Norway developing new banknote series

According to a Norges Bank press release dated 4 December 2012, Norges Bank has started on a project to develop a new banknote series. This will be the eighth series of krone-denominated banknotes. There is a need to enhance the security of Norwegian banknotes so that they will continue to be hard to counterfeit.

Why is Norges Bank going to replace Norwegian banknotes?
As the central bank, Norges Bank bears the responsibility that Norwegian banknotes function effectively as means of payment and have adequate functionality and that the general public has confidence that the notes they use are genuine. This means, for example, that genuine banknotes should be easy to identify. Norwegian banknotes must therefore have security features that are sufficient to deter counterfeiting.

The likelihood of Norwegian banknotes being counterfeited may be reduced by ensuring that the notes' security features are not inferior to those on comparable countries' banknotes. A number of countries, including Sweden, Denmark, Canada, Switzerland and the Euro countries, have introduced or are about to introduce new banknote series with enhanced security. This requires an enhancement of the security features on Norwegian banknotes too. And because developing a new banknote series takes time, work to develop a new series needs to begin now.

Moreover, it has been nearly 20 years since the appearance of first banknote in the current series (the 200-krone note). Norges Bank has already upgraded this series once, and has concluded that further upgrades of the existing banknote series would be impractical.

When will the new banknotes be introduced?
Developing a new banknote series is a complicated and demanding project that poses considerable challenges and various types of risk at all stages. Experience from other countries that have introduced or are about to introduce new banknotes suggests that it takes several years from the time work commences until the notes are placed into circulation.

Why does it take so long to create a new banknote series?
First, Norges Bank will select a theme for the new banknote series. For this effort, the Bank will solicit advice from outside. Once the theme has been approved, the Bank will choose the main elements of the banknotes' design. It may be appropriate to invite one or more artists to propose motifs.

Then the work begins to select security elements and the type of paper. The design components and look of a banknote have a close bearing on the work on security elements. It is a demanding task to place the security elements in a way that makes the banknote aesthetically pleasing, yet meets all technical requirements. At this stage, external stakeholders, such as banks, retail trade and organisations for the blind and visually impaired will be involved to ensure that their needs are addressed.

The banknotes are also supposed to function in vending machines and ATMs, and will be available for testing in sufficient time before being placed into circulation. Introducing new banknotes and withdrawing old ones also requires an extensive information campaign targeting banks, retail outlets and the general public. All these factors help to make the work on a new banknote series a protracted process.

Who decides that we will be getting new banknotes and what they will look like?
It is Norges Bank that has decided that work will begin on a new banknote series (cf. Section 13 of the Norges Bank Act). It is also the central bank that will approve the theme, motifs, format, colours and range of denominations. The Ministry of Finance will be kept informed, as it states in the Norges Bank Act: "Before the Bank makes any decision of special importance, the matter shall be submitted to the ministry." Since approval of a new banknote series is a decision of special importance, the matter will be submitted to the Ministry of Finance.

Do we even need banknotes now that most people pay with a card?
Banknotes are and will continue to be an important part of the infrastructure of the payment system, and the quantity of cash in circulation has remained at around the same level in recent years. In other words, there is still a need for banknotes.

It is also the Bank's experience that whenever electronic payment systems do not function, or there are fears that these systems will cease to function, the general public increases its demand for cash. Thus, cash serves as a backup.

Will there be a change in the denominations of banknotes?
Norges Bank is responsible for ensuring an appropriate range of denominations. An assessment of which denominations to include in the new series is a part of the project.

Will Norges Bank also be introducing new coins?
Norges Bank has no plans to make changes to the current coin series. But in connection with development of a new banknote series and the range of denominations, the Bank will considerer whether the 50-krone note should be replaced with a coin.

What will happen to current banknotes?
From the date new notes are introduced, Norges Bank will approve the withdrawal of existing notes from circulation. This is authorised by Section 15 of the Norges Bank. A decision to withdraw banknotes will be announced in the Norwegian Legal Gazette (Norsk Lovtidend) and Norway's largest newspapers.

Following the announcement, the notes will continue to be legal tender and may be used in the ordinary manner for one year. After that, Norges Bank is obliged to redeem them for an additional ten years.

Courtesy of Phil Martin.