Ever wonder where worldwide currency gets printed? Certainly, here in the United States, our U.S. dollar banknotes are printed by the Bureau of Engraving and Printing in D.C. and Fort Worth, Texas. Of course, our Federal Reserve keeps them busy. Like the U.S., most large countries do their own printing. The smaller countries, and those under a time crunch, outsource the job.
South Sudan seceded from Sudan on July 9, 2011. It needed currency quickly for its new country. Of course, like all cash, it would have no intrinsic value, but it needed to appear of value to inspire public confidence. The product needed to be durable and secure. South Sudan needed millions of copies of their six bills produced cheaply yet safe from fraud. Ten days later, on July 19, 2011, the government introduced the South Sudanese pound, which included the image of John Garang, deceased leader of their independence movement.
South Sudan couldn’t have accomplished this without De La Rue, a British company and the world’s largest commercial banknote printer. De La Rue got started in early 19th century, obtaining a Royal Warrant to print playing cards. Today, it also prints passports, drivers’ licenses, stamps and bank checks. Its customers include 36 central banks, including the Bank of England, the Bank of Greece and the European Central Bank. There aren’t many worldwide “security” printers. Trust is one huge factor. A long history and established relationships with central bank clients are others. De La Rue’s two main competitors also both date back to the 19th century.
The Wall Street Journal on August 13th reported that African countries want to replace the U.S. dollar with their own. Angola, Mozambique, Ghana and Zambia have all recently enacted laws to reduce U.S. dollars in their countries. In copper-rich Zambia, the central bank has banned dollar-denominated transactions and now requires the kwacha be used. They’re serious about this. Violators may spend 10 years in prison. The desire is more than national pride. Small economies like Zambia do not want complete reliance on foreign currency. It’s working. Their recent changes have heightened demand for the kwacha and have pushed their currency to its highest level against the dollar in more than a year.
The financial crisis has also been good for banknote printers. The collapse of Lehman Brothers in 2008 has led to people holding more cash. Around the world, low interest rates and fear of banks in general have resulted in more cash being stuffed in mattresses. Furthermore, if, in fact, Greece exits the euro, commercial banknote printers will undoubtedly be asked to produce, in secret, millions of drachmas in a very short time. And, can you imagine what would happen to the banknote printing industry if the euro zone splits apart?