Public Consultation on Local Banknote Recycling
Code of Conduct for the Authentication of Machine-Dispensed Banknotes
Extract from a speech by Chris Salmon, Executive Director for Banking Services and Chief Cashier of the Bank of England at the launch of the public consultation for the Code of Conduct for the Authentication of Machine-Dispensed Banknotes.
25 February 2013:
"Today, the Strategic Cash Group is launching a public consultation on a new industry policy for banknote authentication. This is in response to a banknote recirculation model which has developed in recent years:
Local recycling occurs when a banknote tendered by one customer in, for example, a bank branch or shop is then used to refill cash dispensing machines e.g. ATMs or self-service checkouts, and so then acquired by another customer. This differs from using banknotes authenticated by wholesale cash centres to refill these devices: a model which has provided robust authentication and quality control for banknotes for many years.
Local recycling has gained popularity abroad, particularly in Japan and parts of Europe. It has the potential to be a useful supplement to the wholesale cash model in the UK, in some circumstances increasing efficiency and flexibility. But without appropriate controls it could also reduce the extent to which banknotes are authenticated.
Robust authentication underpins the public’s continued confidence in the currency: the public need to trust that the banknotes they receive are genuine. This starts with the sophisticated security features which are built into the banknotes themselves. But it also depends on these security features forming the basis for authentication and handling practices throughout the cash cycle. Practices which the entire cash industry need to work together on. The Code of Conduct for the Authentication of Machine-Dispensed Banknotes will deliver will deliver robust local recycling by addressing the change in how, where and by whom a banknote may be authenticated.
Many stakeholders already adopt good practice on this area. We now want to ensure that there are adequate processes in place right across the industry to make sure counterfeits do not start to recirculate to the public through ATMs and self-service checkouts, while also enabling the cash industry to benefit from the potential efficiencies of local recycling....."
The full speech may be found on the Bank of England website at: www.bankofengland.co.uk/publications/Pages/speeches/2013/637.aspx
The Code Consultation document can be found on the UK Payments Council website at: www.paymentscouncil.org.uk/what_do_we_do/cash/cash_recycling_consultation/
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