Norges Bank

Staff Memo

Quality of banknotes in circulation – Norges Bank’s role and monitoring system

Trond Eklund, Leif Veggum, Peder Natvig and Lisa Hausberg Michelazzi
Staff Memo

After the year 2000, Norges Bank made substantial changes to its role and activities in cash operations. The aim was to increase the efficiency of the overall payment system and of cash distribution. The Bank has assumed a clearer role as wholesaler in cash distribution, and discontinued service activities better suited to the retail level. As a result, Norges Bank is now less able to influence the pattern of banknote and coin circulation.

This article explains why the quality of banknotes in circulation is important for Norges Bank in terms of performance in attaining its objectives. It then discusses the challenges regarding the quality of banknotes in circulation, and the possibility to monitor and influence quality using a concept developed and implemented by Norges Bank. Since wear is considerably less of an issue for coins, wear does not pose the same challenge in this regard. This article's focus, therefore, is on banknotes.

Staff Memos present reports and documentation written by staff members and affiliates of Norges Bank, the central bank of Norway. Views and conclusions expressed in Staff Memos should not be taken to represent the views of Norges Bank.

ISSN 1504-2596 (online)

Published 26 May 2016 15:45
Published 26 May 2016 15:45