Banknotes can last for anywhere between a year for £5 notes in circulation, to over five years for the less-used £50 note.

Banknotes can easily end up torn, stained and will wear out over time. In fact, the Bank of England receives thousands of claims every year from people in possession of damaged or contaminated banknotes.

With the Bank of England having to replace damaged banknotes each year, it has become a necessity to ensure that the banknotes that are put back into circulation are of the highest quality.

In this article, we discuss the relationship between clean note policy and the recirculation of banknotes.

What is a clean note policy?

A clean note policy is necessary to enhance security, and improve the overall condition of banknotes in circulation.

The objective of governments and banks is to give the public high-quality currency banknotes, whilst soiled notes are withdrawn from circulation.

Why have a clean note policy?

Uphold national reputation

Banknotes that are in good condition play an important role in projecting a positive image of the nation.

The public prefer to hold on to crisp, clean banknotes. People do not want to keep banknotes that are defaced, dirty or damaged, and will naturally use worn banknotes first.

By consequence, this increases their rate of deterioration.

Enhance security

Worn and stained notes which are left in circulation, significantly diminish the effect of security features

In the UK, banknotes have security features including:

- The Queen’s portrait in the see-through window

- Colour-changing border

- Silver foil patch

- Green foil patch

- Feel of polymer and raised print

- Ultraviolet number

The Bank of England provides an online guide, where you can learn to check if your banknotes are genuine or counterfeit.

But notes that are in poor condition can make it more difficult to identify whether your banknote is real.

If security features are not visible on notes that are in circulation, it becomes easier to pass counterfeit notes.

Improve efficiency in the cash cycle

A clean note policy enhances efficiency in the cash cycle, as automated handling i.e. ATM networks and Cash Processing Systems, is improved, and jams and disruption to the customer are reduced.

How do governments and banks implement a clean note policy?

1. Develop standards

Governments and banks implement a clean note policy by firstly developing a set of fitness standards.

In these standards, they must define the maximum acceptable dimensions for defects, such as holes, tears, folds and missing corners.

For example, a tear of 5mm could be considered acceptable, whereas a tear of 6mm would require the note to be withdrawn from circulation.

In this step, acceptable degrees of fitness must be defined regarding graffiti, tape,, holes, tears, and reference standards for soiling levels.

2. Implement standards consistently

Once standards have been defined and developed, the next stage is to consistently implement these standards.

Manual sorting is used to train staff to identify any notes that visually lie outside of the set of standards.

Automated sorting machines such as the X Range, V Series and 7000i are also used, utilising a range of detectors to assess the condition of the banknotes in line with the fitness standards.

3. Manage the implementation of standards across cash cycle

Implementing standards across the cash cycle is a big task. It involves educating all stakeholders within the cash cycle, including:

  • Commercial banks

  • Wholesale services

  • Cash in transit organisations

  • Auditors

  • Central banks

  • The public

To ensure that standards are adhered to, there could be potential penalties and incentives for third party sorting organisations to implement and follow fitness standards.

Public education campaigns could also be initiated to reduce replacement costs due to poor care or defacing of banknotes.

4. Maintain and develop an effective cash cycle

Banknotes must regularly go through sorting facilities that remove unfit notes to maintain a constant standard of currency in circulation.

The measurement of return rates in particular regions or regarding particular denominations may need to be implemented to maintain the quality of currency in circulation.

The objective for governments and banks is to keep as many banknotes in circulation whilst ensuring they maintain standards of quality.

What is the cost impact of a clean note policy?

Calculating the cost impact of clean note policy is complex.

As fitness levels of banknotes change, the life in circulation, and corresponding banknote stock levels will also change. This will have a direct impact on cost.


The biggest cost impact difference will be seen on banknotes which have the highest circulation rate and shortest current life.

Being able to understand the features or components in a banknote that leads to early life failure is important, as it provides the bank the ability to adjust the banknote specification or the fitness standards to improve note life and reduce cost.

All CPS Banknote sorters provide detailed data outputs that can be utilised to assess and understand note life throughout the cash cycle.

Cash management solutions from CPS

With over 60 years’ experience in providing cash management solutions to Banks around the world, combined with our Data solutions we have the expertise to support Central Banks on the development on enhancement of a clean note policy.

To learn more about our offering, speak to one of our experts today - we’d be happy to help.