COVID-19 and Cash: a Not-so-Brave New World - Oberthur Fiduciaire

COVID-19 and Cash: a Not-so-Brave New World - Oberthur Fiduciaire
VOLUME 18 – NO 3 / MARCH 2020

COVID-19 and Cash:                                                                             Oberthur
a Not-so-Brave New World                                                                       to Share
                                                                                               Oberthur Fiduciaire has announced
                                                                                               that it has developed an effective
                                                                                               anti-viral treatment to counter
                                                                                               coronaviruses on the surface of
                                                                                               banknotes, and that it is making the
                                                                                               treatment available to all accredited
                                                                                               banknote paper makers and
                                                                                               banknote printers.
                                                                                               The treatment, Bioguard Enhance™, is
                                                                                               applied within the post print varnish and
                                                                                               as a paper treatment. It is an extension
                                                                                               of the Bioguard™ anti-fungal and anti-
                                                                                               bacterial technology paper treatment
                                                                                               that is already protecting billions of
                                                                                               banknotes in circulation.
                                                                                               In the past few weeks, tests conducted
On 11 March 2020 the World Health             Both the WHO and the US Center for
                                                                                               in an independent laboratory in the
Organisation (WHO) declared COVID-19          Disease Control and Prevention state that
                                                                                               US have shown that when Bioguard
to be a pandemic. At around the same          the main way that the COVID-19 spreads is
                                                                                               Enhance is applied to a banknote
time, they also managed to convey an          by people-to-people contact and through
                                                                                               in both the paper and the post print
impression of cash in the context of the      droplets that are produced when an
                                                                                               varnish, a coronavirus-type virus sample
virus that could have long-lasting and        infected person coughs or sneezes.
                                                                                               was effectively wiped out.
damaging effects.                             The head of Germany’s Robert Koch
                                                                                               In the tests the Bioguard Enhance was
Is cash safe to use?                          Institute for infectious diseases, agrees that
                                                                                               evaluated against coronavirus OC43,
While the general advice from WHO about       banknotes DO NOT play a significant role
                                                                                               from the coronavirus family that affects
protecting yourself from COVID-19 is clear    in the spread of the coronavirus. The risk
                                                                                               humans. The initial findings from the
(eg. wash your hand, keep your distance,      of banknotes spreading the coronavirus is
                                                                                               laboratory showed that, under standard
avoid touching your face etc), their advice   small ‘unless someone is using a banknote
                                                                                               test conditions, samples treated with
about cash is not. Reports that they          to sneeze in’ says Dr Christine Tait-Burkard,
                                                                                               Bioguard Enhance showed 99.9 % of
advised against using physical banknotes      an expert in infection and immunity at
                                                                                               the coronavirus OC43 were eliminated.
and coins due to the coronavirus surviving    the Roslin Institute at the University
                                                                                               The protocol used is comparable to
on these were quickly picked up by the        of Edinburgh.
                                                                                               the ASTM E1053-97 – Standard Test
media and themselves went ‘viral’.            The US Center for Disease Control said,          Method for Efficacy of Virucidal Agents
WHO subsequently issued a statement           ‘it may be possible that a person can get        Intended for Inanimate Surfaces.
saying that they have not advocated           COVID-19 by touching a surface or object
                                                                                               The science behind this discovery
avoiding cash (‘we did NOT say that cash      that has the virus on it and then touching
                                                                                               results from Oberthur Fiduciaire’s long
was transmitting COVID-19’), but rather       their own mouth, nose, or possibly their
                                                                                               term collaboration with the USA-
suggested that contactless payments may       eyes, but this is not thought to be the main
                                                                                               based laboratory Biological Consulting
be ‘a good idea’, and the risk posed by       way the virus spreads.’
                                                                                               Services (BCS). BCS has for many
handling a banknote is no greater than        Continued on page 6 >                            years been one of the leading experts in
touching any other common surface. Even                                                        the field of pathogen analysis.
so, the original story has done its damage.
                                                                                               Continued on page 6 >
COVID-19 and Cash: a Not-so-Brave New World - Oberthur Fiduciaire
COVID-19 – Truth and Lies
  ‘A lie gets halfway around the world        And it is so frustrating. The damage of           After all, it not an unreasonable assumption
  before the truth has a chance to get its    the World Health Organisation (WHO)               that people would withdraw large amounts
  pants on.’                                  announcement linking cash to the spread           to hoard, as they tend to do in times of
  The above quotation is attributed to the    of COVID-19 is well and truly done. Central       crisis (albeit that the real story of hoarding in
  legendary British war-time Prime Minister   banks have been slow to respond and               this crisis is toilet rolls, not banknotes. Who
  Winston Churchill. While the context is     have given mixed messages about the               could have seen that coming?)
  unknown, it is a perfect metaphor for       safety of cash (why quarantine it if it is so     But for all the central banks that have
  the situation today vis-à-vis perceptions   safe?). At the same time the commercial           sought to reassure the public about cash,
  of cash.                                    payment sector has promoted contactless           there are as many that are encouraging
                                              payments as safer for retail staff and the        them to use alternatives. They include the
                                              public. The net effect is a significant decline   central banks of India, Kenya, Portugal,
     Inside this Issue                        in cash withdrawals. Only time will tell if the
                                              reduction is temporary.
                                                                                                UAE, Estonia, Russia, Malaysia to name
                                                                                                a few. It is not coincidence that some
      1 COVID-19 and Cash: a Not-             In early March, a variety of stories appeared     of these are active proponents of digital
         so-Brave New World                   in the media which quoted a WHO                   currencies anyway. Could their stance be
                                              spokesman saying ‘we know that money              opportunistic?
      1 Oberthur to Share Anti-               changes hands frequently and can pick up          Central banks, and cash, don’t work in
         Viral Technology                     all sorts of bacteria and viruses.’ He went       isolation of course. The pandemic has also
      2 COVID-19 – Truth and Lies             on to say that ‘when possible it would be         seen change in the payments sector which
                                              advisable to use contactless payments to          has sought to increase the use of non-
      3 End of Euro 1 and 2 Cent              reduce the risk of transmission.’                 cash payments.
         Coins on the Horizon                 This was followed up by a statement in            A number of countries, such as the
                                              the ‘myth busters’ section of the WHO
      3 People in the News                                                                      Netherlands, UK, Saudi Arabia and Egypt,
                                              website that said ‘the risk of being infected     have raised the payment limit for spending
      4 A Mixed Bag from the                  with the new coronavirus by touching              using contactless cards. M-Pesa has
         Latest Round of Company              coins, banknotes or credit cards and              waived its fees to discourage cash usage.
         Results                              other objects, is very low.’ WHO did not          The Allied Irish Bank reversed a decision
                                              leave that post up but has confirmed              to charge a fee for contactless payments
      5 News in Brief                         subsequently that it did not say cash was         using mobile devices. Ant Financial has
                                              spreading COVID-19. By then, however, the
      7 The Stars of Aruba                                                                      opened Alipay to third parties to encourage
                                              story had taken on a life of its own with the     its use. An increasing number of financial
      8 Cash Industry Shares                  media, and social media, in full cry. Words       institutions have decided to reduce the
         Crash                                matter and here is a great example of that.       number of branches open to the public.
                                              The response by the cash community has            A number of retail outlets, before their
     10 The Science Behind                    been pretty much the same as that of the          shutdown, moved to only allowing non-
         Bioguard Enhance                     international community to the emergence          cash payments methods.
     11 Windows of Opportunity                of COVID-19 – ie. unprepared, fragmented          Even before social distancing became
         from KURZ                            and slow.                                         policy, the net effect of COVID-19 and
                                              That said, many central banks have now            these changes has been a huge reduction
     11 EyeQ – Truth is in the Eye            entered the debate, using – as noted on           in the use of cash. In a matter of just days
         of the Beholder                      page 1 – science and logic to make clear          in mid March in the UK, for example, cash
     12 Physical to Digital:                  statements that banknotes are low risk            usage halved.
         a Revolution in Document             when it comes to spreading COVID-19.              This is not just down to public fears about
         Security                             At the same time as saying cash is                cash and retailer insistence on cards
                                              safe to use, some central banks are               being used. It is also down to so much of
     12 HSP EMEA – Success in                 also publicising what they are doing to           our daily life now having to be conducted
         the Sun Despite Gathering            safeguard banknotes against spreading             online, and to the lockdowns that mean
         Storm Clouds                         COVID-19 (hence the comment above                 people simply can’t spend so much.
                                              about mixed messages).                            And while cash may be one casualty, other
     13 Three Winners of Regional
                                              Another central bank response has                 payment means are being affected too, with
         Banknote Awards in
                                              been to reassure the public that there            McKinsey claiming that both Mastercard
         Lisbon                               is sufficient cash in the system to meet          and Visa have been hit by a 25% decline
     13 Cash Innovation Comes to              any requirements. This is supported by            in transactions.
         Prague with WBS 2020                 reports from several suppliers that tenders       Even so, it is too pessimistic to suggest that
                                              and orders are being brought forward –            the changes that the pandemic is forcing
     14 Some Progress but More to             presumably not only to inject more fresh          on our payment choices will become
         Do for Gender Diversity in           notes into the system to replace worn             permanent once the pandemic is over?
         Currency                             notes, but as a contingency.

     15 Note and Coin News

COVID-19 and Cash: a Not-so-Brave New World - Oberthur Fiduciaire
End of Euro 1 and 2 Cent                                                                         People in
Coins on the Horizon                                                                             the News
                                                                                                 The Central Bank of Curaçao and
                                                                                                 Sint Maarten has nominated Richard
                                                                                                 Doornbosch to take over as Governor
                                                                                                 later this year. He currently serves as
                                                                                                 Finance Minister and, if approved,
                                                                                                 will replace Jerry Hasselmeyer, who
                                                                                                 stepped down in 2017. The position
                                                                                                 has been vacant since then.

                                                                                                 Diego Labat has been appointed
                                                                                                 interim President of the Central Bank
                                                                                                 of Uruguay pending a permanent
                                                                                                 replacement, following the retirement of
                                                                                                 Alberto Graña.
The European Commission (EC) is                The average purchasing power of the 1
considering a proposal to phase out 1          cent coin in 2019 was 80% of that in 2002.        Evaldas Stralkus has been appointed
and 2 euro cent coins in a move that           And yet the issue of 1 and 2 cent coins           the new CEO of the Lithuanian Mint.
could save up to €1.4 billion a year in        is increasing faster than any of the other
production and transportation costs.           denominations. In 2002, 14 billion 1 and 2
The measure is included in the EU              cent coins were in circulation out of a total
executive’s working programme for this         of 40 billion, ie. 35%. By 2017, 61 billion of
year, released at the end of January and       the coins were in circulation out of a total of
scheduled for the October-December             126 billion, ie. 48%.
period after an evaluation of the use of the   Seigniorage is also an issue. Production
two smallest euro denominations.               costs in particular vary throughout the
Rounding rules would be applied as a first     eurozone, but there is a presumption that
step before any withdrawal. Among the 19       the 1 cent at least has resulted in negative
eurozone states, these rules are already       seigniorage since 2010. With production
used in the Netherlands, Finland, Ireland,     costs routinely 50% higher than the face
Belgium and Italy.                             value, the annual loss of seigniorage is
                                               estimated at €16 million.
With the cost of the 1 and in some cases 2
cent coins mostly exceeding their face value   The disappearance of the coins would
(although these costs depend on where          be unlikely to be missed in the eurozone.
they are minted), their future has been        In a Eurobarometer poll in 2018, 64% of
under discussion for some time.                the public were in favour of abolishing the
                                                                                                 Jutta Buyse.
                                               coins and rounding prices up and down (up
The EC published a report in 2018
                                               from 60% in 2014), albeit that there were         Jutta Buyse has been appointed
giving four scenarios – (1) to maintain
                                               regional variations. Finland was most in          Director General of the International
the status quo (ie. do nothing); (2) to
                                               favour, at 86% (not surprisingly, since they      Currency Associatoin (ICA), replacing
continue issuance but at a reduced cost
                                               decided to do without the two coins from          Dr Susanne Maise who has stepped
(ie. changing to a cheaper composition);
                                               the outset). Lithuanians were the least in        down. She brings 18 years of
(3) to ‘fade out’ the coins (whereby they
                                               favour, at 45%.                                   experience in working with Brussels-
would remain legal tender, but progressively
disappear from circulation); and (4) to go     As above, five countries in the eurozone          based associations and public affairs
for a quick withdrawal. The third option is    have already stopped producing and                consultancies, as well conference
the one that appears likely to be adopted,     issuing the coins (Finland and the                management. Most recently, she
although the EC’s Vice President Maroš         Netherlands first, then Belgium, and more         was Deputy Secretary General at the
Šefčovič has stated that no final decision     recently Ireland and Italy), albeit that they     European Lotteries Association, where
has yet been taken.                            are still legal tender in those countries.        she has executed advocacy campaigns
                                               France is reported to be also invoking            to position the sector in various EU
Dr Rüdiger Voss of the European
                                               mandatory rounding, regardless of the             policy dossiers.
Commission’s Directorate General
                                               EC’s decision.                                    According to Dr Wolfram Seidemann,
of Economic and Financial Affairs
(ECOFIN) has presented on the low value        Germany, on the other hand is understood          Chairman of the ICA Board, ‘the role
denominations at the past two Coin             to be resisting the withdrawal of the coins       of the ICA as the association of the
Conferences, providing figures that put the    due to their heavy use in circulation and         currency industry will continue to grow.
EC’s deliberations into context.               because such a move would prevent the             In Jutta Buyse, who brings strong
                                               fractional pricing so favoured by retailers.      association and advocacy experience,
The net issue of euro coins between 2002
                                               Germany uses more cash than any other             we found the right person to lead the
– ie. the year the euro was introduced –
                                               eurozone country, but its resistance may          further growth and development of the
and 2019 is 132.9 billion with a value of
                                               also be due to the fact that it is home to        ICA, with a strong focus on advocacy
€29. 4 billion, equating to 396 coins per
                                               five mints. Estonia is also resisting the idea,   and outreach.’
eurozone inhabitant.
                                               having recently increased the number of
                                               these coins in circulation.

                                                                                                           VOLUME 18 – NO 3 | MARCH 2020    3
COVID-19 and Cash: a Not-so-Brave New World - Oberthur Fiduciaire
A Mixed Bag from the
  Latest Round of Company Results
  Last month we reported the published             came from new products, these having now          Revenue for the year fell slightly from
  results of a number of industry leaders          achieved a 42% year-on-year sales growth.         €1.22 billion to €1.21 billion, but costs also
  in cash, including Loomis, Brinks’,              The division’s profit margin improved by          increased, resulting in gross profit falling by
  Diebold Nixdorf, NCR and Crane Co.               13.7% to 16.9% in 2019.                           12% to €312.9 million. Profit before interest
  This month it is the turn of Spectra                                                               and taxes (EBIT) was also lower at €56
                                                   G4S demerges cash business
  Systems, Prosegur, G4S and Koenig &                                                                million compared with €87.4 million in 2018.
                                                   G4S produces two sets of results, the
  Bauer, all the figures for which represent                                                         Net profit at €38.4 million was 30.5% lower
                                                   Statutory Results and Underlying Results,
  operations in 2019 – ie. before the                                                                than in the previous year.
                                                   claiming the latter, presented at constant
  impact of COVID-19.                                                                                The revenue share from banknote and
                                                   exchange rates other than the operating
  An update on the performance of the listed       cash flow, provide a better indication of         security printing of €463.9 million was
  companies in our sector post the COVID-19        the performance of the group’s on-going           5.6% lower than in 2018, which had been
  outbreak can found on pages 7-8 in this          business for the year. For brevity we use         boosted by a major order. The order intake
  month’s Industry Watch.                          those results here.                               was also 19.5% lower at €406.7 million
                                                                                                     than the previous year. Operating profit fell
  Record year for Spectra                          Revenue in 2019 at £7.67 billion was
                                                                                                     by 8.9% to €43.9 million. The division has
  Spectra Systems Corporation reported             4.7% higher than in 2018 and the adjusted
                                                                                                     an order backlog of €287.3 million.
  another year of growth. Revenue of $13.23        operating profit (PBITA) at £501 million
  million was 5.9% higher than the previous        remained the same. The operating margin           The company has in place a Performance
  year, the increase being largely due to early-   in 2019 was 0.3% lower at 6.5%. Net profit        2024 Efficiency Programme with the
  stage research funding for future sensor         for 2019 was £263 million compared with           intention of reducing costs by €70 million
  technology development for a G7 central          £261 million in 2018.                             by 2024, improving operating margins, and
  bank and equipment sales to a major                                                                reducing working capital through lower
                                                   The most notable feature of 2019 was
  banknote printer.                                                                                  inventories and receivables in security
                                                   the demerger preparations for the Cash
                                                                                                     printing, as well as other initiatives.
  Adjusted EBITDA (before stock                    Solutions business which culminated, on 26
  compensation expenses) increased by 8%           February this year, in the sale of the majority   In the guidance for 2020 the company
  to $5.5 million, representing an operating       of the conventional side of the business          stated that, even before the coronavirus,
  margin of 41.54%. Net income for the year        to the Brink’s Company, the Board having          the global economic conditions were
  increased by 7% to $4.3 million, a net profit    determined that this sale was superior to         demanding, and with the pandemic
  margin of 32.75%.                                the demerger and in the best interests of         situation now worsening, the company
                                                   shareholders. 35% of this business is being       could not be sure of its performance.
  Most of the company’s sales and profit are
                                                   retained, including the company’s cash            Managing the possible consequences
  derived from the Authentication Systems
                                                   operations in the UK. Together, the retained      of the pandemic is now the company’s
  business, which generated revenue of
                                                   businesses had sales of £297 million in           top priority, with a professional project
  $11.83 million, and achieved an adjusted
                                                   2019 and PBITA of £27 million. The sale will      organisation already established.
  EBITDA of $5.06 million, a 9.5% increase
  over the previous year.                          see the transfer of c. 25,000 employees to        Update from De La Rue
                                                   Brinks, and a reduction of £15-20 million         De La Rue won’t be announcing its results
  Sound performance from Prosegur                  per year in overheads for G4S.                    for 2019/20 until May, but issued a trading
  Prosegur's revenue in 2019 was €4.2
                                                   According to G4S, the disposal of these           update at the close of the financial year
  billion, a 6.6% increase over the previous
                                                   capital-intensive businesses will enable          in which it states that it still expects an
  year, and it achieved an operating profit
                                                   G4S to focus on the growth of other               adjusted operating profit of between £20-
  (EBITDA) of €536 million compared with
                                                   aspects of the business. These include its        25 million, as previously guided.
  €456 million in 2018, an increase of 17.6%.
                                                   rapidly growing Retail Technology Solutions       The group has operated within its banking
  Its operating margin increased from11.6%
                                                   business, which includes Cash360,                 covenants for FY 2019/20. Net debt is
  to 12.8%.
                                                   Deposita and G4SPay – all described               estimated to be £105 million, down from
  Operating profit, excluding depreciation         as industry-leading solutions which               the £170 million recorded in September.
  (EBITA), was €358 million, an increase of        transform customers’ payment and cash
  9.7%, and profit before interest and tax                                                           De La Rue is progressing with its
                                                   management processes. This business
  (EBIT) was up 9.7% at €330 million. Net                                                            Turnaround Plan, preliminary details of
                                                   grew by 18% in 2019 and is expected to
  profit at €160 million was 11% lower than                                                          which were announced at the end of
                                                   continue growing strongly, at 14-16% per
  in 2018.                                                                                           February and which include an accelerated
                                                   annum and generate margins of c.15%.
                                                                                                     cost-cutting programme combined with
  Revenue in Latin America increased by            The operations of Retail Technology and the
                                                                                                     a sharper focus on its core businesses of
  2.2% to €2.08 billion (but by 19.7% in local     retained cash business will account for 8%
                                                                                                     currency and authentication.
  currency). Revenue in Europe increased by        of group turnover going forward.
  1.7% to €1.77 billion and in the rest of the     Uncertain outlook for
  world by 116% to €342 million.                   Koenig & Bauer
  Prosegur Cash is one of three divisions,         Koenig and Bauer is the parent company
  accounting for €1.8 billion in sales (up         of KBA-NotaSys, which has recently
  nearly 4%) – 42.85% of the total sales           been renamed Koenig and Bauer
  revenue. In local currency the sales growth      Banknote Solutions.
  was approximately 17% of which 16.2%

COVID-19 and Cash: a Not-so-Brave New World - Oberthur Fiduciaire
News in Brief
Nepal Halts Security                             ‘Automatia offers us know-how and                   A spokeswoman for the Royal Mint said it
Printing Press Tender                            experience in operating ATM services and
                                                 digital payment systems. This is a great
                                                                                                     had received requests from health trusts
                                                                                                     and hospitals across the UK since news
The Public Accounts Committee (PAC)              opportunity for us to expand our ATM                of its medical visors was announced. ‘We
of the Nepalese Parliament has directed          outsourcing services. As its new owner,             have increased production as a result to
the government to halt the process of            Loomis will continue to develop Automatia's         help as many as possible,’ she added,
setting up a new security printing facility in   businesses and will use Automatia's know-           explaining it should be fairly straightforward
the country.                                     how and payment platform internationally,’          for other engineers to produce its visors.
In the view of the PAC, the previous             said Patrik Andersson, President and CEO            ‘We are already a fast-moving consumer
process to procure the new facility was ‘full    of Loomis.                                          goods (FMCG) manufacturer so a lot of the
of irregularities’ and it has recommended        Under the terms of the transaction, the             techniques could be easily transferred.’
that it be scrapped and replaced with            selling banks will commit to long-term
a new global competitive tender. It has          agreements to be serviced by Automatia.             Finland Maintains Coin
also directed the Commission for the             The transaction is subject to merger control        Production for Denmark
Investigation of Abuse of Authority to           approval by the Finnish Competition and             Coins in Denmark will continue to be
investigate the irregularities rife in the       Consumer Authority and approval by other            minted by the Mint of Finland until 2025,
procurement process. These include               relevant authorities. Closing will take place       following the renewal of its contract with the
reports that a government minister resigned      after approval, which is estimated to take          Danish central bank. Last year, Danmarks
from his post after he was heard in a leaked     around five months.                                 Nationalbank launched a tender as its
audiotape seeking a ‘commission’ from a
                                                                                                     existing agreement with the Mint of Finland
potential supplier.                              Note Issuer to                                      is due to expire this May. The Bank started
Two European companies – from France             Change Name                                         outsourcing its coin requirements when it
and Germany respectively (neither being                                                              closed its mint in 2016, and the first three
                                                 The Royal Bank of Scotland (RBS), one of
the afore-mentioned potential supplier                                                               year contact was award to Mint of Finland
                                                 Scotland’s three note-issuing banks, is to
in the leaked tape) – submitted bids last                                                            in 2017.
                                                 change its name to NatWest, the subsidiary
year to build the facility, but neither was
                                                 which represents 80% of its customer base.          The Bank tendered for the four year
followed through on the basis of cost, with
                                                 According to RBS, the move is designed              production contract, to take effect from
calls for global bids instead, rather than the
                                                 to align the group name with the brand              2021, via an EU open procedure and says
previous so-called G2G (government-to-
                                                 under which the majority of its business is         that the Mint was chosen for providing
government) process.
                                                 delivered. But cynics see it as an attempt          the best offer overall. The award criteria
The government’s plans involve an in-                                                                included not just price, but also quality,
                                                 to shake of its toxic past and the financial
country security printing facility so that                                                           security and CSR.
                                                 crisis of 2008, when it was rescued with
it can produce its own passports, ID
                                                 £45 billion of taxpayers' money following
documents and, potentially, banknotes as
                                                 years of disastrous mismanagement                   Cash Management in
well, with the aim of becoming self-sufficient
in five years.                                   It is presumed that the change will not,            Mozambique
                                                 however, affect RBS banknotes, as the               The Bank of Mozambique and the country’s
Loomis Expands in                                press release announcing the name change            credit and financial institutions have signed
Scandinavia                                      explicitly states that ‘customers will see
                                                 no change to products or services as a
                                                                                                     an MOU to share the responsibility of
                                                                                                     managing cash in circulation, both notes
At the start of this year Loomis announced       result of this change and will continue to be       and coins.
the acquisition of the Swedish arm of the        served through the brands they recognise            According to the Governor, Rogério
Norwegian cash management company                today, including NatWest and Royal Bank             Zandamela, the MOU will help to
Nokas. It has since announced that it is         of Scotland’.                                       ‘promote greater efficiency, to ensure that
acquiring 100% of the Finnish ATM operator
                                                                                                     the selection, counting, transport and
Automatia Pankkiautomaatit Oy (Automatia)        Royal Mint Steps up to                              distribution of metical banknotes and coins
from the present owners Danske Bank,
Nordea, and OP Financial Group.
                                                 Help Health Workers                                 are properly conducted and at low cost.’
                                                 The Royal Mint is set to produce thousands          The appropriate standards and division of
Automatia, established in 1994 as a joint
                                                 of medical visors to protect health workers         responsibility between the Bank and the
venture of Finland’s main commercial
                                                 on the frontline of the coronavirus outbreak.       financial institutions will be issued ‘soon’.
banks, operates the largest ATM network
                                                 While the organisation typically produces           But the Bank will retain responsibility for
in the country under the Otto brand. The
                                                 coins, its engineers are to manufacture up          ensuring the integrity of notes and coins in
business also provides nationwide cash
                                                 to 4,000 of the visors a day. The engineers         circulation, monitoring their level of quality,
supply services for bank branches and night
                                                 decided to produce these after searching            as well as educating the public on issues of
safes for retailers. In addition, it operates
                                                 online to see what medical equipment could          their handling.
Siirto, an open multi-bank digital platform
for real-time mobile payment services.           be easily created on its site. After settling on    The financial institutions, meanwhile, will be
                                                 the visors, their high specification prototype      responsible for checking the authenticity of
Automatia employs around 30 people and
                                                 was approved in two days. The Royal Mint            cash to protect themselves from losses due
manages around 1,500 ATMs, which is
                                                 says it will post the exact specification for       to counterfeiting or forgery, and ensuring
more than 95% of the total ATM numbers
                                                 its design online so that other engineers           that banknotes and coins in circulation are
in Finland. Its 2019 annual revenue was
                                                 can replicate it.                                   genuine and of good quality.
around €42 million. The enterprise value, ie.
purchase price plus acquired net debt, is
also approximately €42 million.

                                                                                                    NEWS IN BRIEF | VOLUME 18 – NO 3 | MARCH 2020      5
COVID-19 and Cash: a Not-so-Brave New World - Oberthur Fiduciaire
Anti-Viral Paper                               COVID-19 and Cash (Continued)
  (Continued)                                    There is a lot of research into how the        Some banks have focused on removing
 BCS is accredited by ANSI National              COVID-19 virus survives on different           more notes from circulation and putting
 Accreditation Board (ANAB), the largest         surfaces, but it’s not just cash payments      into circulation only new ones, others such
 accreditation body in North America             that potentially carry a risk. Using PIN       as the Federal Reserve are quarantining
 and also by the National Environmental          keypads for card payments might be an          repatriated banknotes.
 Laboratory Accreditation Program                even more direct way of transmitting the       The logic behind central bank decisions
 (NELAP). The Bioguard technology                virus. As is touching frequently handled       to disinfect banknotes, only issue new
 platform, from which Bioguard Enhance           objects such as door handles, petrol pump      notes or move to more wipeable polymer
 has been developed, has already been            handles, shopping trolleys, handrails, water   or varnished banknotes, is a concern over
 certified under ISO 10993 in France and         taps and light switches.                       how long any virus will stay on a banknote.
 in the USA by Biomatech, a NAMSA                What are central banks saying?                 Stephanie Brickman from the WHO said,
 (North American Science Associates)             A number of central banks have made clear      ‘we do not know (how long the virus lasts
 member company.                                 statements that banknotes are low risk         on banknotes), but we estimate not longer
 Bioguard Enhance has the major                  when it comes to spreading COVID-19.           than two hours. The virus will not survive for
 advantage that it can be added to an            The Executive Board Member of the              very long on surfaces, particularly on a dry
 existing series of banknotes without any        Bundesbank, Johannes Beermann, said on         surface like a banknote.’
 impact on the visual appearance of the          18th March, ‘…the probability of becoming      De La Rue research during the H5N1 flu
 banknotes, security features or machine         ill from handling cash is smaller than from    in 2006 suggested that as little as 10 % of
 readability.                                    many other objects used in everyday life’.     COVID-19es (with feline COVID-19’s being
 According to Oberthur Fiduciaire, the           In the same press briefing, René               specifically tested) were still present after
 anti-viral properties of Bioguard Enhance       Gottschalk, infectiologist and head of         four hours. This research concluded that
 have no effect on the banknote’s                the Frankfurt am Main Health Office,           overnight storage was likely to be adequate
 physical properties, are unaffected by          explained that what is decisive is whether     to ensure that the virus was no longer
 lithographic and intaglio printing and by       there is an infection channel. ‘COVID-19       present. Other studies, that are relevant
 washing and maintain their effectiveness        is mainly spread by infected droplets          but not directly translatable to banknotes,
 in artificial ageing tests. From a health       transmitted by coughing, sneezing or           suggest between hours and days.
 and safety perspective, the treatment           also talking.’ He did not regard banknotes     Can the industry help?
 does not result in any additional irritation    as providing an infection channel since        As described elsewhere in this issue,
 or sensitisation.                               the physical properties mean banknotes         Oberthur Fiduciaire have brought out a
 Oberthur Fiduciaire is making Bioguard          do not particularly lend themselves to         new anti-viral substrate, Bioguard Enhance.
 Enhance available to all accredited             transmitting pathogens.                        There are claims of other substrates out
 banknote paper makers and banknote              The Bank of Canada and the Bank of             there too – from Goznak and Intace for
 printers as part of its commitment              England have made statements that almost       example, while Inovink is about to launch an
 to assist the world’s fightback                 used the same words, saying the risk of        anti-microbial additive for banknote varnish
 against COVID-19.                               getting COVID-19, ‘…by handling a polymer      and substrates called BioNote®.
 Oberthur Fiduciaire will also provide           note is no greater than touching any other     Whether or not there is a need for such
 technical support to all manufacturers          common surface, such as handrails,             substrates given the lack of evidence and
 who wish to use this anti-viral solution        doorknobs or credit cards.’                    consensus that viruses survive for any
 for the first time. A number of paper mills     The Banque de France has said there            significant length of time on banknotes is
 have already had experience of adding           is ‘no evidence that the COVID-19 was          beside the point; the ability to address such
 the Bioguard family of products to              or could be spread by banknotes.’ The          concerns, legitimate or otherwise, with a
 paper – Louisenthal in Germany, Crane           Oesterreichische Nationalbank, Reserve         tailor-made solution could be key to helping
 in Sweden, FNMT in Spain, Portals               Bank of New Zealand and the South African      regain trust in banknotes.
 in UK and VHP Security Paper in the             Reserve Bank are among several others          A detailed analysis of the various industry
 Netherlands. In this time of crisis, says       that have also made similar statements.        technique and products to help fight
 Oberthur Fiduciaire, it has built on its well
 proven Bioguard technology to develop           How are central banks treating                 COVID-19, or fears of COVID-19, will be the
 an effective anti-viral treatment for
                                                 banknotes?                                     topic of a special report to be distributed
                                                 At the same time as saying cash is safe        with the next issue of Currency News.
 banknotes. This solution can be applied
 to all new banknote orders and Oberthur         to use, some central banks have also
 Fiduciaire has committed to work with           publicised what they are doing to safeguard
 all accredited industry suppliers to            banknotes against spreading COVID-19.
 ensure that every central bank in the           The People’s Bank of China (PBOC)
 world has access to this significant            has taken a number of steps such as
 new technology.                                 quarantining of returned banknotes before
 Please contact G Tillon of Oberthur             reissuing them, increasing the issue of
 Fiduciaire, for further details                 new notes and disinfecting areas where
 at                            cash is handled, and these have been
                                                 implemented elsewhere (for example, Costa
 (An interview with Henri Rosset,
                                                 Rica, Indonesia, Iran, Russia, South Korea
 developer of Bioguard Enhance, can be
                                                 and Thailand).
 found on page 10).

COVID-19 and Cash: a Not-so-Brave New World - Oberthur Fiduciaire
The Stars of Aruba – Issuing Banknotes
with Humour and Public Interaction
Lat year, the Centrale Bank van Aruba                 Q: What was the reason for issuing the new          It had to be proven technology, and
(CBA) introduced a new banknote                       series in the first place?                          MOTION SURFACE is in our view the best
series, its first in 16 years – a decision            A: Throughout the years, the CBA had                available banknote security technology.
that was not taken lightly given the                  done a number of updates of the old                 It has the highest quality and is the most
popularity of the existing series in                  series but came to a point when it was too          effective feature on the market.
this small but beautiful island in the                cumbersome. The old banknotes had fallen            Q: And what about the themes and
southern Caribbean. But after intense                 out of step with the functional and security        designs themselves?
preparations with many stakeholders                   needs of modern banknotes. They were                A: The new series is very modern, beautiful
and the decisions to also include                     also quickly soiled, especially the highly          and colorful. I have shown the new
humour in the public awareness                        circulated 10 florin note, and contained a lot      banknotes to international friends and they
campaigns, the 120,000 residents                      of white areas which attracted dirt.                like them – so much so that they want to
of Aruba now have one of the most
                                                      Another tipping point was the emergence of          take them back home with them.
innovative and modern banknote series
                                                      counterfeited banknotes. Not many, but the          The public can now explore the 10, 25,
in the world. And ones they appear
                                                      central bank’s strategy is to communicate           50, 100 and 200 florin banknotes in a new
to like as much, if not more, than the
                                                      immediately any counterfeits to the public.         vertical format – each with beautiful artistic
previous notes.
                                                      We then set the goals for the new series            elements from the Aruban culture, flora and
                                                      already from the start. It had to be modern,        fauna. These are in combination with the
                                                      use the best security features available            most secure banknote features available,
                                                      to prevent counterfeits, convey a clear             such as high-relief printing, colour-changing
                                                      message to the public, and be a full                ink, MOTION SURFACE and 3D moving
                                                      family of new notes. And not the least be           stripes with miniaturized micro-optics from
                                                      sustainable over time – we didn’t want to           Crane Currency, which also printed the
                                                      start all over again for the next ten years.        new series.
                                                      We launched the new series on 17 May                People appreciate that they can discover
                                                      2019, and made it available to the public on        new elements of the banknotes almost
                                                      3 June. Five new banknotes, of which one            every day. On each note, there’s a
                                                      has a new denomination, were issued after           combination of different elements, vibrant
                                                      what were years of intensive preparations           colors and messages about nature
                                                      and close cooperation with various local            conservation that fuel curiosity.
                                                      stakeholders, including the commercial              Q: How did you implement the public
                                                      banks, as well as international suppliers           education campaign?
                                                      of banknote paper, security features
Jeanette Semeleer, centre, at the launch of Aruba's                                                       A: We had years of preparations before
new banknote series.                                  and equipment.
                                                                                                          successfully launching the new series,
                                                      Q: How did you go about deciding on the             allowing sufficient time for including as
Currency News™ spoke to Jeanette                      design and security features?                       many parts of the society as possible
Semeleer, President of the CBA, about
                                                      A: When the decision was taken to work              in this important project. And since the
the motivation behind the new series and
                                                      with local Aruban artists, the CBA attended         co-circulation time was only two months,
how the public were converted to their
                                                      numerous conferences and company visits             we implemented an inclusive information
new notes.
                                                      to find the best designers, printers, and           campaign to ensure that all members of the
Q: First of all, can you give some headline           other external experts. A lot of travel and         Aruban community were immediately aware
comments about the new series, and the                hard work had to be done before choosing            of the new series and its unique design and
factors behind it?                                    the right suppliers.                                features, and the story behind them.
A: The new series was hatched several                 You have to go out at least four years in           The public information and education
years ago – to make people proud of their             advance and attend all conferences, listen          involved printed material and instructional
country and to show the world the rich life           to presentations, walk with the experts, feel       movies via various channels such as
of Aruba.                                             the products, conduct on-site visits and            TV, radio, social media and the central
But replacing a complete banknote series              review advanced security features.                  bank’s website.
was not an easy task. The CBA decided                 For a small central bank as the CBA, it is          As an addition, the CBA held information
early on to take on the whole experience              crucial to balance the need for efficient           sessions in various community locations
of creating a family of banknotes by                  anti-counterfeit technology with cost. We           and schools and presented a ‘Treasure
themselves – albeit together with a network           selected Crane Currency’s micro-optic               Box’ to communicate the new banknote
of local partners and international experts           security feature MOTION SURFACE® for the            series to a younger audience. Using an
and advisors.                                         complete series of banknotes – a decision           analogue game in an otherwise digital world
We are all very pleased with the result,              that wasn’t taken lightly as it was a first. If     was a strategic move to encourage pupils
but the project was huge and we                       you want to be open-minded you have to              to practice mathematics by managing cash.
underestimated the magnitude of the work              take some risk, but we didn’t want to be a          Continued on page 9 >
needed to be done. It took about seven                pure test case for new banknote security
years to accomplish everything, including             features either.
the legislative process as approval of the
Parliament was necessary to change the
relevant law, which also put an extra burden
on the staff.

                                                                                                        ON THE RECORD | VOLUME 18 – NO 3 | MARCH 2020      7
COVID-19 and Cash: a Not-so-Brave New World - Oberthur Fiduciaire
Cash Industry Shares Crash
  For most of last year there was talk of           In the period since last December (ie.            Crane Co’s share price fell by 42.5% in
  a market downturn. Some believed that             the last Industry Watch), every market in         the period, reducing its market value from
  many companies, and in turn markets,              the world has fallen in value. In the USA         $4.95 billion to $2.91 billion. In the period it
  were over-valued. But although there              the Dow Jones has fallen 28% and the              underperformed its market by 20% and in
  were brief dips, the general downturn             NASDAQ 13%. In Asia, the Nikkei has               the full year by 24%.
  never materialised.                               fallen 19%, the Hang Seng 17.5% and the           Currency products accounted for 35.3%
  Indeed the markets not only bucked a              Shanghai Composite 8%. In Europe the FT           of revenue in 2019 (see CN February
  downturn, most recorded gains in the              All Share Index has fallen 29%, the FT 100        2020) and although, this represented a
  year, enabling our industry to end 2019 in        28%, the SMI 15.5 %, the CAC 28%, the             fall of 7.9%, its operating profit only fell
  reasonably confident mood. No one saw             DAX 28% and the FT Eurofirst 350 17.7%.           by 4.7% to $177.3 million, representing
  the current storm coming. The modern              Whilst the losses in the world’s markets are      38.7% of Crane Co’s operating profit (prior
  world has never experienced anything quite        shocking, they are not nearly as substantial      to asbestos and environmental provisions
  like this highly infectious disease, and we       as some of those incurred by the                  totalling $248 million). These provisions
  are only currently in its early stages.           companies in our sector which, with one           seemingly had no impact on the market
  Bill Gates forecast a pandemic two years          or two exceptions, have fared considerably        as the share price held firm until mid
  ago and others have sounded warnings,             worse than their respective markets.              February, but then, along with other shares
                                                                                                      on the Dow Jones Exchange, it began to
  but in the period of austerity following the      Substrates and banknotes
  financial crash of 2008, virtually no country                                                       fall steeply.
                                                    De La Rue’s share price fell by 54.3% in
  or organisation heeded the warnings and           the period, reducing its market value from        Orell Füssli’s share price fell from CHF 98
  prepared for it. The effect on daily life needs   £219.7 million to £59.4 million. As a result,     to CHF 93.5 in the period, a 4.6% fall that
  no further description, except to say that        it underperformed its market by 30% and           reduced its market value to CHF 183.5
  that communities, regions and countries           in the 12 months has underperformed               million. However, it was the only company
  are in lockdown and their economies in a          by 66%.                                           in the industry to outperform its market in
  state of suspension at the best, meltdown                                                           the period with a 10% gain; in the full year it
                                                    Some of this fall reflects the changes that
  at the worst.                                                                                       was level with its market.
                                                    have been taking place in the company’s
  All global equity markets have lost value         business activities and in management in          Spectra Systems Corp’s share price fell
  as many companies have been forced                the last nine months and its unimpressive         by 22.8% in the period, reducing its market
  to reduce output or close their doors,            interim results last autumn. Even though          value from £64.56 million to £50 million, but
  either temporarily or permanently. Many           DLR issued a turnaround and trading               it only underperformed its market by 2%;
  governments have pledged eye-watering             update at the end of February, with its           in the full year it outperformed its market
  amounts of financial support, which will          share price at 140p, this continued falling       by 12.5%.
  have to be recovered once the pandemic            until it reached a low point of 47p on 23         This strong performance compared with
  is over. Even so, millions will be thrown out     March. It has since recovered somewhat            others in the industry may well be due to
  of work and there will consequently be a          and ended the period at 57.3p.                    its releasing good results for 2019 and a
  long haul out of recession. Investors are                                                           strong forward outlook (see page 4).
  anticipating this.
                                                                                                      Continued on page 9 >

  Company Performances – March 2020
                                                                                                                              % Change Versus
                                                                           % Share Price            % Change Versus           Market – Last
                           Current                                         Change –                 Market – Last             12 months to
  Company                  Share Price              Market Cap             Dec-March 2020           3 months                  Dec 2019
  De La Rue                57.1p                    £59.4m                 -54.3%                   -30%                      -66%
  Crane Co                 $49.22                   $2.91b                 -42.5%                   -20%                      -24%
  Orell Füssli             CHF 93.5                 CHF 183.5m             -4.6%                    +10%                      0%
  Spectra Systems          110p                     £50m                   -22.8%                   -2%                       +12.5%
  Brinks                   $51.4                    $2.58b                 -44.5%                   -19%                      -16.5%
  G4S                      92.5p                    £1.44 b                -57.1%                   -30%                      -35%
  Loomis                   SEK 191                  SEK14.4b               -53.1%                   -26.5%                    -25%
  Prosegur                 €2.33                    €1.4b                  -37.9%                   -13.5%                    -37%
  Diebold Nixdorf          $3.85                    $298m                  -61.5%                   -40%                      -48.5%
  NCR                      $18.26                   $2.36b                  – 47%                   -23.8%                    -16%
  Glory                    ¥2560                    ¥1629b                 -23.8%                   -4%                       +3%

COVID-19 and Cash: a Not-so-Brave New World - Oberthur Fiduciaire
The Stars of
CIT companies hit hard                          NCR’s results for 2019 also provided
                                                confidence for 2020. But as with others,
                                                                                                    Aruba (Continued)
In the last Industry Watch we reported a
strong performance for two of the four CIT      NCR’s market value fell by 47% in the               Q: Given that the population was
companies (for the other two, see page          period, reducing its market value by                perfectly happy with the existing notes,
4). Today their outlook and situation is        $1.99 billion to $2.36 billion. It also             what were the messages you used to
very different.                                 underperformed its market by 23.8% and in           convert them to the new one?
                                                the 12 months by 16%.
Brinks’ share price fell by 44.5% in                                                                A: We had to present a better product
the period, reducing its market value           Glory also fell in the market downturn, but         that the public could fall in love with –
from $4.64 billion to $2.54 billion. Its fall   to a lesser degree than its US competitors.         and we succeeded. The reactions since
exceeded its market by 19% and in the full      In the period its market value fell by 23.8%        the launch have been very positive.
year it underperformed by 16.5%.                from ¥213.82 billion to ¥162.91 billion, and
                                                                                                    We did this by taking the decision to
                                                although in the period it underperformed
G4S’s share price fell by 57.1% in the                                                              step away from being perceived as a
                                                its market by 4%, in the full year it
period, reducing its market value from                                                              dull central bank. To generate attention
                                                outperformed by 3%.
£3.35 billion to £1.44 billion. It also                                                             before the launch, the CBA adopted
underperformed its market in the period by      Conclusion                                          a humoristic teaser campaign titled
30% and in the year by 35%.                     The link between the disproportionate fall          the ‘Stars of Aruba’. It was created
G4S announced the sale of most of of its        in value of companies in our sector and             together with Crane Currency and its
cash business in February to Brinks for         the new front that has opened up in the             communication partners in Sweden
£600 million, but this was announced some       war against cash thanks to the arrival of           and leveraged the island’s vibrant social
time after its share price had begun to fall,   COVID-19 is inescapable.                            media channels, in particular Facebook
along with the market. Its recent results       The World Health Organisation (WHO) has             and Instagram. The peculiarity and
(see page 4) did not halt its fall in value.    a lot to answer for in this, having issued a        uniqueness of some indigenous
                                                statement saying that the coronavirus was           animals, also key elements of the
Loomis released impressive results for
                                                carried on banknotes and that people could          previous series, were maintained but
2019 (see last month’s CN), but in the
                                                become infected this way. The story spread          updated for the new banknotes.
period its market value still declined by a
very substantial 53% to SEK 14.4 billion        rapidly and although the WHO retracted its          You have to make people curious,
and it underperformed its market by 26.5%.      statement later, the damage – as noted in           and we definitely succeeded. The
In the year it underperformed by 25%.           this month’s editorial – has been done.             Arubans were very surprised when
                                                Stories on various attempts to clean notes          the first campaign ads came out and
The fall in its share price started around 19
                                                via, for example, disinfection, were also           wanted to learn more about the new
February (roughly a week later than most
                                                widely published, simply adding weight to           banknotes. Each day people were
other companies in the industry) – from a
                                                the story, with the result that cash – mainly       looking forward to the next ad to see
high of SEK 398 reaching a low point of
                                                banknotes but also coins – is widely seen           which animal we had put into the
SEK 158 on 23 March, a fall of 60.3%,
                                                as a means of spreading and catching the            spotlight. And the public started asking
before recovering to end the period at
                                                virus and so unsafe to use.                         for the next teaser animal, sending in
SEK 191.
                                                                                                    suggestions to us with arguments for
Prosegur’s share price, like that of Loomis,    Central banks have been too slow to
                                                                                                    their favourite animal.
also fell from around 19 March. Its high        reassure the public that cash is no less safe
                                                than other products or surfaces with which          This was indeed one of the most
point in March just prior to the fall was
                                                people interact on a daily basis. And some          effective marketing strategies that we
€3.91 and its low point €2.03, a fall of 48%,
                                                have been actively promoting cashless               could have used. It worked very well
despite releasing encouraging results for
                                                alternatives. Meanwhile the industry – albeit       – and an innovative and creative way
2019 (see page 4).
                                                now coming to the defence of cash – has             to show that the CBA also has normal
In the period, Prosegur’s market value                                                              people as its staff!.
                                                also been too slow and too fragmented in
fell from €3.75 billion to €2.33 billion, a
                                                its approach.
38% fall. In the period it underperformed
its market by 13.5% and in the full year        The consequences are that retailers
by 37%.                                         are refusing to accept cash, with a
                                                corresponding increase in alternative
Falls for ATM and service providers             payments, particularly contactless. At
Diebold Nixdorf started this year with          the same time, economic activity has
confidence as indicated in its 2019 Report      nosedived, further suppressing demand
and Accounts. However, COVID-19 has             for cash and all the normal activities in the
knocked that confidence off course. In          cash cycle.
the period its market value fell by 61.6%
                                                It follows that investors, having absorbed
– the highest of any company in this
                                                these negative aspects, both short and long
portfolio, reducing its market value from
                                                term, are steering clear of the cash industry
$765.6 million to $298 million. It also
                                                – certainly for the time being. Will this be
underperformed its market in the period by
                                                permanent? Only time will tell. But in all
40%, and in the year by 48.5%.
                                                crises, there are always winners and losers.
                                                And in this particular crisis, cash is definitely
                                                proving to be a loser.

                                                                                                            VOLUME 18 – NO 3 | MARCH 2020       9
COVID-19 and Cash: a Not-so-Brave New World - Oberthur Fiduciaire
The Science Behind Bioguard Enhance
   Currency News was keen to find out              Q: From our understanding, Bioguard is            Q: Are there any trade-offs required to
   more about Oberthur Fiduciaire’s new            an anti-bacterial defence. How is this new        adopt this solution?
   Bioguard Enhance™ anti-viral treatment          solution different?                               A: There are no changes required at all for
   so we met, on the phone of course,              A: Bioguard is indeed an anti-bacterial (and      the banknotes – existing security features,
   with Henri Rosset – Research Centre             anti-fungus treatment) but it also builds         designs, and machine reading features
   Manager, VHP Security Paper, which is a         on the previous work undertaken by the            can continue as today. This makes the
   subsidiary of Oberthur Fiduciaire.              R&D teams against banknotes carrying the          technology available to every part of our
                                                   influenza virus. This new solution is different   banknote community.
                                                   because it is effectively the combination         Q: Will you make this available to other
                                                   of Bioguard in the paper and Bioguard             paper makers, not just for banknotes?
                                                   in the varnish which enlarges the activity
                                                                                                     A: Yes, very much so! We see this as an
                                                   spectrum and provides us with a much
                                                                                                     industry solution. The world is facing a
                                                   more powerful solution.
                                                                                                     pandemic which affects us all – our friends,
                                                   Q: Can you provide some more                      families and our whole industry. I am very
                                                   details about the science behind                  pleased to know that Oberthur Fiduciaire
                                                   Bioguard Enhance?                                 is keen to share its solution with other
                                                   A: It is well known that silver has anti-         providers, competitors and all those in the
                                                   bacterial and anti-viral properties. So, we       supply chain.
                                                   use a silver-based component in both the          As far as other industries are concerned,
                                                   paper and varnish treatments which are            we are obviously open to share the
                                                   active against bacteria and also viruses          technology, bearing in mind that it is
                                                   when introduced into both paper base and          valuable for any object that is handled
                                                   into the varnish: this combination enables        frequently by humans.
                                                   significant anti-viral activity.
                                                                                                     Q: How long have you been working on
                                                   The Bioguard Enhance anti-viral activity          this solution?
                                                   was assessed against a seasonal
                                                                                                     A: I have personally been working in this
                                                   coronavirus, the OC43 which comes
   Henri Rosset.                                                                                     field for 15 years and I have constantly
                                                   from the coronavirus family to which
                                                                                                     been trying to find solutions in this area. To
                                                   COVID-19 belongs. The results showed
   Q: At this time, everyone in the world is                                                         discover that our products work against
                                                   that our solution offers a significant anti-
   considering how they can protect themself                                                         coronavirus OC43, a representative
                                                   viral protection.
   from the threat of COVID-19. We know                                                              of the coronavirus family that includes
   that the virus can survive on many surfaces     And yes, it continues to protect against          COVID-19, was a very exciting moment for
   and is transmitted via the hand to the face.    bacteria and microscopic fungi. In                me, personally.
   How does your solution break this cycle         particular, Bioguard treatment has been
                                                                                                     Q: How confident are you in the
   for banknotes?                                  tested to demonstrate its effectiveness
                                                                                                     performance of Bioguard Enhance?
                                                   against the bacteria responsible for carrying
   A: Well, all viruses die naturally on                                                             A: We are scientists and look at the results
                                                   plague and cholera.
   banknotes, like any other inert material.                                                         in an objective way and that is why we are
   What Bioguard Enhance does is to                Q: Where banknotes are circulating fast,
                                                                                                     quite confident.
   accelerate the dying process.                   they wear and soil fast. How robust will
                                                   Bioguard Enhance be in circulation?               We have been working with a leading
   The laboratory tests that were conducted                                                          laboratory, using standardised procedures
   on Bioguard Enhance measured the                A: Good question! We have experimented
                                                                                                     with detailed protocols in the field of
   remaining viruses that survived after five      with the components in our Bioguard paper
                                                                                                     pathogen testing in the USA and so our lab
   hours on both a regular PVOH (polyvinyl         for many years with papers stored in normal
                                                                                                     test results are credible and robust.
   alcohol) paper sample and a paper sample        conditions. Of course, when banknotes
                                                   become unfit and severely soiled through          We believe, given their similarities in
   treated with Bioguard Enhance. On the
                                                   circulation it increases their weight because     structure (they're both enveloped viruses),
   untreated PVOH paper, 92.4% of the
                                                   of the accumulated dirt and the anti-             that it is logical that all coronaviruses and
   viruses had died after five hours, while on
                                                   microbial protection can be reduced as any        H1N1 influenza type viruses will react
   the sample treated with Bioguard Enhance
                                                   other paper property would be. This is why        similarly to this treatment. For H1N1
   more than 99.9% of the viruses were
                                                   Bioguard Enhance was developed in order           influenza type viruses, tests are ongoing.
   destroyed. This means that the remaining
                                                   to ensure the optimisation and long-lasting       This is as far as we can go. Nobody can
   amount of the virus is 100 times less than it
                                                   impact of the inherent properties.                tell you from what virus the next pandemic
   would otherwise have been.
                                                                                                     will spring. What we think is that the
   By accelerating the destruction process,        We therefore recommend Bioguard
                                                                                                     banknotes would be more protected with
   Bioguard Enhance effectively diminishes         Enhance as a combination of a paper and
                                                                                                     this treatment and less able to contribute to
   the probability of contamination through        varnish to give protection throughout the
                                                                                                     general contagion.
   exchange of banknotes.                          banknote life in circulation.
                                                                                                     We are very transparent with the
   Q: Can you tell us a little more about                                                            performance of our paper and can provide
   Bioguard Enhance?                                                                                 any information related to the test results to
   A: It is a combination of Bioguard in paper                                                       whomever would like to see them.
   and Bioguard in the varnish, applied
   post print. This combination is called
   Bioguard Enhance.

Windows of Opportunity from KURZ
At the Banknote Conference in Dallas in          confined the design to a stripe application         For the second concept note, the APL
2018, foil manufacturer KURZ unveiled            format. KINEGRAM APL overcomes this                 depicts a spider which is again applied over
its new banknote window feature                  limitation by enabling banknote printers to         a die-cut window and uses KINEGRAM
– KINEGRAM® APL (Applied Patch                   create window features for paper notes              COLORS technology. KINEGRAM ZERO.
Label). At the more recent HSP EMEA              in their own premises, thus retaining both          ZERO® partial metallisation is also used,
conference in Lisbon, it revealed the            value and process control.                          allowing filigree line resolution down to
first application of this feature on two         The two concept notes designed and                  40μm, and perfect registration of the optical
sample (concept) notes designed by               produced by HBPC feature Ottó Herman,               effects with the metallisation. The authentic
György Pálinkás and produced by the              one of Hungary’s most productive and                impression of the spider is produced by
Hungarian Banknote Printing Company /            internationally known scientists. Reflecting        the surface relief 3D effect combined with
Pénzjegynyomda Zrt (HBPC).                       his passion for birds, insects and spiders,         pumping and transformation movements.
                                                 both sample notes illustrate biodiversity.          Both sample banknotes were industrially
                                                 KURZ provided two KINEGRAM APL                      produced under real-life banknote printing
                                                 features for these notes, applied on the            conditions, and tested against banknote
                                                 latest Gietz FSA 1060 Foil Commander                industry quality standards.
                                                 foiling machine.
                                                 The first involves an eye-catching butterfly
                                                 APL applied over a die-cut window. The
                                                 patch incorporates KINEGRAM COLORS®
                                                 technology, showing different colours on
                                                 the front and back of the foil. The feature
While window features are becoming               also included a striking FLUX effect that
increasingly popular, the options for central    exhibits several movements in different
banks wishing to specify these are limited       directions. In addition to the Flux effect, the
to either the use of polymer or compost          foil contains delicate fine line movements
substrates, of to having the foil applied over   and a virtual 3D surface relief effect.
the window at the paper mill, which has

EyeQ – Truth is in the Eye of the Beholder
Bank Innovation Systems LLC (BIS) was            At the numbering machines, the serial               throughput of 10,000 sheets per hour,
established in 2006 by the engineering           numbers applied are linked to the barcodes          its BISM complete finishing single note
team of BARS, who make banknote                  on each sheet so that, after cutting, it is still   inspection system with a throughput of
sorting equipment. While it still produces       possible to connect the individual banknote         388,000 notes per hour, and its QIS 300
sorters, BIS has focused on the creation         back to the sheet it came from.                     sampling inspection system for sheets.
of finishing quality inspection systems          As well as tracking the sheets, the system          According to BIS estimates, through the
and has been working with Goznak’s               creates a quality record for each sheet             implementation of the system, overall
paper and banknote production teams to           process by process. The data is used                throughput increases by 10%, while
create a comprehensive quality control           to generate reports on the quality and              industrial and technical rejects are reduced
and production records system. This so-          performance achieved for each sheet for             by 50%.
called track and trace system – EyeQ - is        each process step, including on the people          In paper mills the system marks each sheet
now ready for wider use.                         working at the time. A history of every             of white paper with a unique bar code. In
Currency News’ Directory of Currency             end-product sheet is created as it passes           paper factories, marked sheets are tracked
Suppliers lists 27 companies active in           through production so that it is possible to        at every production step, and - if numbering
supplying quality control and inspection         know what was done by whom, when and                machines are used - banknote numbers are
systems for banknotes, so BIS are entering       on what equipment.                                  matched to a sheet number.
a crowded field with their new EyeQ              The EyeQ uploads data from the printing             The BIS team has about 25 years of
system, which is designed to enhance the         quality control systems to analyse product          experience in developing and delivering
economic efficiency of banknote printing         quality and the reasons for quality rejects,        integrated solutions for support of the full
by providing process-oriented/production         allowing timely and detailed analysis, with         life cycle of banknotes and printed security
support departments and management               every defect traceable back to the process          products. EyeQ systems have been
with on-line production data, including          and shift that made it. EyeQ is intended            integrated at all of Goznak’s production
equipment types and operators involved.          to be used to recognise latent problems             sites throughout Russia, two paper mills
The approach BIS are taking is to use a          and, consequently, allow production to be           and two banknote printing factories, where
standalone device to add a unique barcode        restructured to resolve them.                       they are used in all steps of the banknote
to identify each sheet of paper. In the          EyeQ can be used with a wide range of               production cycle. Clearly the system
printworks each production process has           high-performance systems, including those           is well established in Goznak, but the
barcode readers integrated into them to          of BIS, such as its QIS 700 complete                company's customers are also located in
track the sheet at every stage.                  inspection system for sheets with a                 10 countries worldwide.

                                                                                                 TECHNOLOGY NEWS | VOLUME 18 – NO 3 | MARCH 2020     11
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