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The British government crippled Muammar Qaddafi’s attempt to fund his faltering regime this week by impounding nearly $1.5 billion worth of Libyan dina rs, which had been printed under contract by a British firm. Wait, how many countries outsource their currency?
Half the world. Between 10 and 20 percent of all bank notes around the globe are printed by private companies, such as the U.K.’s De La Rue, the Canadian Banknote Company, Giesecke & Devrient in Germany, and Crane, a printer working in Sweden and Massachusetts. Of the world’s 171 currency-issuing authorities—there are more countries than currencies, because of the EU and an economic union of West African countries—around 50 percent outsource some portion of their printing needs. Giesecke & Devrient, for example, prints currency for five dozen countries, and Canadian Banknote fills orders for 20. (There may be overlap in those numbers. Central banks sometimes split production of different denominations between companies.) It’s impossible to compile a complete list of outsourcers, though, because many governments don’t like to talk about the practice, and the printing houses refuse to release their client lists. Singapore, Finland, Sweden, Bahrain, and Qatar are known to outsource all of their printing. Controversy erupted in India last year when its outsourcing became public. The Philippines has been ordering notes from abroad for years, with mixed results. In 2005, the French company Oberthur misspelled the president’s name on some of the bills.
Smaller countries outsource their printing needs for economic and technical reasons. Bank note production is a niche business, and the machines required to make modern currency are both expensive and rare. The smallest and cheapest printing systems available today can produce around a billion notes per year, so if a country needs fewer than that—and many do—they’d be wasting their investment. (For reference, the U.S. Bureau of Engraving and Printing churned out more than 9 billion notes last year.) Some smaller countries choose to keep their printing in-house despite the inefficiency, for national security reasons. (More may do so after what the U.K. did to Qaddafi.)
Even if a country can afford printing machines, it’s hard to keep up with constantly evolving anti-counterfeiting measures. Producers use robotic etching devices, inks that change their appearance in different lights and at different viewing angles, laser marking, and pixelated watermarks. The paper itself can be made of cotton, polymers, or a combination of the two and has metal and magnetic elements interwoven. Central bankers around the world can specify which of these products they want when they place an order. High-denomination currencies are usually the most expensive to produce, because they’re low-volume and tend to be equipped with the most stringent security measures.
Some aspects of the currency-outsourcing industry are shrouded in mystery. In addition to keeping their client lists under lock and key, producers won’t disclose how they transport billions of dollars in cash from their warehouses to central banks abroad. Nor will they say how much they charge for printing a bill. The U.S. Bureau of Engraving and Printing spends about 6 cents per note, but that’s on a nonprofit basis and with the benefit of an enormous economy of scale.
The ordering process is tightly controlled, so don’t try to order a shipment of vanity notes for the Bank of [Your Name Here]. Printers must be certified by the central bank they’re working for. The central banks, in turn, have to register with the World Bank for the right to order currency from the printers. The printing companies can only take orders directly from the central banks. Not even a head of state can buy cash—his central bank must place the order.
Explainer thanks Ian Shaw of Canadian Banknote Co. and Heiko Witzke of Giesecke & Devrient. Thanks also to reader Wynne Beers for asking the question.
