Is the US ready for plastic money?

Canada is the latest nation to switch to polymer banknotes. The case for change seems compelling, but . . .

By doubleace Apr 22, 2011 12:08PM

This post comes from Lynn Mucken at MSN Money.


Canada plans to begin printing $100 plastic -- specifically polymer biaxially oriented polypropylene -- bills this fall, joining 32 nations that have abandoned paper money, which actually is cotton and linen.


By all accounts, this is a no-brainer: The new bills, while more expensive to manufacture, last a lot longer than paper money and thus cost less in the long haul; they are much more difficult to counterfeit; and they don't carry disease-creating microbes because there are fewer wrinkles to hide those nasty germs. They're even recyclable.

So why is the United States still using paper nearly 20 years after Australia successfully switched over?


There are no clear-cut answers. The U.S. is quite secretive when it comes to currency, worrying that it will lose a step in the never-ending technology battle with counterfeiters.


But here are a few guesses:

  • There are some downsides to polymer money. In 2000, Brazil went to polymer to issue a commemorative 10-real note, then did an exhaustive study over the next few years. Generally, all reports were good, except for one thing: Those who handled money the most -- clerks, bank tellers, cab drivers -- said the bills were too slippery and so thin they stuck together. That remains Brazil's only polymer issue.
  • The cost-to-savings ratio is not good enough. According to the Federal Reserve Board, the U.S. will print 6.8 billion banknotes in 2011, at a cost of $650 million, about 9½ cents each. Going to polymer would at least double that cost. However, about 45% of the U.S. currency issued every year is in $1 bills. The $5 bill makes up another 6%. These bills are almost never counterfeited -- like the rest of us, counterfeiters prefer to make a lot of money as quickly as possible -- so the anti-counterfeiting case has less merit.
  • The "clean money" argument? Just wash your hands before handling food. And don't suck your thumb.
  • Pure politics. If polymer bills last longer than paper money, and they obviously do -- the Brazil study showed that after 42 months, only 0.18% of its 10-real notes ($6.35 U.S.) were unusable; the average life of a $5 bill is 24 months -- the companies that provide the material for American money would take a hard hit. Crane & Co., of Dalton, Mass., has provided all of the paper for U.S. money and passports since 1879. Think their lobbyists and the members of Congress from that state wouldn't go to the mat over a proposed change to plastic?

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5Comments
Nov 19, 2011 10:49AM
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Three other changes are in order along with polymer bills: (1) Eliminate the $1.00 bill.  It is nearly worthless due to inflation.  Make the $2,00 bill the smallest polymer currency; (2) Along with suggestion #1,  mint a really practical $1.00 coin that Americans will accept and can use cinveniently in vending machines and for change (If your "break" a $5.00 for a $2.00 item, you would get back a $2.00 bill plus a $1.00 coin). The dollar coin should be quarter size for easy and not awkward carrying, perhaps with features like  8 flat edges and a slight yellow or gold tone to separate it by feel and look from a quarter; (3); eliminate the penny as worthless and make the nickel the smallest coin with the Govt. declaring all debts-public and private-payable and legal rounded to the nearest nickel.  Something priced using the current worn out marketing ploy of $9.99, for example, would be priced at $9.95 or $10.00.  If sales tax somehow resulted in a ":penny amount," that would also be rounded to nearest nickel. I.E., not $10.54, but $10.55 or not %10.52, but $10.50.  Rounding up or down would result in total price and tax neutrality, but loads of convenience!  
Nov 19, 2011 12:21PM
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If converting to plastic money in the U.S requires an act of Congress, we will probably be using paper money well into the next century.  A country stuck politically and ideologically in the 19 century.
Apr 24, 2011 9:59PM
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The plastic is worth what the dollar is!!!! Not much. Just play money.
Apr 22, 2011 9:58PM
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Wait, I thought it was called a credit card?
May 8, 2011 8:39AM
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America has already switched to plastic money...
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