The Lifespan of Money

How long a banknote lasts is dependent on how the public handles it. There are regional as well as cultural differences here. Whether people mostly carry their money in a wallet or keep it loose in their pockets has a major impact, for example. Overall handling throughout the cash cycle, ATM dispensing, frequent sorting by automated systems, and being passed from hand to hand multiple times a day all also leave tracks on a banknote’s surface.

It is not only where it is kept and how it is handled that plays a decisive role in determining the lifespan of a banknote. Environmental influences also have a considerable impact on banknote “fitness.” This means that in subtropical climates, there are different demands on banknote material and resilience than in the cooler north. Banknote quality can be optimized for the needs of a given country by tailoring the combination of substrate, printing methods, and finishing technology. This is essential not only for the population, but also for the machines that count the notes and test for authenticity.

The actual lifespan of a banknote and the point when it must ultimately be replaced can be determined by laboratory tests. A circulation algorithm developed by G+D Currency Technology simulates the wear and tear on banknotes in circulation and is therefore a reliable tool for this purpose.


The Life of a Banknote

500,000,000,000 banknotes around the world

There are currently around 357 billion banknotes in circulation. Their average circulation lifespan ranges from under 12 months to several years. About 150 billion banknotes are printed every year to replace the worn notes taken out of circulation. What is more, statistics show that the number of notes in circulation continues to increase by around 3 percent each year.

From cradle to grave

Before a banknote enters circulation, it passes through numerous production steps and security tests. After production of the banknote substrate and integration of security elements into the paper, printing and inspection takes place, followed by cutting and packing of the finished notes.
Today, banknotes are high-tech products with numerous different security features distributed over well-defined security levels. These levels are associated with user groups. Some are designed for the general public, overt and easy to recognize, while others can only be read by sensors on sorting machines. The overall durability of a banknote is therefore limited not only by its optical appearance to the human user but, above all, due to altered signals in automated authentication. Notes that no longer meet the quality criteria for reliable processing must also be exchanged.

Best before

All these factors influencing the length of time a banknote stays in circulation are considered by central banks when establishing specifications for new banknotes. In Germany, for example, according to information from the Deutsche Bundesbank, the typical lifespan is between one and five years. Whereas five- and ten-euro notes must be exchanged around once a year, 500-euro notes are used significantly less, so remain in use for up to five years.

If a banknote no longer meets the required quality standards, it must be taken out of circulation by the central banks and replaced with a new banknote. Secure destruction at the end of the note’s lifecycle is also very important, in order to ensure that it cannot be put back into circulation.


Quality and Demand

External and internal qualities

The higher the value of the banknote, the longer it can stay in circulation. A banknote must meet various quality criteria to continue circulating. Above all, visual and tactile features play a role for the public. Aspects of banknote automation also count, as these are required by banknote processing systems in order to assess and process notes.

Demands on automated processes

In contrast to coins, paper money reacts strongly to external influences. Friction, moisture, and contact with liquids or even chemicals put a strain on banknotes in the same way as extreme climatic conditions. In an increasingly automated business world, it is mainly machines that place demands on the quality of a banknote. It is now standard practice for processes such as counting and sorting of notes to be carried out by machines.

Machine readability

While the public ensures the authenticity of their money by means of optically variable, tactile, and interactive features, automatic banknote verification remains essential to detect counterfeits quickly and securely and remove them from circulation. Hidden features based on magnets or UV light, which can only be checked by specific sensors, ensure clear differentiation between authentic and counterfeit banknotes. To enable reliable checking, a particular signal intensity is required from these machine-readable features, i.e. a certain mechanical quality, for the banknotes to remain in circulation.


A Journey through Time

Simulated circulation looks to the future

G+D Currency Technology has developed a test to simulate circulation, so that central banks know when they need new banknotes and can exchange old ones at the right time. Using this process, G+D Currency Technology can simulate the wear and tear that would arise over many years of use by humans and machines within a very short time. The process is modular and can simulate the intensity of handling and the duration of circulation based on the selected settings.

Here, Jürgen Zerbes, Director of Product Marketing in the Banknote Solutions Division at G+D Currency Technology explains how the simulation works.

Mr. Zerbes, can you give us more details about the testing process?

The banknotes are subjected to extreme conditions and undergo very thorough testing. This means that they age at an accelerated pace. After six hours of testing, the banknote shows the same amount of stress as if it had been in circulation for two years under high strain. The banknote material is of course much more stable than ordinary paper, and is therefore more robust. This robustness is highly relevant in everyday life.

Can you explain the advantages of an accelerated circulation simulation for banknotes as opposed to a field trial?

This intensive testing enables us to preview a banknote’s behavior in circulation. So central banks know whether their future banknotes will meet their expectations and actually achieve the intended service lifetime. Individual, wear-resistant variants can be objectively compared using this type of test. Field trials with banknotes are a highly sensitive issue, as they involve public participation and are therefore much more complex to conduct and control. Banknotes have to be distributed in large quantities, and strict monitoring of the various set-ups substantially increases the effort involved. It takes several years until the final results are obtained in such an experiment. Defects in a test note may also compromise the field trial.

Meeting the demand for banknotes requires reliable and cost-efficient planning in advance, to allow sufficient time between order and delivery. Quantity requirements for actual circulation and strategic stock levels are determined based on average “banknote consumption”. Especially for new currencies or banknote series, the quality of the notes and their sustainability in circulation can be tested beforehand using our simulation.

What does the banknote look like after the test and what exactly can you deduce from this?

During the simulation, the banknote is soiled, crumpled, scratched, etc. It undergoes typical everyday situations, like being dropped into dirt or soil and stuffed into a pocket, and this is then evident from its appearance. The tests can be adapted according to the substrate used in the banknote and adjusted to the requirements of the central bank. Typical notes in various stages of degradation are taken from circulation in the relevant country and used to make adjustments in the final stage after simulation.

How do you assess whether a banknote is fit or unfit?

Each central bank sets the relevant quality standards for its banknotes independently, and is therefore ultimately responsible for deciding when its money must be exchanged or renewed. Needless to say, however, the degree of automation of a cash cycle is also a decisive factor here. The more frequently banknotes are counted automatically in a cash center and further processed, the more rapidly damaged notes can be taken out of circulation.


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Giesecke+Devrient Currency Technology GmbH

+49 89 4119-0

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