7/29/2019 90722 Pro Memoria

1/6

Trends and Tendencies in Banknote Production

Pro memoriae

7/29/2019 90722 Pro Memoria

2/6

Trends and Tendencies in Banknote Production

Prior to the 20th century, bonds and banknotes were manufactured in a spirit of artisan, handcraftedfabrication in a more or less semi-industrial process which, in turn, yielded a wide variety of finishedproducts on an equally wide variety of substrates in accordance with the traditions, cultures, habitsand technical capabilities of geo-political zones or individual countries. That multitude of individualsolutions to the task of creating a means of payment did not actually foster the use of banknotes asan additional payment instrument in competition with precious metals and coins.

The Industrial Revolution and the growth of international trade triggered the need for a certaindegree of standardization of the banknote as a mutually recognizable and acknowledgeable,universal proof of value. After World War II, it was the multi-color intaglio process based onprevious inventions by Orloff and Serge Beaune, promoted by Gualtiero Giori and cast in functioningmachines by Koenig & Bauer that led to more standardized, wide-spread and modern banknotes, aswe know them today.

Giori's KoeBau set of machines revolutionized the manufacture of banknotes by achieving a hithertounknown economy of scale through the simultaneous printing of three or more colors fromengraved steel plates in a modified rotary gravure process. But, compared to the old flat-bedcopper/steel plate printing machines that allowed for almost any artistic freedom of design and size

of a banknote, the new process came with some limitations. This applied to the banknote formatspossible, the ink to be used and the way of engraving and plate making. Due to an extremelyintelligent marketing, sales and patent regime, Giori succeeded to establish his intaglio process asthe industry's standard, hardly troubled by any major competitor. Only from the 1990ies, theJapanese corporation Komori succeeded in installing some few machines for internationalcustomers.

Central Banks, however, soon found themselves exposed to new challenges. The rule of economyconquered central banks. Governments, although appreciating a smooth and hitch-free fuelling oftheir economies with cash, exercised pressure on their central banks to reduce the cost of cash atall stages from manufacturing, counting and sorting to the disposal of withdrawn notes. The intaglio

ink layer thickness decreased gradually, with the current issue of the European Central Bank beinga master example of that philosophy. Circulation endurance became an issue, and Australiaexperimented on the plastic banknote.

The arrival of new, cheap and simple scanning and reproduction technologies constituted anotherchallenge. Old, classical security features in banknotes and the immaculate execution of artisticdesigns lost their importance. Instead, the security of a banknote shifted into the paper with moresophisticated watermarks and security threads, and new anti-copying or optically variable securityfeatures became standard in banknote design.

The Australian plastic substrate gained ground (and lost it again) in some countries. But the

marketing strategy of the Australians shelved the focus of discussion even more towards enduranceand economy aspects. As contended as the Australian product may be, it made the banknoteprinting industry more competitive and forced the established banknote paper manufacturers "to dosomething" about the subject of longevity and endurance of circulating notes.

7/29/2019 90722 Pro Memoria

3/6

Today, the banknote printing industry has become more competitive and transparent than everbefore in its history. The once so monolithic and secretive industry is in a permanent exchange and

discussion fuelled by www. and a number of publications, conventions and meeting places unseenand unthinkable before. New players have entered the industry enhancing competition or evenoffering completely new solutions. Never before in its history has the banknote printing industryavailed of a greater number of suppliers offering a greater variety of substrates, ink, machinery,security features and advice than today.

The majority of central banks are operating in the conflict between economy and security of theirbanknotes. In this tension field, use of experience and methods of analysing the optimum cashmanagement have been refined, and central banks have developed scientific means to optimizesecurity and cost of the cash instruments issued by them. Technical specifications, security features,purchasing policies and all other aspects of the production have been thoroughly optimized for each

individual denomination against their effect on economy and security. As a result, a morepronounced specialization and differentiation of individual denominations has been observedrecently in terms of security features and manufacturing cost.

Based on these developments and on recent trends and tendencies, we have tried to draw someconclusions and dare to raise the following theses:

1. The necessity to consider economical aspects in design, manufacture and circulation of cashinstruments will persist at a level not below the present.

2. Differences between denominations in terms of security/technical and economicalrequirements will become more and more pronounced under the conflict of security vs.

economy. This trend will culminate in a kind of low-denomination-banknote, which willreplace what are maybe the highest coin denomination and some low to medium banknotedenominations today.

3. In most countries, the new segment of the low-denomination-banknote will represent thebulk of banknote production.

4. The clock cannot be turned back: A once established competitive and transparentenvironment cannot be reversed any more, but will develop into an even more pluralisticand competitive one.

5. This will result in the availability of a growing variety of machines, materials, securityfeatures, and processes that will enable banknote printers to optimize production according

to denomination-specific requirements.

The printing and finishing equipment presently marketed by KBA Giori are standard equipment forthe manufacture of banknotes, as we have known them for the past 50 years, with emphasis on ahigh quality in the execution of intaglio printing. The low-denomination-banknote, however, willrequire a printing equipment that has an emphasis on the economy of the initial investment as wellas the economy of operational cost for the printing of adequately designed, secured and executedbanknotes in very high volumes.

For this segment, we regard web-fed presses an interesting alternative. In the field of multi-colorform printing by different printing processes, the web-fed press offers speed, output and flexibility

unmatched by any sheet-fed process. The possibility to re-arrange a machine configuration for acertain job structure, to combine dry offset, wet offset, screen, flexo, foil application etc. into oneinline pass of a web press, carries the potential of a high production output per time unit and a

7/29/2019 90722 Pro Memoria

4/6

reduction of the physical and process security arrangements in the banknote printing plant. Theweb process is therefore ideal for the manufacture of bulk quantities of the low-denomination-

banknote segment.

Consequently, we anticipate the future banknote manufacturing plant to feature a higher degree ofspecialization and economical optimization than today. It will consist of web-fed presses for aninline production of low-denomination-banknotes in bulk and the well known sheet-fed presses forthe printing of conventional high-denomination-banknotes, as we have known them so far.

The idea, to realize Rino Giori's intaglio method in form of a web printing machine, is not a newone. Long before the offset process, rotogravure was the first printing method that was conveyedto web, resulting in significant gains in terms of speed and output. In the banknote printing sector,early web intaglio developments were made in Finland by Wrtsila for Setec and Nohab for Tumba

Bruk. Nohab was later taken over by the German manufacturer Miller-Johannisberg, and for a while,marketing efforts in co-operation with Tumba Bruk looked promising. After MAN Roland, a companywith no interest in banknote printing machinery, took over Miller-Johannisberg, the web intaglioproject was terminated. While Tumba continued to print banknotes on the web, more banknoteweb printing developments were carried out in England, USA/France and Italy (Trissel, SNOW,Epicos).

At the time of the early developments in Scandinavia, another German printing machinemanufacturer, Goebel, had already developed its own web intaglio process, however with a focuson the printing of postage stamps and tax banderols. The Goebel intaglio machine turned out to bevery successful in this field, and soon, banknote and security printers approached Goebel to developthe machine further, in order to enable them to print bonds, passports or even banknotes on theweb. A first installation in a North-African country was followed by deliveries to German, French andScandinavian customers.

The early web-banknote-printing installations suffered from three major disadvantages: Theaccumulation of waste rates through the inline manufacturing process, the inability to producebanknotes with localized watermarks and the limitation in ink layer thickness of the web-intagliodue to printing and ink drying. At that time, the banknote paper mills (except Tumba) were stillunable to guarantee the register of localized watermarks over the length of a reel. Internal wasterates of banknote papermills were generally higher in the 1980ies than they are in modern mills.The cutting of the reels into sheets was a necessary step to enable the papermill to check and sortthe paper according to watermark dis-localization and other deficiencies and to ensure that the

printers would receive only (supposed to be) 100 % flawless paper. Drying times of intaglio inkwere such that, in sheet printing operations, interleaving paper was used to "protect" the intaglioprint for weeks of ink drying, before another machine pass was possible.

With today's electronic control and new servo-drive technology, the problem of watermarkregistration during web printing has been completely solved, from both, the paper manufacturer'sand the printing machine's ends. From the presently observed tendency towards plastified banknotepapers or plastic-paper-compounds, we even expect a further fortification of the substrate in termsof format and climatic stability. This will further improve the paper-print-register in the webbanknote printing machines.

7/29/2019 90722 Pro Memoria

5/6

Modern paper machines deliver an almost flawless paper with perfect watermark localizationalready on the reeler at the end of the paper machine. Thus, the waste that has before been carried

into the web printing machine right from the papermill has been grossly reduced, and the gap inwaste rates between sheet and web operations is narrowing.

State-of-art intaglio inks count drying times rather in seconds instead of days or weeks 25 yearsago. Therefore, the major factor limiting the layer thickness of ink in a web intaglio process does nomore apply to the same extent as at that time. Continuous improvements to the mechanism of theprinting unit have considerably increased the amount of ink that can be transferred in web intaglioprinting today. Whilst the banknotes of the seventies and eighties usually featured a very highdeposition of ink in the intaglio print, modern banknotes get by with a much flatter intaglio, and,today, the intaglio of a web-printed Danish Kroner can hardly be distinguished from the intaglioprint of any other banknote done on a sheet-fed press, including even higher denomination uro

notes.

Technological progress and enhanced process stability at the paper maker's as well as the printer'send have eliminated many of the set-backs users of web-fed banknote printing machines haveexperienced, since the first of these machines were installed some 30 years ago. Recentdevelopments that will seamlessly become future trends in banknote production make it compulsoryto look into the web-printing technology again, at least for a certain segment of denominations. Weare therefore convinced that the web intaglio process will gain pace in the future and become avalid alternative, especially for the cost-efficient printing of high volumes of notes. It's the economy,stupid!

30th July 2009Walter Pohl

7/29/2019 90722 Pro Memoria

6/6

Security Printing KG is one of the very few trading and consultancy firms in the security printingindustry which is independent from the interest of the major groups in this sector. It provides

protection of documents, products and administrative processes against counterfeiting, forgery andabuse.

SP co-operates with industry-wide renowned experts and selected manufacturers. The combined in-depth knowledge of the industry's technology, products, processes and innovations held by SP andits network of partners enables SP to provide its clients with enhanced solutions and the latestsecurity and authentication technologies. For the establishment of this "Pro Memoriae", we wouldlike to thank for the contributions of

Mr. Heinz Artmann, SID-Consult GmbHMr. Klaus W. Bender: "Moneymakers", 2006 Wiley-VCH Verlag GmbH & Co KGaA, Weinheim

Mr. Eckhard Braun, Falcon Industrial Service GmbHMr. Claus Jung, eurotec Industrieberatungen

For more information, please contact

Security Printing KGCarl-Orff-Str. 7785591 VaterstettenGermanyTel. +49-8106-379 49 34www.sp-kg.deinfo@sp-kg.de