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NexGen 100-Dollar Note Will Become a New Stage in the Long History of US Money
01/10/2008 | Banknotes of the World
Larry Felix is the Director of the Bureau of Engraving and Printing of the USA since 2006. He manages the development of the design and security complex of the NexGen banknote series.
Mr. Felix was going to take part in the Second international conference «Cash Circulation: Models, Standards, Tendencies» but regrettably was not able to do so. Instead he sent his video presentation the script of which
we offer to our readers.
I am really honored by the opportunity to present to you on where we are on United States’ banknotes in terms of redesign. Because US paper currency is used worldwide, it is always my pleasure to talk about its developments and discuss some thoughts on future generation of US currency.
Banknotes will continue to fill a need in a wide array of payment options because they are convenient, anonymous, and will always be preferred for certain transactions. Despite all the rumors of the demise of cash, this has been a very interesting and busy year for the entire banknote industry.
Before I talk to you about security features and the prospects of their implementing, I would like to talk to you about our last generation notes, the NexGen notes if you will, and the $100 note, and where we stand with the $100 note being the last in the series of our NexGen notes. Following the successful issuance of our redesigned $20 notes in 2003, and the $50 in 2004, with the $10 following shortly thereafter, and in 2008 we unveiled the new $5 note, we are now facing the most challenging period in our history, as it relates to designing the $100 banknote. This banknote will be the flagship note, and therefore it must be the most technologically sophisticated and complex banknote that the US issued. We believe that the highest denomination note requires the highest level of security. Therefore we have embarked on an effort to add additional levels of hovered and covered security.
This redesigned US note will maintain the unique American look and feel that is immediately recognizable to the public and its users, but it will be distinctive from the rest of the notes in the NexGen series. No matter how daunting the challenges are, we at the BEP do our best to make our redesigned note the most secure in the world. Accordingly, the Bureau is working with our partners, the Federal Reserve, and stakeholders, and banknote users to ensure proper functioning of our banknotes in commerce and in the marketplace. There is a perception that the features in US banknotes have not been sufficiently effective. But according to statistics, less than 0.01% of all US currency that is in circulation is estimated to be counterfeited. That means 1 in 10,000 banknotes. So, as we move forward, we intend to build on existing features, we intend to evaluate what is effective, and we intend to keep those. And we also intend to discard those features that have proven to be less effective.
As we embark on the future generation series, it is important for us to have a road map. It was for that reason that we commissioned the American Academy of Science and the National Research Council to identify potential new features, but also to look at threats that are evolving in the marketplace and see how we can address those threats. These new features that would be incorporated into paper will take advantage of 21st century materials and technologies, and address the 21st century threats that we see looming in the horizon. Our long-term proactive research program may consider advanced printing methods, and a break from the current 2-dimensional printed note. The future could be in the use of smart materials and smart substrates and a hoist of other features that are now may be ideas waiting to be developed.
The Bureau is evaluating 3 technology platforms identified and targeted by the National Academy of Science. We established an internal committee of experts to evaluate all of these technologies identified in the National Academy of Science report. We then intend to narrow the list to those areas that exhibit the greatest degree of promise for the long term. Among the areas that we have identified are fiber-infused substrates, e-substrates and smart nanomaterials. Some of the criteria we use to select these 3 technology platforms included uniqueness of the technology, the amount of ongoing research necessary to keep that development going in that area, and the degree of potential for successful transitioning from conceptual stage to practical application.
Our next step is to partner with a select amount of national laboratories in the United States, universities and the private sector, and we are also open to forming potential joint ventures with other state banknote printing organizations and governmental institutions internationally. If we determine that the requirement requires a multinational approach, a determination can then be made as to decide the best approach for developing these technology platforms to the point that they now become viable features for incorporation in the US currency. As we move forward in our research to find new features relative to the recommendations of the National Academy of Science, it is clear to us that we must first change the way we acquire features, secondly sponsor features from the inception if we want to have different options, and third be open to the notion of co-developing features with others. We want to develop features that are in the idea stage, and if possible co-develop an IPR, intellectual property rights, or license the concept from a third-party. We want to protect the feature from use in other product areas, because we believe that once commercially available the deterrent aspect of a feature loses its effectiveness. We are committed to supporting and nurturing these nascent ideas. Previously, the BEP have relied on the marketplace to provide commercialized features that were proven technology before the Bureau would consider it for its deployment in US currency. Let me emphasize that we are not turning our back on commercially available products, but we believe that we need to develop an additional avenue beyond the marketplace if we want to offer the best protection for our currency.
Over the past year we have developed a program for evaluating and developing how to access potential deterrent features. This new process is much more formalized than existed in the past, and it provides a logical framework for our research and development efforts. Again, from a policy standpoint and from the standpoint of need this type of process was not necessary in the past. Today however we need to be much more responsive to the needs of our customers, our stakeholders, and of course the ultimate end-users of our currency.
Our new process is much less reactive, as I mentioned earlier, and is much more proactive. We have organized our feature acquisition process into four stages: idea generation, feasibility, development and demonstration of applicability (that is what the ECB calls the ’industrialization phase’), and implementation. The idea generation phase is essentially a screening process for determining where to focus our resources. The decisions at that stage are controlled by the existing need for types of features and the level of the existing and future threats that we anticipate on the horizon. During the feasibility phase we will attempt to demonstrate the value of a feature, and how we can implement it into the background. The third phase is the actual development step. Our overall purpose in this stage is to determine the risks, the costs, and the benefits associated with the technology that we selected. Finally, if we determine that a particular feature is a viable candidate for inclusion into our banknotes, we will perform large scale testing, start-up testing, and look into how easy or difficult it is to integrate into our production process.
Every step in the way we go in this process, we will have to actively involve our stakeholders in this development process. We are working with our primary partners, the Federal Reserve Board of Governors, as well as their technology arm, the Currency Product Office, with any new features that can be successfully incorporated or integrated to ensure that they meets their needs. Our process also takes into consideration the Federal Reserve Board’s sensor strategy, high-level covered counterfeit deterrent features to ensure their longevity and detection abilities in the central bank for here going out many decades. Finally, we are committed and expanding our program to original equipment manufacturers and the people who make the equipment that interface and validate our banknotes to ensure that our banknotes work the first time every time, especially in human-to-machine transactions.
As we go forward, what next to expect from the Bureau of Engraving and Printing? Future banknote designs will focus on the fact that banknotes must have more machine-readable features. Additionally, these banknotes have been interrogated by systems using a variety of sensing equipment, including UV, IR, magnetics and some of the most advanced optical devices available. An additional requirement for our FuGen banknotes will be finding optically variable notes that are complex yet easy to explain to the users of currency. And so, those will be the major design thrusts for the future US currency and the fundamental differences between our NexGen and FuGen series. As we go forward, you can expect that the United States will be looking to get the features that offer us two sets of platforms: machine interrogation and ease of use in the marketplace.
I thank you very much for attention, and I regret that I have been unable to visit Moscow, I do look forward to visiting you some time in the future.
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