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FEW businesses do well in a climate of global political instability and mistrust of banks. De La Rue, the world’s largest commercial banknote printer, is one of them. The Basingstoke-based firm’s profits rose by a fifth in 2003 thanks in part to a contract to supply a new currency to Iraq. It also created a currency for the world’s newest country, South Sudan, in time for its independence a year ago. Disintegration of the euro zone would be terrible for most businesses but an opportunity for De La Rue.
Indeed, the financial crisis has broadly been good for banknote printers. The collapse of Lehman Brothers in 2008 led to a surge in demand for the folding stuff, which has not ebbed. Low interest rates have cut the opportunity cost of holding cash. With banks looking wobbly, many prefer to keep their money stuffed in the mattress, creating extra demand for banknotes. After falling steadily during the 1970s and 1980s, as the use of chequebooks and credit cards spread, cash in circulation has been rising again (see chart).
Private-sector printers like De La Rue inhabit a small but vital corner of a huge business. State-owned print works make around 85% of the 150 billion banknotes produced each year. But commercial outfits can be asked to step in when central banks fret that state printers may not be able to meet demand, as De La Rue did for the European Central Bank in 2001. Small countries are more likely to contract out banknote supply to commercial printers, who can harness economies of scale. That logic prompted the Bank of England to outsource its printing to De La Rue in 2003.
The firm devises 100 or so new banknotes each year as well as around 2,000 “design concepts”—a security feature, say, or a new image for a big-denomination bill. It has helped produce more than 150 currencies and won design awards for the banknotes it crafted for the central banks of Kazakhstan and Uganda, among others. De La Rue also prints identity documents, including British passports.
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