhich security sales comprised C$60m)and an unaudited pro formas operatingprofit (EBITDA) of $11.3m. They werefloated together under the name ofFortress Paper.

Mr F Teixeira dos Santos ( Minister of Finance, Portugal), Mr L Gonzi (PrimeMinister and Minister of Finance, Malta), Mr L Papademos (Vice-President, Euro-pean Central Bank) and Mr Almunia (Commissioner for Economic and MonetaryAffairs) at the festivities celebrating Cyprus’ and Malta’s adoption of the euro.

CN No 7 July-07 23/7/07 12:09 pm

CURRENCY NEWS I PAGE 2

COMMENTJULY 2007 I VOL 5 I NO 7w

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Meaningful data on counterfeiting is hard to come by - somecentral banks report routinely on levels of counterfeiting, bydenomination, by value and volume and, in a very few cases, bytype, but most don’t.

And even if they did, there are as yet no common standardsfor counterfeiting data. For example, what is a counterfeit,what is being compromised and with what? There are coun-terfeits so poor that a child would spotthem and others so sophisticated thatonly an expert would detect them, withmany levels in between - all producedvery differently? Without such data, howcan the threat level be properly assessed?

Only by establishing standards and a mechanism to collect,collate and analyse such data can anyone, be it governmentsecurity bodies or the currency industry, really understandnational and global threat levels and trends and, with thatknowledge, take appropriate action. Undoubtedly some cen-tral banks have a good understanding of the counterfeiting oftheir currency, but not of what is happening globally, and asjust as business is becoming global, so is currency counterfeit-ing.

To say there isn’t reporting of counterfeiting at an interna-tional level is not true – all (or nearly all) countries do providedata to Interpol. This, however, is only on the basis that theinformation remains confidential and it is not, therefore, madeavailable other than to law enforcers. And even Interpol admitsthat the quality of the information is patchy, with the differentmethods used in gathering and interpreting the data making itvery difficult to gain a clear understanding of the global scaleof counterfeiting and the major trends and threats.

Yet counterfeiting is the key factor that drives the specifi-cation of banknotes. It determines the level of investment insecurity features and the frequency either with which new fea-tures are incorporated or new designs are issued. It stands toreason therefore, that data on counterfeiting should be com-prehensive, standardised, categorised, current and – critically– available to all those involved in the development anddeployment of countermeasures. Without such data how can it

be possible to make informed decisions about the develop-ment and deployment of new features?

However, is the value of counterfeit notes sufficiently sig-nificant to justify the current upward trend in the level andcost of security measures? Examining the figures of the twomajor currencies, we see $71m worth of counterfeit US dollarswere seized in 2006 out of $780 billion in circulation (0.01% in

value) and €19.5m of euros versus €633billion in circulation (0.003% in value).

Even taking the figures for two coun-tries, Canada and the UK, with relativelyhigh numbers of counterfeit notes, the

value of counterfeits in 2006 respectively were C$6.7m out ofC$48.8billion in circulation (0.014%) and in the UK £7.3m outof £36.91 billion (0.02%).

By comparison, the value and losses caused by other formsof financial crime are on an altogether different scale. The costof credit card fraud, for example, is $60 billion in the US (840times the level of counterfeiting) and £430m in the UK (59times the level of counterfeiting). Losses from product coun-terfeiting, meanwhile, are put at $450 billion by the WorldCustomers Organisation and $600 billion by the InternationalChamber of Commerce. When seen in this context, counter-feit banknotes pale by comparison.

Yet, central banks are now changing their banknotes withmuch greater frequency – every five to seven years – and intro-ducing ever more complex and expensive security features.Does this caution and expenditure demonstrate laudable pru-dence on the part of central banks or are they simply over-reacting? Without detailed global data on counterfeiting andthus trends and threats, it is impossible to answer this ques-tion.

In summary, we maintain there is a need for quality, globalinformation on counterfeiting - what counts as a counterfeit,the level of counterfeiting by denomination and series, num-ber and value, what technologies are being compromised andhow, and basically what percentage of counterfeits present areal threat to the currency. Only then can preventative mea-sures be properly assessed and implemented.

Preventing Counterfeiting –Prudence or Over Reaction?

Counterfeiting is the key factor that

drives the specification of banknotes

Wasilenkoff is quoted as saying, they nowwant to roll out. ‘We'll start with theSwiss franc, and we're in discussions withthe Bank of Canada. It's a transparentwindow that's easy to recognize by retail-ers, but virtually impossible to replicateby counterfeiters’ he said.

Wasilenkoff has also said that Fortressis in discussion with the Bank of Canada,and hopes to win the contract to produceCanadian currency paper in 2009, when

According to entrepreneur ChadWasilenkoff, founder and CEO of thegroup as well as Fortress Paper, the moneyraised will be used to expand Landqart’scapacity and acquire other small nichepaper mills around the world.

The money will also be used to fundR&D. The company has developed apaper with a transparent ‘window’ which,

the contract with Crane is up for renewal.In addition to the Swiss National

Bank, Landqart has supplied banknotepaper for another 25 central banks, aswell as other security papers and sub-strates for passports, ID cards and securi-ty documents. It has just installed ashortformer to supply paper with widethreads, which is expected to increase itsbanknote and high security paper capaci-ty to around 3,000 tonnes per year.

Paper Maker Goes Public... cont’d

CN No 7 July-07 23/7/07 12:09 pm


IN THE NEWSJULY 2007 I VOL 5 I NO 7

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Profitable Year for Goznak2006 was a milestone year for Goznak.On July 12 the organisation was trans-formed through a Decree from Presi-dent Putin into the Federal State Uni-tary Enterprise ‘Goznak’, instead of itsformer status as an association of enter-prises.

The new organisation employs some10,000 people and has four major activi-ties – paper, printing, coins and scientif-ic research - all focussed on security.Apart from banknotes and coins it pro-duces most of the state documentsrequiring security such as passports, IDcards, tax stamps etc.

It also marked the year by producing

the new 5,000 rouble - the largest facevalue Russian banknote.

According to Goznak’s report andaccounts for 2006, which have recentlybeen published, sales increased by36.6% from 19.14 billion roubles($676m) to 26.15 billion roubles($963m). Profit before taxation alsoincreased substantially, from 2.99mrubles ($106m) to 3.37m rubles($124m), an increase of 12.8%. But theprofit to sales margin did slip – from15.6% in 2005 to 12.9% - as growth insales exceeded that in profit.

Banknotes accounted for 19.3% ofturnover, but there is no indication of

export values in this figure. In paper,however, Goznak sold 2.6 times moreabroad in 2006 compared with 2005,with a total of 3,046 tonnes exported tocountries including Indonesia, Nigeria,Belarus, Cambodia and France.

In the security features field, Goz-nak also made notable progress withseveral new security threads, fibres andinks as well as intaglio print, machineread features and anti-bacterial paper.

The mint also had a good year, pro-ducing 10.4% more circulation coins in2006 compared with 2005 and increas-ing its export sales by 30%.

The Global Role of the EuroIn its sixth annual review ofthe international role of theeuro, published in June 2007,the European Central Bankhas concluded that the inex-orable rise in the value ofeuros in circulation is not, asoriginally assumed, due to ris-ing international demand but– instead – due to the finan-cial habits of the populationswithin the 13-country euro-zone.

The value of euros in cir-culation (currently around€630 billion) has exceeded by€100 billion the original forecasts thatwere based on the growth of legacy cur-rencies from 1990- 2001. At the end of2006 the value of euros in circulationpassed that of the dollar for the first time.

According to the report, globaldemand for the euro, which was thoughtto be a main reason for its growth, is lessimportant then previously thought andthat, beyond Europe, the dollar remainsthe currency of choice. Some 60% of thevalue of dollars in circulation is heldabroad. For the euro the figure is 10-15%.

The growth of the euro, both in actu-al terms and compared with the dollar,

has been attributed instead to the factthe payment card usage is less developedin the eurozone. Banknote holdings perperson are almost twice as high in the 13-country eurozone as in the US, the studyshows, while eurozone citizens typicallywithdraw 50% more each time they use acash machine.

In addition, low inflation and lowinterest rates have increased the attrac-tion of holding cash, while the higherdenominations (for which the dollar hasno equivalent) are suitable, and routinelyused, for high value transactions.

The ECB has reported separately,

meanwhile, in its AnnualReport for 2006, on the estab-lishment of an Extended Cus-todial Inventory (ECI) pro-gramme pilot in Asia to facili-tate the international distribu-tion of euro banknotes and tomonitor their circulation out-side of the euro area. In this, itis following the example of theUS Federal Reserve, whichfirst established ECI facilitiesin 1996 to help introduce newcurrency designs overseas,recirculate fit notes, repatriateunfit notes and provide infor-

mation on the use and counterfeiting ofUS currency.

As with the US, the ECB’s ECI pro-gramme enables chosen financial institu-tions to hold currency in cash depots on acustodial basis. Two commercial banksactive in the wholesale banknote markethave been selected to operate one ECIeach – one in Hong Kong and the other inSingapore. Their logistical and adminis-trative counterpart is the Bundesbank.

Based on the success (or otherwise)of the pilot the ECB’s Governing Councilwill decide in 2008 whether or not to con-tinue with the programme.

Volume and value growth of the euro - 2002 - 2007

CN No 7 July-07 23/7/07 12:09 pm


CURRENCY NEWS PAGE 4

COMPANY NEWSJULY 2007 I VOL 5 I NO 7w

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People in the News• The Slovenian Parliament hasapproved the appointment of MarkoKranjec, as Governor of the centralbank.

• Krishna Bahadur Mananda,Deputy Governor of Nepal Rastra Bank,has been appointed Acting Governor fol-lowing the suspension of BijayanathBhattarai on charges of financial irregu-larities.

• Bonnie Schwab, advisor to the Gov-ernor of the Bank of Canada and formerChief of the Banking Department, hasretired after 35 years with the organisa-tion. She will continue to act as its rep-resentative in the Central Bank Counter-feit Deterrence Group (CBCDG) andalso as Chairman of the latter, subject toits needs. She will, in addition, continueher participation on the Bank’s SteeringCommittee for the next generation ofCanadian banknotes, and plans to offerindependent consulting services.

• Ken Niven, of Group 4 Securicor, hasreplaced Nick Buckles as President ofthe European Security Transport Associ-ation (ESTA).

opment on three fronts – an improve-ment in financial performance, structuralchanges in the way the business operatesand a number of changes to senior man-agement (including the chairman him-self and the chief executive).

The Royal Mint's primary responsi-bility is to supply the UK with circulatingcoins. During the year, demand rose by12% to 1.6 billion coins. The mint alsoexports circulating coins and blanks toover 50 countries and during the year sig-nificant orders were completed for Nige-ria, Mozambique and Sri Lanka. Sales ofcirculating coins were £74.4m, of which£36.3m was for UK coins and £38.1m foroverseas.

The UK’s Royal Mint has reported astrong surge in profits following a reviewand restructuring of the business that hasresulted in more than 70 job losses (some10% of the workforce). For the financialyear to March 2007, it posted turnover of£121m (an increase of 5.5% over the pre-vious year) and an operating profit beforeexceptional items of £8.7m – up from£1.1m the year before and its highestlevel for nine years

Retained profit for the year was£1.2m compared to a loss of £1.6m in2005-06. This result was achieved aftercharging £6.4m of exceptional items,which related to the implementation ofthe business improvement programme.

The mint is owned by the UK Trea-sury. After several years of profits in the1990s it started this decade with signifi-cant losses and its return to profitabilityhas been slow. According to its chairmanMike Davies, the turnaround in its for-tunes is the result of substantial devel-

Royal Mint Coins Profits

The Royal Mint accompanied the announcement of its resultsfor 2006-2007 with the unveiling of a new corporate identi-ty that marks a break from the problems of recent years.

Obituary: - Werner Reinhart - 1952-2007Werner Reinhart, a member of the Kurz man-agement board and the man widely creditedwith putting diffractive optically variabledevices (OVDs) onto banknotes, has died atthe early age of 55 after a battle against can-cer.

Werner joined foil specialist Kurz in 1984as a development chemist after gaining hisadvanced degree from Langen University.His early work as a chemist on coatings andadhesives for Kurz’s embossed holograms ledto the development of foils for banknotesand it was in the marketing of these that hecame into own, with Kurz's current position

as the pre-eminent producer of high security diffractive OVDs owing much tohis vision, commitment, determination, patience and charm. The first holo-gram for a banknote, from Kurz, appeared in the late 1980s (on the Austrianschilling) and the company's position was consolidated by the leading role ittook in the specification and subsequent supply of the diffractive OVDs forthe euro. Diffractive OVDs are now used by over half the world's issuingauthorities on some 250 denominations, and Kurz remains by far the leadingsupplier. Werner's contribution to the hologram industry was recognised in2004 when he was selected by the International Hologram ManufacturersAssociation as the recipient of its annual award for business innovation andachievement.

He is survived by his wife Beate and children Antonie and Philip, and willbe sorely missed by them and by his colleagues at Kurz, as well as the broad-er holographic and currency communities. (An interview with Werner featured in the July 2004 issue of Currency News. Thisinterview can be downloaded from the Currency News website -www.currencynews.info)

CN No 7 July-07 23/7/07 12:09 pm


COMPANY AND MARKET ROUND-UPJULY 2007 I VOL 5 I NO 7


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Group 4 Securicor has sold its Frenchcash management subsidiary to LoomisFrance Holdings for €24.5m. Accordingto the company, although the Frenchcash services business has a relativelystrong position in the northern part ofFrance and in Paris in particular, its over-all market share is modest and thereforeunlikely to meet the group’s strategicobjective of attaining the first or secondposition in each of its national cash ser-vices markets.

Loomis already has a strong footholdin France, with a market share of around50%, having acquired the market leaderValiance in 2004 (see CN Vol 2, No 10).That acquisition combined with itsexisting operations gave it, at the time,66 branches, approximately 3,000employees and sales of €215m. The lat-est acquisition will add €46m in turnoverand approximately 700 employees.

NautilusBegins ATMExpansion inUSNautilus Hyosung Inc, the Korean-based ATM manufacturer, has signalledan aggressive expansion policy in NorthAmerica with the opening of new head-quarters in Dallas, Texas and a promiseto outdo its competitors in the retailATM market with better prices and ser-vice.

According to Christopher Cho,senior executive vice president ofHyosung Corp and a board member ofNautilus Hyosung, the company’s goalis to become a global leader in financialIT solutions. ‘We now have a presencein 11 countries,’ he said, ‘but NorthAmerica is the largest and the mostimportant market to us.’

Nautilus Hyosung is targeting theoff-premises and financial institutionmarkets. Its principal competitors inthis sector are Triton Systems, NCREasypoint (formely Tidel) and TranaxTechnologies. The latter was Nautilus’distributor until it decided to manufac-ture its own units in competition, andthe two companies officially severedties in January (see CN Vol 5, No 2).

NorwegianPrintworksClose DoorsThe printing facility of the Norges Bankin Oslo has finally closed its doors, some60 years after the first notes were pro-duced there in the immediate aftermathof the 2nd World War. The decision toclose the printworks was taken back in2002 because – according to the Bank –it was not economically viable to makethe upgrades that the plant needed tomeet future banknote requirements.

Printing ceased at the end of Febru-

Best Year Yetfor BDR2006 was the most successful year inBundesdruckerei’s history, the formerstate-owned German banknote andsecurity printer has stated. Salesincreased by 22% from €215m to€262m. Profits more than doubled from€27.2m to €63m. The company is nowprimarily engaged in passports and IDsystems. Sales to this sector were€183m (up from €144m in 2005). Bank-note sales were up from €40m in 2005 to€47m in 2006.

The results will be good news forBundesdruckerei’s owners, Authentos,

3SI Expands inFrance

G4S SellsFrenchOperation toLoomis

3SI Security Systems (3SI), manufactur-ers of electronic security systems for cashprotection, has announced the acquisi-tion of IBP France, a specialist distribu-tor of security systems for financial insti-tutions. Earlier this year 3SI acquiredECA of Austria, a manufacturer ofsmoke- and dye-based theft deterrentsystems (see CN Vol 5, No 3). IBP,which was established in 1993, is theexclusive distributor for ECA in France.

According to Bart Milissen of 3SIEurope, the acquisition confirms its posi-tion in France as a market leader insmoke and dye security systems, andgives it access to an installed based ofapproximately 1,000 financial branchesequipped with ECA’s SmokeNote systems.

who are hoping to sell the company. Anumber of companies have expressedinterest, including rival German printerGiesecke & Devrient. The longer-termoutlook, however, for banknotes at least,is uncertain given that, once the Bun-desbank opts for centralised tendering,both BDR and G&D will lose their guar-antee of 50% each of production of thecountry’s banknotes.

Nevertheless, with banknotes nowcomprising a declining proportion of thecompany’s turnover (less than 20% in2006), it is likely to be the passport andID side of the business that is of moreinterest to potential buyers.

ary, by which time the Bank had alreadyplaced contracts with De La Rue andOberthur, with deliveries commencingin 2008. It expects to save €1.2m peryear by outsourcing. (An interview with Jan-Erik Johansen fromNorges Bank will feature in a forthcoming issueof Currency News).

CN No 7 July-07 23/7/07 12:09 pm


CURRENCY NEWS PAGE 6

COUNTERFEITING NEWSJULY 2007 I VOL 5 I NO 7

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Euro Counterfeiting StaticIn its bi-annual statement on banknotecounterfeits, the European Central Bankannounced that a total of 265,000 coun-terfeit euros were removed from circula-tion in the first six months of 2007 – anidentical figure to those reported in thesecond half of 2006.

According to the ECB, the number ofcounterfeits compared with the numberof notes in circulation is low - with anaverage of 11 billion notes in circulationin the first half of 2007, the rate is 24 permillion. This it says, coupled with thevolume of seizures and the fact that over95% of counterfeits were recovered ineurozone countries, are all causes foroptimism. 3% of counterfeit seizures

were made innon-eurozoneEU memberstates and only2% from outsidethe EU.

The €50 wasthe most coun-terfeited bank-note in the firsthalf of 2007,accounting foraround a half ofthe total coun-terfeits found in circulation – a jump fromthe previous six months when it account-ed for less than a third. The three mid-

range denominations (€20, €50 and €100)between them accounted for about 85%of all counterfeits.

UK Counterfeits Drop The Bank of England has reported a 24%drop in the number of counterfeit notesdiscovered – from over 505,000 in 2005 to384,000 in 2006. The face value of thecounterfeits fell from over £10m to £7.6m.With some two billion notes in circulation,the number of counterfeits has fallen from252 to 192 per million (but is still eighttimes that of the euro).

The £20, which accounts for 55% of allnotes in circulation, accounted for 95% ofcounterfeits, but the recently-introduced‘Adam Smith’ note is expected to reducecounterfeiting (of the £20) substantially.

The Bank has also reported on bulk

seizures, discovered bypolice authorities in thecourse of criminal investiga-tions and removed prior toentering circulation.Andrew Bailey, ChiefCashier, referred to the suc-cess of a number of suchseizures during 2004 and2005 (in his interview withCurrency News earlier thisyear – see CN Vol 5, No 3),and these have been themain cause for the drop incounterfeits in 2006.

Polymer Symposium The Mexico Regional Polymer BanknoteSymposium was held in Mexico City atthe end of June and officially opened byDeputy Governor Jose Julian Sidaoui.

Pictured here, from left to right, areDr Manuel Galán Medina (GeneralDirector of Currency Issue, Banco deMexico), Odi Batistatos (Research Sci-entist, Securency), Ing Raúl Valdés

Rámos (PrincipalCashier, Banco deMexico), M en CEnrique GuarnerLans (Manufacturing Manager, Banco deMexico), Chris Ogilvy (Chief ExecutiveOfficer, Note Printing Australia) andJoseph Mamo (Director Strategic Plan-ning & Marketing, Securency).

A report of the symposium willappear in the next issue of CurrencyNews.

Euro counterfeits - January 2002 - June 2007

UK counterfeits discovered in circulation - 2002 - 2006

CN No 7 July-07 23/7/07 12:09 pm


ON THE RECORDJULY 2007 I VOL 5 I NO 7


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Continued on page 8

CN: Can you provide some background to theNational Bank and to the Tenge currency? AS: The National Bank was founded fol-lowing our independence, with The Lawof the National Bank of the Republic ofKazakhstan adopted on 13 April 1993.

The Tenge was introduced on 15November 1993 following the decree bythe President of Kazakhstan for its cre-ation. After independence, it was an eco-nomic necessity for us to have our owncurrency, and in a well-defined structure.To begin with the Tenge was denominat-ed in notes of 1, 3, 5, 10, 20, 50, and 100Tenge but, other than the 100, these areno longer in circulation. Notes are nowissued in denominations of 200, 500,1000, 2000, 5000 and 10000 Tenge.Coins were originally denominated in 1,2, 50, 10, 20 and 50 Tyin (1 Tenge = 1Tyin), as well as 1, 3, 5, 10 and 20 Tenge,but the coins now in circulation are the 1,2, 5, 10, 20, 50 and 100 Tenge. CN: When did you start printing your ownbanknotes? And why?AS: By the middle of 1993, almost allthe CIS countries had introduced theirown national currency, with just fourstates - Russia, Kazakhstan, Uzbekistan,and Tajikistan – still using the banknotesof the former Soviet Union. After Russiaintroduced her own national currency in

July 1993, our government and Parlia-ment decided to introduce our ownnational currency. The first banknoteswere printed abroad. In April 1995 thebanknote factory of the National Bank ofKazakhstan began production. The pur-pose of having our own banknote factorywas to minimise the cost of banknoteproduction and give us independencefrom foreign suppliers.CN: What is the volume and value of notes incirculation?AS: The value of banknotes in circula-tion in June 2007 was 843.3 billion Tenge(100 KZT = $0.8). Regarding the vol-

ume of banknotes, we had 1.63 billionnotes in circulation in June. CN: You put into circulation a new series inNovember 2006. What were the reasons for thisnew issue?AS: Primarily as a precautionary mea-sure. The new series has been designedmainly to provide better protectionagainst counterfeiting. We do not cur-rently have a problem - from January toMay 2007, for example, 58 counterfeitnotes were detected which puts the cur-rent rate of counterfeit notes per millionat only 0.0035%. However, the securityupgrade is linked to the country's eco-nomic development because the Tenge isbecoming a regionally important curren-cy. We are also following the recommen-dations of international organizations,such as Interpol, which advises a changeof currency design every five to sevenyears because of the world-wide problemor potential threat of counterfeitingCN: The notes are fundamentally differentfrom their predecessors. Can you describe therationale behind the new design? AS: A completely new style was intro-duced to reflect present-day Kazakhstan,which is a country with an ancient histo-ry but which at the same time is creativeand forward-looking.

High Ambitions for CentralAsia’s New PowerhouseKazakhstan’s new series of Tenge banknotes, introduced last November, set a high standard for design and security – and earnedthe country’s central bank the Best New Banknote Series award in the IACA awards presented at the Currency Conference in May.The country is rapidly emerging from the shadow of its powerful neighbour Russia to become a regional economic and financialpowerhouse. The new series was introduced in part to reflect its new-found status, and in part to provide a formidable defenceagainst any counterfeiting the newly-important Tenge is likely to suffer.

Following the presentation of the IACA awards, Victor Ionov spoke on behalf of Currency News to Anvar Galimullaevich Saide-nov, Governor of the National Bank of Kazakhstan, about the design and introduction of the new series, the structure of currencyservices in Kazakhstan and the future of the country and the bank within the region.

Mr Saidenov is a graduate in economics and political economics from Moscow State University (MSU) and has a masters degreein economics and finance from the University of London. He has worked as a consultant and special officer for the London-basedEuropean Bank for Reconstruction and Development and was appointed Deputy Governor of the National Bank of Kazakhstan from1996 to 1998. For the next two years he held the posts of Executive Director of the State Committee of Kazakhstan for Invest-ment, Governor of the Agency of Kazakhstan for Investment and Vice-Minister of Finance. In 2000 he joined the Halyk Bank ofKazakhstan, first as its Acting Chairman, then as Chairman and also Governor of the Council of Directors. He rejoined the Nation-al Bank of Kasakhstan in 2002, and was appointed Governor in 2004.

(NB A detailed description of the new Tenge series can be found in the December 2006 issue of Currency News).

Anvar Galimullaevich Saidenov

CN No 7 July-07 23/7/07 12:09 pm


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ON THE RECORDJULY 2007 I VOL 5 I NO 7

The obverse side of all the banknoteshas a uniform general image. The reverseis also executed in uniform style, butwith different images depicting differentaspects of our cultural heritage. Thenational symbology that is used providesan artistic connection between the past,present and future of Kazakhstan.

We have taken the opportunity toinclude security features that play a hugerole in preventing the notes from beingcopied. But we have not used portraits.From the security view the role of por-traits has decreased and, whereas in thepast the slightest changes in a portraitwere immediately apparent, with themodern techniques widely available now,portraits can be reproduced with greataccuracy. CN: How did you choose the features and withwhich suppliers did you work?AS: The features were based onseveral factors such as range ofproofing, optimal prices, cost-effectiveness and security. Since1993, we have worked just withDe La Rue and SICPA. CN: Did you need to make any signifi-cant investment for the production ofthe new notes? Do you have the capaci-ty to produce all your needs, or do youneed to subcontract as well? And, if youhave more capacity than you need, willyou be offering your services to othercountries. AS: We didn’t need any signifi-cant investment, although for the launchitself we didn’t have enough capacity. Sowe needed to subcontract some of theproduction and signed a contract for thiswith De La Rue.

Our banknote factory prints othersecurity products for Kazakhstan and weare now in the process of finding bank-note customers to utilise our unusedcapacity. CN: What has been the general reaction to thenotes?AS: The new banknotes have beenreceived positively, with the exchangehappening a little bit faster than we fore-casted.

As we had predicted, the public hasbeen divided into active, passive andnegative groups on the basis of age.Young people, who are generally morereceptive to change, were happy to usethe new banknotes from the day of

launch and they did not hesitate tochange their old banknotes. Older peo-ple, more accustomed to stability andslower to accept change, were more neg-ative about the change in design. Themajority of people were happy with thechange as it was understood to be a pre-ventive measure by the central bankagainst counterfeiting.

Our media coverage played a positiverole in training the public about the secu-rity features. We found however, thatsome features needed to be explained inmore detail to some target groups such asolder people, children, and cashiers.CN: Can you describe in more detail the cam-paign to publicise the new notes? From theexample of which country or countries (if any)did you base this campaign? AS: The issue of a new series of bank-notes is a very public event that affectsthe whole country. That was why our pri-

ority task was media coverage. Theannouncement about the issue of thenew series was made a year ahead of theevent. During the course of that year weundertook mass media activities in theform of interviews for newspapers, radioand television, as well as articles aboutthe designs.

At the same time we prepared educa-tional videos and publications. For exam-ple, leaflets with images of the new noteswere distributed throughout the countrythree months before the changeover andpublic education programs were shownon television until the end of November.Brochures detailing the main securityfeatures were distributed two weeksbefore the launch and detailed bookletsfor cashiers were available immediatelyafter the launch.

A special website specifically for thechangeover was launched in the summer.

Visitors could find all the necessary infor-mation about the notes and send in ques-tions for feedback. Most of the questionsfrom the website concerned the designsof the banknotes and the reasons for thechangeover.

We reviewed examples from countriessuch as Turkey, Azerbaijan and, of course,Europe with the introduction of the euro. CN: With a landmass of 2.7 million km2,Kazakhstan is the ninth largest country in theworld by area. How, in a country of this size, isdistribution handled?AS: The National Bank has 16 branchesthroughout the country. These branchesdistribute currency to the commercialbanks, and these then distribute curren-cy to their branches. In this way note dis-tribution involves the private as well asthe public sector. CN: Can you describe the changeover – partic-ularly given the size of the country? For exam-

ple, how were the new notes (and coins)distributed in advance? How impor-tant are ATMs and vending machinesand how were they included in thechangeover exercise?AS: Because of the large area ofthe country and the long dis-tances between cities and othercenters of population, one of themost important tasks was distri-bution of the new notes to allregions for simultaneous launchthroughout the country.

Railway transportation wasfrom Almaty, where our securityprinting works is based. Rail is

the best mode of transport for the com-bined reasons of safety, cost and speed.But distances and timescales had to betaken into account because, for example,it takes three days nonstop to reach themost remote western city from Almaty.That is why delivery started as early asthe first quarter of 2006 when the firstoutput of new notes was ready.

Commercial banks are the main cus-tomers of the central bank and they arealso responsible for delivery of cash tosmaller cities and villages, so the com-mercial banks played an important role inthe preparations.

In advance of the launch, we provid-ed the banks and ATM servicing compa-nies with new notes to enable them toadjust their ATMs for the new designnotes. The banknotes were made avail-

High Ambitions... cont’d

Continued on page 9

Pictured celebrating their IACA award at the Currency Conference are, from left to right,Andrey Balakhmetov (Deputy Head of Funds Planning, Division of Cash Department),Zhanna Adilbekova (Interpreter), Daurenbek Mazhitov (Director of Cash Department),Anwar Saidenov (Governor) and Mendybai Alin (Chief Designer).

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High Ambitions... cont’d

able in the summer on a ‘return orrefund’ basis. We also made clear therules of the exchange exercise – one newnote was equivalent to one old note andno fee was to be charged for theexchange. If a bank broke these rules,they were fined the equivalent of aroundUS$400.

Branches of the National Bank andthe commercial banks also contributed tothe success of the launch. They replacedthe old banknotes with the new and weonly registered one instance of a com-mercial bank cashier charging for theexchange.CN: What issues (if any) do you have with notequality? Will this change with the introductionof the notes?AS: The main issue that we have is con-formity of all notes to ATM require-ments. This will not change with theintroduction of the notes.CN: The country is fast-growing in terms ofboth wealth and strategic importance. Where doyou see yourselves and the Tenge in the next tenyears?AS: One of the short term aims of Kaza-khstan economic policy is to achieve aconvertible Tenge.

The banking sector in Kazakhstan isthe largest and most rapidly- developingsegment of the country’s financial sys-tem, and is expanding in the CIS. Longerterm plans include the further growth ofqualitative and quantitative parameterswithin the sector, the expansion of themarket for payment cards, the introduc-tion and development of various types ofbanking services, the perfection of riskcontrol systems (eg. the introduction of

New Effects for Security DotsHonnorat Recherche & Services(HR&S), the security patent specialistand developer of the a-dots authentica-tion feature, has extended the range ofeffects that this offers. A-dots, like fibres

or planchettes, are added to paper pulpand appear in the finished paper of prod-ucts such as banknotes as microscopicovert or covert opaque, iridescent or ther-

mochromic dots. Their security comesfrom the various characteristics theyexhibit under different sources of light,and also the diversity of the size of eachdot and their random positioning within

the paper. Different levels of security canbe generated, and these can be furtherenhanced by combining different types ofdots within the same substrate.

According to HR&S, developments inthe manufacture process for a-dots haveled to the creation of new effects whichcan be combined to offer multiple effectsand customised for each application or

user. One such example,shown here, exhibits severaleffects according to the typeof light under which it isviewed. In daylight the dotsare invisible; in short wave(254nm) UV light they appearwhite, under long wave(360nm) UV light they appearred and, in phosphorescentlight, blue.

According to HR&S, a-dots can be used either as an

alternative or in combination with securi-ty fibres, and each of its customers isguaranteed their own unique version.

Natural light Under Short Waves (254nm) Under Long Waves (360nm) Phosphorescence

Basel II) and of bank legislation, andimprovements in the transparency ofbanking activities.

In this way, we will be able to imple-ment our strategic purpose of making theRepublic of Kazakhstan a key regionalfinance centre that will ensure the effec-tive redistribution of financial flowswithin not just the CIS region but all ofCentral Asia.

The Tenge has a new symbol, following a competition by theNational Bank to design a graphic representation that wouldsimplify financial documentation, make the Tenge easilyrecognisable and consolidate its position in international mar-kets.

The winners of the competition were Sanzhar Bahytovich Amerhanov andVadim Muhamedzhanovich Davidenko for their use of the symbol of the ancientTurkic alphabet that provides both the designated T sound and also denotes theword Tengri, or sky, which was a deity and sacred to the Turkic people.

According to the bank, the symbol has a historical basis that others lack (todate, only the dollar, pound, yen and euro have symbols, although Russia is plan-ning its own for the rouble in the near future – see CN Vol 5, No 5). This, it says,personifies the unification of modern Kazakstan with its ancient Turkic roots andwill provide a link between the country’s ancestors and its descendants.

The New Symbol forthe Tenge

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First New Series in a Quarterof a Century for SaudiIn May 2007, the Saudi Arabia MonetaryAgency (SAMA) issued the first twodenominations of the Saudi Royal (SR)in a new series of banknotes – the fifthsince the foundation of the country in1932 and the first redesign in over 20years. The SR 50 and 100 issued in Maywere followed by the SR 5 and 10 in July.The new SR 500 will follow in Septem-ber and the SR 1 in December.

Being a strict adherent of IslamicSharia law, the Kingdom of Saudi Arabiadoes not treat those caught counterfeit-ing lightly – it executes them – whichone might think would preclude theneed for high level security features! Notso, and the security features increase innumber and complexity the higher thedenomination in this new seriesdesigned by De La Rue, who also wonthe tender to print the notes.

The new series includes familiarimages such as that of Saudi Arabia’sfounder, King Abdulaziz, and the holysites of Mecca and Medina. But the R 50

also makes a political statement by carry-ing images on both side of Muslim holysites in Jerusalem in a move, say Saudiofficials, that reflects the Kingdom’s con-

cerns for the plight of the Palestinians.All the notes, other than the SR 500,

feature a portrait of King Abdullah (theportrait on the SR 500 is of King Abdu-laziz). And all the notes include multi-tonal watermarks with electrotypes aswell as windowed security threads and

fibres. They are printed two side intagliowith the exception of the Riyal 1, andexhibit a number of print featuresincluding microtext, fluorescent andinfrared inks, rainbow printing and a see-through feature. The notes also featureCornerstone®, De La Rue’s patentedwatermark system positioned on the fourcorners of the banknotes to reduce thetendency for the notes to bend at thecorners and become ‘dog-eared’.

The three lowest denominationsinclude a narrow, windowed, detectabledemetallised security thread while thethree highest denominations all havestrong anti-counterfeiting features, suchas registered panel watermarks with wideelectrotype numerals, D-OVD patches,OVI™ , iridescent ink and Starchrome™thread - a wide, windowed, machinedetectable, colour shift security threadwith de-metallised cleartext.

In common with other currencies thebanknotes also have tactile features forthe visually impaired.

• The Czech National Bank has issued anew version of the 2000 Czech Koruna(CZK) with improved security features.The note was first issued in 1996 andmodified three years later. The latestmodifications are, according to the bank,part of a long-term programme to improvethe security of Czech currency. The newfeatures include an electroytpe withinthe watermark, an irridescent stripe and acolour shift thread.

• Brunei and Singapore have marked 40years of twinned currencies by launchinga pair of $20 polymer commemorativenotes bearing their national icons. TheCurrency Interchangeability Agreementcame into effect in June 1967 and makesthe dollars of each country legal tender inthe other.

Before 1967, Brunei, Singapore andMalaysia were in a monetary union with a

common currency. But when the unionfell apart, each country issued its own cur-rency. Singapore and Brunei then signedthe pact which, according to the former’sPrime Minister Lee Hsien Loong, hasstood the test of time and has benefitedboth countries in terms of trade, stabilityand investment.

In a ceremony held in Brunei to intro-duce the notes and celebrate the anniver-sary of the agreement, he said that hehoped the $20 notes will heighten aware-ness of the currency pact and its benefitsamong the younger generation.

• The Hong Kong Monetary Authorityis undertaking a trial of $10 polymer notesto judge their performance against theirpaper counterparts. 50 million of thenotes are being issued and the trial willlast for two years. The new notes are sim-ilar in design to the paper notes, but have

Note and Coin Newsadditional features specific to polymer. Apaper version of the $10 was introducedin 2002 to co-circulate with the $10 coin.It is the only note in Hong Kong to beprovided by the issuing authority. Theother denominations are all supplied byHong Kong’s three different note issuingbanks.

• The Royal Monetary Authority ofBhutan has completed the issue of itsnew series of banknotes, a process thatbegan last November, with the issue ofnew 10 and 100 Ngultrum notes. Thenotes are varnished for durability andinclude features for the visually-impaired.

• The Bank of Albania is planning theintroduction a new high denomination20,000 Lek at the end of 2007, and thereplacement in 2008 of the 100 Lek witha coin.

CN No 7 July-07 23/7/07 12:41 pm


PUBLICATIONSJULY 2007 I VOL 5 I NO 7

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ATM Security in the AmericasSeptember 11-13, 2007 Las Vegas, USAwww.atmiaconferences.com

The 2nd Authentication ConnectionsForumSeptember 18-20, 2007 Minneapolis, MN, USAwww.acf-acd.com

ICCOS 2007 September 23-26, 2007, Las Vegas, USAwww.iccos.net

ATM Sec 07October 8-9, 2007 London, UKwww.atmiaconferences.com

IntergrafOctober 10-12, 2007 Nice, Francewww.intergraf.org

6th Asian High Security Printing Conference October 30-November 1, 2007 Hong Kongwww.cross-conferences.com

Diary - Exhibitions, Conferencesand Meetings

Above is a selection of the main events taking place over the next few months. A com-prehensive list of both industry-specific andindustry-related events throughout 2007 is nowavailable on the Currency News website –www.currencynews.info

The Bank for International Settlements’Committee for Payment Systems haspublished its latest report entitled ‘Statis-tics on Payment and Settlement Systems inSelected Countries’. This is published annu-ally and provides statistics on 14 coun-tries, including the euro area. The reportcovers the period 2001-2005 and includesa wealth of data per country on notes and

coins issued and in circulation, financialinstitutions and settlement systems, dif-ferent types of payment cards and pay-ment systems, as well as the volume andvalue of transactions per these cards andsystems.

The report can be downloaded fromthe BIS website – www.bis.org.

Payment Statistics from BIS

The European Central Bank has pub-lished ‘How the Euro Became Our Money – AShort History of the Euro Banknotes andCoins’. The 94-page illustrated reportcontains seven chapters on preparation(covering the ten years prior to the euro’s

introduction); design, production, thechangeover, communication, security fea-tures and current and future develop-ments. It can be downloaded from theECB website – www.ecb.int.

A History of the Euro

The latest Currency Patent Database,for 2007, has now been published. Pro-duced by patent specialist HonnoratRecherches & Services (HRS), thedatabase covers eight years and 1,845patents in the field of banknote materi-als and technology (an additional 360over the 2006 database).

The database contains detailedinformational patents relating to bank-note substrates and features; produc-tion techniques and equipment;authentication devices; deposit, dis-

pensing and recycling systems; destruc-tion, disinfecting and anti-theft equip-ment.

According to HRS, it is becomingincreasingly difficult for companies tokeep up with the growing number ofpatents that are published in the secu-rity sector each year (there have beenover 1,450 in the past four years alone),which is why the database has beendeveloped.

It is produced on DVD and the datais searchable by a wide variety of fields,

Banknote Patent Information

The Bank of Canada has published a 123-page full colour book in English andFrench on the art and design of Canadiannotes. The book covers notes from 1685to the present Canadian Journey series

The book tracks the history, from theearliest ‘card’ money (ie. playing cardscut to different dimensions to differenti-ate denominations and signed by colonialofficials) through to present day and pro-

vides descriptions of printing technolo-gies used over the years, as well as pic-tures of completed engravings that werenot used in the notes. Enlarged images ofthe portraits on Canadian notes over theyears and the engraver responsible arealso shown.

Copies of the book, priced at C$25,can be ordered from the Bank - [email protected]

Art and Design inCanada

including product or technology cate-gory, patent index, country and patentnumber, publication date, applicant,title, priority date and number andequivalent patents It is also possible tosearch the database by key word, man-ufacturer and application.

Information on the price of the Cur-rency Patent Database, updates andalso the Currency Patent Bulletin canbe found at www.currencynews.info(NB there is a 15% discount for Cur-rency News subscribers).

CN No 7 July-07 23/7/07 12:09 pm



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PPuubblliisshheerr:: Currency Publications Ltd(a Reconnaissance International/Currency Research company)

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Currency News is published twelvetimes a year to report on regulatory, com-mercial and technical developments ofimportance to those specifying, issuing, producing, handling or processing currency.

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No part of this publication may be reproduced,stored in a retrieval system or translated in any formor by any means – electronic, mechanical, photo-copying, recording or otherwise – without the priorpermission of the publishers. While every effort hasbeen made to check the information given in thispublication, the authors, editors and publishers cannot accept any responsibility for any loss or dam-age arising out of, or caused by the use of, such infor-mation. Opinions expressed in Currency News arethose of the individual authors and not necessarily those of the publisher.COPYRIGHT 2007. ALL RIGHTS RESERVED.

India in PolymerBanknote TrialAccording to reports in The Times ofIndia, the Government and the ReserveBank of India have decided to accept alimited circulation trial of Guardian®polymer banknotes from Securency.

The decision, which some years agowould have dismayed the banknotepaper industry, will come as no surprisenow, as like other large central banks,the RBI is bound to be consideringdurable substrates for some or all of itsdenominations to reduce costs. In suchcircumstances, polymer is now comparedagainst the new durable and anti-soilpaper substrates developed in recentyears specifically to meet the challengeof the former’s durability. Nevertheless,India is the world’s largest market forcommercially made banknote paper,with the country importing about 17,000tonnes of cotton banknote paper peryear and any threat to this demand willbe unwelcome news to the Europeanbanknote paper makers, India’s tradi-tional suppliers.

This however, may not be the onlythreat in India for the European paper

industry, for the two bodies associatedwith banknote production in India(Security Printing and Minting Corpora-tion of India and Bharatiya Reserve BankNote Mudran, subsidiaries of the Min-istry of Finance and the Reserve Bankrespectively), are both said to be consid-ering the possibility of building a newpaper mill in India. This will supple-ment the existing mill, Hoshangabad,which normally manufactures some4,000 tonnes a year of the low denomi-nation paper for Indian currency, a frac-tion of the country’s overall require-ments.

The one million note circulation trialof the Rps 10 is being printed at theNote Printing Australia facility inCraigieburn, Victoria, and is expected tobe put into circulation within the nextthree months. But such a limited circu-lation trial will have to be well designedand carefully managed to provide anymeaningful information. A further threatto the trial could be that the polymernotes attract significant collector’s inter-est and disappear from circulation.

Charter Subscribers of Currency News

Euro Countdown... cont’d

ing in the eurozone. Both countries werepart of the wave of ten new membersthat joined the EU in 2004. Slovenia,which joined at the same time, adoptedthe euro this year – and the Commissionis hoping that its successful introductionof the euro will be mirrored in the two

new member countries. Both have lessthan six months to make the preparationsbut each already has a changeover plan inplace. Both, like Slovenia, will be adopt-ing the ‘Big Bang’ approach wherebythere will be a minimum changeoverperiod with dual circulation.

The next country likely to adopt theeuro is Slovakia, in January 2009.

CN No 7 July-07 23/7/07 12:09 pm

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