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Recessions are good for banknotes!

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Recessions are good for banknotes!

August 08, 2010 - 22:40

BRUSSELS, Aug. 9, 2010 (RISI) -In part II of the series "Making money by making money", HughO'Brian discovers that even in an economic turndown, bank notes can be even more popular.

It may seem paradoxical, but Tim Crane, managing director of Crane Currency in Tumba, Sweden says that recessions are actually good news for making and printing banknotes, and the very difficult global recession of 2008-09 was no exception. "In times of uncertainty the public relates to and reverts to cash," Crane explains. "There is a high-level trust in cash and banknotes. In fact, during that period we saw a very clear increase in orders for high denomination notes, so demand actually went in the opposite direction of the decreasing economy."

Another result of the recession was the incredible fiscal stimulus packages that were implemented throughout many nations of the world. Thus the total money supply went up, and printed banknotes benefited as a side effect. When governments ‘print money' most of the stimulus is not in cash, but a small part is, in the form of newly-issued banknotes.

As the business at Crane in Sweden has been developing, the company faced a critical decision as to whether to shut the fairly minor printing facility there or to upgrade it substantially. If they upgraded it would entail a major capital investment and the risk that that involved. The investment would be on the order of tens of millions of Euros, which for a family owned company required a lot of discussion.

On the other hand, as there were only two fully integrated printed banknote suppliers in the entire world, Crane saw an opportunity to take its combined expertise in papermaking and security technology much further with a very modern printing operation. The other two integrated suppliers, De La Rue of Britain and G+D of Germany, had a pretty strong hold on the printed banknote market but Crane had a feeling it could make a big impact.

So after numerous discussions and meetings the company board approved the €50 million investment in late 2006 and by late 2007 Crane AB was printing new banknotes on its ultramodern KBA-GIORI presses.

Crane Currency: expertise in papermaking and security technology

All currency operations under one name

The investment has paid off well. Production on the presses is fully sold out through 2011 and the company is printing banknotes on its own paper for a wide variety of countries around the world.

Crane claims that the printing operation in Tumba, which can do everything from pre-press design through to finished banknote packaging, is the most modern single printing line in the global banknote industry. It's a very impressive operation to watch, and to look around and see the millions worth of Swedish banknotes and many other currencies being printed, packaged and stored in the vault.

Regarding the experience of an American private company taking over a previously state-owned Swedish operation, Crane says that the cultural differences are relatively insignificant between Sweden and America. But he explains, "The shift from state ownership to private commercial ownership was quite a big change for many employees. Happily, we have been making the transition without having to resort to massive housecleaning to get rid of people. The key has been to grow the business and that we have done by going from about 250 to 350 employees. So we have brought in new blood with 100 new recruits and many coming from the printing sector, which has been hard hit in recent years. This means these new folks have relevant experience and are hungry for work, which is perfect for us."

Motion holograms on steroids

A key ingredient in Crane's success, both in the US banknote business where it has made US dollars for decades and even centuries, and in its growing international business, has been its security technology expertise. Tim Crane has been one of the driving forces in advancing the technology over the past 25 years and is the holder of numerous patents together with other co-inventors in this field.

Anti-counterfeiting measures are an extremely important part of any banknote, especially the high-denomination, high-value notes. Recently a technology called "Motion" has made a big impact in a very short time in the industry. This technology has been used in the 1,000 krona Swedish banknotes since 2006 and is right now being put in the US $100 notes.

Using something called Moiré principles that were first observed in the 1800s, a company called Visual Physics from Atlanta GA, developed this micro lens array technology and approached the US Bureau of engraving and printing. It immediately referred this idea to Crane & Co., which picked up on it and concluded an agreement with Visual Physics, giving it exclusive control of the invention.

The effect of Motion is similar to a hologram but with a much larger, deeper effect and a much greater range of motion. There are millions of tiny, sub-microscopic lenses that give an incredible feeling of movement with even the slightest change in angle of the material. It is reported that the new security thread in the US $100 bill will contain "650,000 tiny lenses" which gives you an idea of the incredibly small size of these optical devices.

The future looks promising

Based on the successful move to the international market with the acquisition of a somewhat antiquated but now newly reinvigorated Tumba, Crane has made a very strategic forward integration into high-technology printing of banknotes. Added to this is Crane's world leading security and anti-counterfeiting technology, which gives Crane Currency three legs to stand on. No wonder the company's new slogan is: "Paper . . Print . . Technology". In a sector that provides the public with the choice of numerous transaction methods, such as electronic payments and debit cards, Crane Currency is committed to making sure that paper-based banknotes continue to be the preferred instruments of payment around the world.

This article is part II in the series of "Making money by making money". Part I of the series can be readhere