Money with staying power

San Diego Union Tribune
By S. Lynne Walker

28.09.02

Mexico expects longer use from plastic 20 Peso bills
 

Mexico City. It bends. It curves. It doesn't tear. It doesn't even get dirty.

Plastic money. It's Mexico's latest way of dealing with the expensive problem of replacing ripped-up, worn out currency.

On Monday, the Banco de Mexico will release a plastic 20 Peso bill that could revolutionize the way money is handled in this country.

The 20 Peso bill will still bear the familiar face of Mexican hero Benito Juarez. It will be the same size. It will still be tinted with blue dye. It will still be worth about $2.

But the new bill, the subject of six years of research, has a tiny, transparent window that makes it tougher to counterfeit. And it's fabricated from polymer instead of cotton-based paper, making Mexico the first nation in North America with plastic currency.

The experiment holds so much promise that the U.S. Federal Reserve Bank is watching to decide whether, one day, the greenback could also go plastic.

The 20 Peso note is Mexico's most heavily used bill, so it's subjected to a lot of wear and tear, said Jaime Pacreu, currency-issuing director for Banco de Mexico, the nation's equivalent of the Federal Reserve.

A bill changes hands about 10 times a day, so the current 20 Peso note lasts only eight months before it has to be taken out of circulation. The new plastic bill will cost twice as much to make, Pacreu said, but it is expected to last three times as long.

Banco de Mexico will remove 178 million paper bills from circulation in the shift to plastic. Already, hundreds of thousands or carefully bundled 20 Peso notes have been trucked or flown to six key cities across the country, including the border city of Mexicali.

On Monday morning, the glossy new 20s will start showing up in banks, which will pass them along to the public.

"There will be people who will notice it, but others who won't," Pacreu said as he pulled one of the new bills from his leather wallet. "What people will see more and more of these new bills every day and less and less of the old ones."

Pecreu isn't worried that Mexicans will reject the plastic Peso, as Americans shunned the $2 bill in the late '70s. For months, Banco de Mexico has tested the plastic money with focus groups from all economic levels, and the response has been overwhelmingly positive.

To avoid confusing the public, the bank has been running television and radio commercials for the past 10 days. After the bill's release, Pacreu said, more commercials will remind people that the plastic bill—referred to as "the window to modernity"—is in circulation.

Federico Estévez, an analyst who comments on political and economic trends in Mexico, said he'll be one of the first in line Monday to get some plastic Pesos. Estévez said he's tired of carrying wrinkled, dirty 20 Peso bills in his pockets. And he complains that Mexico's heavy, 20 Peso coins are downright destructive.

"Those bills are hard to keep fresh. And we hate those big coins. They wear holes in your pockets," he said. "This new stuff? You can let the kids play with it. You can put it through the washing machine and nothing will happen. This is true innovation."

Australia has produced plastic currency since 1988. Brazil, New Zealand, Thailand and Romania also use polymer money with favorable results.

Climate and local customs could change the results in Mexico, said Pacreu. Here, for example, "a lot of people don't put their bills in a wallet. In Australia, almost everybody uses a wallet."

But, he added, "We do not see any reason why this should not be successful."

Other countries are experimenting with alternatives to the traditional paper bill. One project calls for collecting worn out bills and covering them with a coat of warnish.

Improving currency is "a process that we cannot stop," Pacreu said. Countries are always searching for ways to make money that is harder to falsify and cheaper to produce.

If the two-year experiment proves successful, Mexico will begin converting its 50 Peso bill—worth about $5—to plastic. The paper version of that bill lasts only a couple of months longer than the 20 Peso note.

As for concerns that Mexico is becoming a plastic society, Pacreu said, "I don't think plastic is good or bad. It has its advantages and disadvantages. People will have a better, cleaner bill, and it will cost the country less money."

All things considered, it's not so bad to go plastic, he said. "We think the change is good."