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Winston Churchill on a £5 plastic note

By Katie Pisa and Tracey Hobbs, for CNN
updated 12:55 PM EDT, Wed July 9, 2014
STORY HIGHLIGHTS
  • By 2016, the Bank of England will be printing polymer £5 and £10 notes
  • The plastic notes will help fight counterfeiters and will be more durable
  • While the switch to polymer will be expensive, in the long-term it will save millions

Editor's note: Future Finance is a new series showcasing future trends related to the global financial system. The show complements CNN's business coverage by examining everything from a cashless society to high-speed trading that employs the power of laser beams. The series provides global insight into what's on the horizon for consumers and businesses.

(CNN) -- Crumpled, grubby bank notes could soon be on their way out in the UK, according to the Bank of England.

By 2016, the UK will be switching its £5 and £10 bills to polymer bank notes as they're more durable, harder to forge, and cheaper in the long run.

For over 300 years the Bank of England has been printing bank notes, and despite the growth of credit and debit cards and online transactions, there's more cash in circulation than ever before.

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The challenge is how to keep ahead of the counterfeiters, and this has prompted the Bank of England to follow recent technology in converting some of its notes.

"The key part of a bank note is 'I promise to pay' and people need to believe the bank will always promise to pay, but they also need to believe the notes they hold are genuine notes and not counterfeited notes," explained Victoria Cleland, chief cashier of the Bank of England, to CNN's Nina Dos Santos in an interview.

The UK will be one of just a handful of currencies produced this way. Already, Australia and Canada have been moving away from paper to polymer in order to crack the counterfeiters and ensure the notes last longer.

A key security feature of the polymer note is a window you can look through. Another feature of the plastic note is that it's quite thin and flexible, and still includes the raised print which people seem to prefer, said Cleland.

"One of the advantages of polymer notes is that they will hold their shape a lot more and they're more durable," Cleland explained to Dos Santos, showing CNN the slick new, washing-machine proof notes being printed.

While the process of converting traditional notes to a plastic form will be an expensive endeavor, the Bank believes a polymer note will last at least two and a half times longer than paper.

The £5 note will get the first facelift in 2016, followed by the £10 note. Winston Churchill will become the face on the £5 note, while Jane Austen will grace the £10 note.

A polymer note is more expensive to produce initially and there will be some transitional costs, but Cleland said that over a 10 year period of switching the £5 and £10 notes, the Bank will save at least £100 million, a lot of it because of the increased longevity of the notes.

One of the advantages of polymer notes is that they will hold their shape a lot more and they're more durable
Chief cashier of the Bank of England, Victoria Cleland

And it's not just British notes which are getting a makeover. The Royal Mint has proposed a new design for the one pound coin, with state of the art anti-counterfeiting technology embedded into the metal which they claim will make it the most secure coin in the world.

The Royal Mint has been casting coins for over eleven hundred years, producing coins and medals for up to 60 countries and supplying about 15% of global demand.

The £1 pound coin has been used for 30 years but has become increasingly vulnerable to counterfeiters, with 45 million coins -- or 3% of the coins in circulation -- now being forgeries.

"The current electromagnetic signature in a coin can wear over time making forgeries harder to detect," said Andrew Mills, director of circulating coin sales at the Royal Mint.

The new £1 coin, which is set to be introduced in 2017, will have the ISIS Technology -- Integrated Secure Identification Systems -- which has been used in bank notes for 20 years.

This will enable enhanced security throughout the cash cycle, said Mills, protecting the public, vending machine operators, retailers and the banking system.

With all the talk of a cashless society, it seems that cash is here to stay, albeit in its new plastic format.

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