Credit cards may be catching on in Sri Lanka but the island's first experiment with plastic banknotes has failed to take off, dashing hopes of saving on printing costs.
Sri Lanka's Central Bank issued its first plastic bill six years ago ahead of a planned changeover to what were believed at the time to be more durable and cleaner polymer notes widely used in countries like Australia and Canada.
Central Bank officials said the first polymer note in the denomination of 200 rupees (1.93 dollars) to commemorate the country's independence golden jubilee in February 1998 was aimed at testing public acceptance and wear of the new bill.
The experiment has proved a failure, however, and the bank's superintendent of currency, S. Wijesinghe, said they had abandoned plans to switch over to polymer notes and would stick to the traditional cotton-based paper bills.
Produced by "Note Printing Australia," the 200-rupee note is slowly and steadily going out of circulation. Many retailers refuse to accept the note despite it being legal tender, central bankers said.
It is not that Sri Lankans have lost their appetite for cash. While the number of people using credit cards, a relatively new concept here, recorded a 22 percent jump last year to around 400,000 users, currency in circulation still jumped by 11.7 percent during the same period.
Polymer notes in circulation peaked to a face value of 2.3 billion rupees in March 2001 but the figure dropped significantly to 998 million by December 2003, official figures show. The current figure is expected to be even lower.
"We get so many calls from people asking why this note is not accepted," a Bank official said. "It is still legal tender, but the wear and tear of this note is not what we expected."
The Bank's currency museum extolled the virtues of polymer in a tropical country where humidity is high and wear-and-tear of notes is even higher.
"Polymer bank notes are robust," said the museum's blurb. "The non-porous and non-fibrous substance does not absorb moisture such as water, oil or sweat and does not break down physically with repeated folding."
But the museum was reckoning without the rigours of the day-to-day street stresses and strains to which currency notes in Sri Lanka are subjected.
Bus conductors, for example, are able to fold currency notes with a dexterity that would give Japanese origamists a good run for their money.
Wijesinghe said most notes are damaged by this type of frequent folding.
Vegetable vendors, meanwhile, store their cash in dirty gunny bags while money that finds its way to a fish market could get spoiled very quickly.
The Bank releases about 20 billion rupees annually in new currency notes to replace torn, damaged, disfigured or badly soiled notes, spending about 10 million dollars on the printing.
Some 200-rupee notes have faded to the point of disfiguring the embodied security features and the Bank acknowledges this has become a problem.
The 54 other bank notes issued by Sri Lanka since independence from Britain in 1948 have been on cotton-based paper.
Polymer notes were believed to be more environmentally friendly as they could be recycled into plastic pellets and used in the manufacture of garden tools and garbage bins.
The Bank cited Australia as a good recycler of old polymer cash, but in Sri Lanka the damaged and dirty notes are just shredded and buried in a landfill.
"We don't have the technology to recycle the soiled cash regularly," a Bank source said. "There could be a lot of cash in shredded money, but we can't find anyone to recycle it. We offered free transport, but there are no takers."
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