Recent Trends and Developments in Currency 2011/2012
Jacobson, Glenys, The Reserve Bank of New Zealand Bulletin
The Reserve Bank has the sole right to issue currency (banknotes and coins) in New Zealand. Maintaining the supply, quality and integrity of the currency is one of the Reserve Bank's core functions. To fulfil this function, the Reserve Bank closely monitors trends in the demand for notes and coins, and undertakes banknote processing operations to maintain the quality, and to check the authenticity, of notes in circulation.
This article looks at trends and developments in New Zealand's currency. Section 2 looks at the growth in currency in circulation as a whole, sections 3 and 4 look at the composition of, respectively, banknotes and coins in circulation, and section 5 covers the note-processing function of the Bank. Section 6 discusses the level of counterfeiting in New Zealand, and section 7 summarises.
2 Currency in circulation
Currency in circulation comprises notes and coins held by the general public (businesses and households), and held by banks and other financial institutions. Figure 1 shows that currency in circulation has grown steadily over the last several years. Figure 1 also illustrates the peak in demand at Christmas each year when banks order additional cash from the Reserve Bank to meet their customers' needs. In the year to June 2012, total currency in circulation grew by 4.9 percent, as shown in table 1 below, and as at 30 June 2012 the value of currency in circulation was $4.4 billion. Of this total, the general public held $3.8 billion and banks held $580 million. Total currency in circulation has risen by 30 percent over the last five years, currency held by the general public has grown by 32 percent and that held by banks has grown by 18 percent.
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3 Composition of banknotes in circulation
Figure 2 and table 2 show the composition of banknotes in circulation at 30 June 2012. Figure 2 shows the number of notes and value of notes in circulation by denomination. The $20 note has the largest share of notes in circulation at 43.8 percent. However, the $50 note saw the largest growth in value over the year to June 2012, at 7.9 percent, and has continued to increase its share of notes in circulation by number, now accounting for 15.2 percent.
Table 2 gives figures for the number and value of notes in circulation by denomination at 30 June 2012. In June 2012, 136.6 million banknotes were in circulation with a combined face value of $4 billion. The value of notes in circulation has grown on average by 4.8 percent per year for the last Ave years.
4 Composition of coins in circulation
Table 3 shows the number and face value of coins in circulation at the end of June 2012. The face value of coins in circulation was $320 million, an increase of 5 percent on the June 2011 figure. This figure represents almost 8 percent of all currency in circulation. In the year to June 2012, the Reserve Bank issued 52 million coins. The most popular coin in circulation is the 10 cent coin, and this is also the coin with the fastest growth rate in demand, at 9.3 percent over the 12 months to June 2012.
5 Banknote processing
Another key function of the Reserve Bank's currency department is to maintain a high quality of notes and coins in circulation. It is important that banknotes are of a good quality to protect against counterfeiting. If banknotes were of a lower quality it would be more difficult for the general public to distinguish a counterfeit from a poor quality genuine banknote. To ensure a high quality of banknotes the Reserve Bank processes notes using a high-speed note-processing machine. The note-processing machine will sort low quality notes and destroy them automatically. The machine can also authenticate banknotes, acting as an important check for counterfeits.
In the year to June 2012, banks repatriated 70.5 million surplus and unfit notes to the Reserve Bank. …