We’ve all stumbled across a torn, stained or heavily wrinkled banknote before, and you’re probably wondering where they end up. While such money still holds value, there comes a time in every banknotes life where it can no longer be used and must be destroyed.

If you’re curious about learning who’s responsible for destroying banknotes, the reasons why and how they’re destroyed, continue reading on. We cover all you need to know in this article.

Why are banknotes destroyed?

Just like banknotes are securely produced, they must be securely destroyed. Billions of banknotes are destroyed across the world each year, and it’s an extremely important part of the cash cycle. It ensures that banknotes no longer fit for circulation are removed for good, allowing cash to be controlled at a higher standard.

  • Heavily damaged banknotes – This could involve torn, stained or wrinkled, notes. It’s important to remember though, accidentally damaged banknotes notes can usually be exchanged at a bank if at least half of the banknote remains. The damaged banknotes are then considered null and void and destroyed in a controlled environment.

  • Counterfeit banknotes – To eliminate worthless, counterfeit notes from circulation, these are sent for analysis by law enforcement upon discovery. Not only do counterfeit notes directly fund organised crime and put people, who receive them, out of pocket, but harm the economy by creating unnecessary losses for business too.

  • Old banknotes out of circulation – When new banknotes are released, an official date is set to which the previous note will no longer be considered legal tender. These old paper notes (or polymer plastic notes that we see nowadays) which have been exchanged will then be sent to be destroyed.

    This doesn’t always happen, though. Many notes are allowed to circulate for many years. For instance, the US dollar never goes out of issue - however old the actual series is.

How are banknotes destroyed?

Several decades ago, there was a switch in the way that banknotes were destroyed. Before this switch, the traditional method that governments would use to dispose of unfit banknotes was incineration. The process, although in a secure environment, was relatively manual, where the notes were burned and no online record was created.

Although you could make the argument incineration was a somewhat sustainable way to provide heating, the cons certainly outweighed the pros - The biggest issue? Ink used in notes would release chemicals during the incineration process, contaminating the air.

Nowadays, when it comes to the destruction of banknotes, the processes used to efficiently and sustainably do so, shredding and granulating are the preferred solutions.

At CPS, our SmartShred™ range offers banknote destruction, conveying and collection systems for secure and efficient cash processing. With on-line shredding, off-line granulation, bagging, and briquetting capabilities, each SmartShred™ system can be configured to best suit your needs. Find out more about our SmartShred™ range, or speak to one of our experts today.

Who destroys banknotes?

Central banks across the globe are responsible for destroying damaged, and out-of-circulation banknotes. This allows for both the documentation of destroyed notes and for tighter control over unused cash within a region.

Secure banknote destruction from CPS

With customers located in more than 100 countries, combined with over 60 years’ experience in the industry, we have the specialist knowledge needed to provide a solution tailored to your needs. If you’re seeking a complete and integrated banknote destruction system, contact our team at CPS today and discover more on our SmartShred™ range.