Public officials are responsible for the expenditure of public funds. Period. It is a fundamental principle. For this reason, I have been concerned about the impressions that may have formed from The Gleaner article, published a few weeks ago, on the unavailability of the sums involved in the ticket printing contract for Improved bank of Jamaica. Some have interpreted the non-production of the specific information requested by The Gleaner as contradicting the fundamental principle cited above. However, as we know, principles are often not absolute and apply provided they do not violate other important principles.
Public disclosure of this specific information would constitute a breach of contract, which could engage the liability of the Bank of Jamaica (BOJ). The BOJ is therefore correct that such disclosure “would constitute an actionable breach of trust” and as such this specific information is exempt from disclosure under the Public Access Act. information.
However, we cannot stop there. Fidelity to the cited principle requires a response to the motivating and underlying questions: “Will we be better off?” “Is this a good use of resources?” As Minister of Finance and Public Service, with ultimate responsibility for the form and design of notes and coins to be issued by the Bank of Jamaica under Section 14(1)(a) of the Bank of Jamaica Act, I see it as my duty to provide this account.
In my budget presentation, I provided the context and rationale for upgrading Jamaica’s banknote family. To recap, the BOJ independently and uninvited recommended to me almost three years ago that the Jamaican banknote family needed to be upgraded. In fact, they indicated that it was “overdue”. Benefits to be gained included (a) increased security, as the next generation of banknotes incorporate features that make counterfeiting more difficult; (b) improved banknotes would allow a much clearer distinction between notes, reducing errors made in trade (eg mistaking the $500 note for the $5,000 note, often at night); (c) the improved grades would have features that would better meet the needs of the visually impaired; (d) the cost of the upgraded tickets, over the expected life of each ticket, would be lower than that obtained today.
In addition to these four benefits, and related to the last of those above, upgrading Jamaica’s banknote family will allow Jamaica to maintain competition in the purchase of all of our banknotes. . This is not happening today. A little known fact is that there are features on our current $50 and $100 banknotes, introduced in 2012 when the substrate was changed, that only one printer in the world can produce. (This was necessary at the time for technical reasons). Therefore, whenever the BOJ bids for printing banknotes, there is only one printer in the world that can bid for the $50 note and the $100 note. Obviously, it is very sub-optimal that we only have one source when purchasing these two tickets. Jamaica’s banknote upgrade solves this problem. Multiple ticket printers will be able to print all upgraded tickets. With the enhanced banknotes, whenever banknotes need to be purchased, Jamaicans can be assured of multiple offers for each denomination. This will be a vast improvement over current realities.
Today, our currency denominations use a mixture of materials called substrates. The $50 and $100 bills use a hybrid substrate, which is a mixture of cotton and polymer. The $500, $1,000 and $5,000 are on patent cotton. However, they are not the most durable substrates available today. In upgrading Jamaican banknotes, the BOJ has sought much more durable substrates that will improve the average life of banknotes, thereby reducing replenishment quantities and frequencies compared to current practice.
The process for settling the engineering design of the Jamaican banknote upgrade included a competitive international bidding process in which six world-renowned banknote printers participated. One of these bids was deemed non-compliant and therefore eleven design concepts were considered by five global suppliers. In addition, the evaluation of bids was conducted with the advice of an independent global currency technical consultancy firm specializing in banknote printing technology and security.
Improved Jamaican banknotes resulting from this process will use a polymer as a substrate. The feel will be very different from our banknotes of today. The feel and texture of the British Pound, Canadian Dollar or East Caribbean Dollar are all based on polymer substrates and provide a close approximation of what our new improved banknotes will feel like.
The Eastern Caribbean Central Bank, which is the monetary authority for the Eastern Caribbean countries of Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, Grenada and Saint Vincent and the Grenadines, updated its family of banknotes during the years 2019-2021 to use the polymer substrate. Trinidad and Tobago carried out the same banknote upgrading exercise, also using the polymer substrate, during the same period. And, this year, Barbados has updated its banknote family using the same polymer substrate. Jamaica is therefore lagging behind the other CARICOM countries in the implementation of this essential modernization.
Further from the Caribbean, Australia, Canada, Ireland, New Zealand, Scotland, the United Kingdom and 25 other countries around the world have also upgraded their tickets to this more durable and less expensive substrate. .
THE $2,000 TICKET
In separate correspondence almost three years ago, the BOJ also independently and uninvited informed me that technical studies have shown the need for introducing a new currency denomination between the $1,000 note and the $5,000 note. The Bank of Jamaica further proposed the introduction of a $2,000 note which would bring greater efficiency to Jamaica’s monetary structure, allowing cash transactions to be settled more easily. With the introduction of the $2,000 note alongside the $1,000 and $5,000 notes, consumers and businesses will need fewer notes to settle their transactions.
TICKET PRINTING COST
Over the past five years, the BOJ has spent an average of just under $1 billion a year to acquire banknotes and, in the process, replace worn notes.
The BOJ projects that without upgrading Jamaica’s banknote family, it would spend $16.6 billion over the next 10 years on banknotes. By upgrading Jamaican banknotes, the BOJ instead plans to spend $12.4 billion over the next 10 years, including the initial supply. The upgraded tickets therefore promise savings of at least $4 billion over the next decade. The profitability of the improved banknotes allows the BOJ to introduce a new additional denomination, the $2,000 note, while saving $4 billion over a decade.
Savings can also be measured in terms of the number of tickets purchased. Over the past five years, the BOJ has purchased an average of 122.6 million banknotes each year. The BOJ predicts that if we keep the existing banknote family, 123.9 million pieces of banknotes would be purchased annually over the next 10 years. The BOJ projects that with the upgraded banknote family, the BOJ will buy an average of 103 million pieces of banknotes per year over the next decade. So although the BOJ will increase the number of denominations with the introduction of the $2,000 note, it plans to purchase a smaller amount of banknotes each year, largely due to the increased durability of each note. and the substitution effect of the $2,000 note.
The modernization of the Jamaican banknote family is indeed behind the times and Jamaica lags behind its peers in this regard. The improved banknotes will allow the BOJ to use public funds more efficiently, saving $4 billion over 10 years, while improving the security and usability of our national currency.
n Dr Nigel Clarke is Minister for Finance and the Civil Service and MP for St Andrew North West. Send your comments to [email protected]