With the United States looking at abandoning the iconic dollar bill, Alex Blackburne asks whether it is time to question our fixation with paper money and mint higher denomination, more durable coins instead.
The Bank of England has been issuing banknotes for 300 years. There are currently 2.6 billion pieces of paper worth £48 billion in circulation in England and Wales (Scotland and Northern Ireland issue their own notes worth £3.5 billion and £1.8 billion respectively).
Each year, thousands of banknotes and even more coins pass through an individual’s fingers.
As we strive to cut emissions and delay climate change, two and two could be put together, with the introduction of £5 and £10 coins a distinct possibility.
In fact, the United States Congress has already tabled plans to phase out the country’s iconic dollar bill in favour of a dollar coin, to significantly mixed reactions.
Will the UK be following suit, though?
In 2010, the Bank of England produced 936m new banknotes, costing them £72m in production and issue fees, and bringing the total circulated notes in the UK to 2.6 billion by the end of that year.
Although the Royal Mint, the manufacturer of UK coins, don’t reveal the exact amount it costs to make specific coins, their total sales, selling, distribution and administration expenses for 2010-11 came to a staggering £212m.
However, although the initial costs of producing £5 and £10 coins would be greater, the increased longevity would mean less expenditure in the long term.
Whilst the average lifespan of a £5 note – granted, the least durable of all UK banknotes – is just 12 months, the Royal Mint state that coins can be in active circulation for “in excess of forty years”.
Then there’s the issue of environmental effects. Coins are fully recyclable, whereas the remains of incinerated notes often end up in landfill sites. However, the processes involved in producing coins far outweigh the note making practices, with mining one of the first steps in manufacturing them.
The costs involved in producing coins is something which the Dollar Coin Alliance, an organisation at the forefront of the proposed introduction of a dollar coin, conveniently omits.
With the coins vs. notes debate seemingly cancelling itself out, perhaps the smarter answer would be to follow the lead of such countries as Australia and New Zealand, and adopt polymer banknotes.
Polymer enhances the durability of notes and also makes counterfeiting more difficult, with added security features possible.
One thing is for sure – changing £5 and £10 notes to coins in the UK would be inconsequential, but mimicking the movements of our cousins down under would be a step, if a gradual one, in the right direction.