Currency fitness: Rules and remedy

October 1, 2021

As the sole issuer of the Philippine peso, the Bangko Sentral ng Pilipinas (BSP) has a lot to say about money and currency. One of the BSP’s more notable and practical pronouncements is the Philippine Currency Fitness Guide by which the BSP adopts a Clean Note and Coin Policy for the effective removal of unfit currency in circulation as a means to maintain the integrity of Philippine banknotes and coins.

The Clean Note and Coin Policy begins with a discussion of the respective security features of all of the currently circulating peso bills and coins. Businesses that primarily dabble in cash and have not yet adopted e-payments, are well advised to go through this part of the guide to find out how to identify legitimate bills and coins and distinguish them from counterfeit ones. Note that not all Philippine bills share the same security features; understandably the P1000 and P500 bills have more security features than bills of smaller value.

As a quick summary and checklist, a legitimate bill may be identified by its feel, look, and tilt. When feeling a bill, check if it is printed on security paper, has embossed prints and tactile marks. As for the look, check if the bill has a watermark, a security fiber, the asymmetric serial number and a see-through mark. Finally, when tilting a bill or holding it at an angle, look for a security thread, its concealed value, if there’s optically variable ink and device patch and finally, the enhanced value panel which is available only in the P1000 and P500-bills. For more information, the illustrated fitness guide is available for download on the BSP website.

Before moving on however, the fitness guide tackles another important scenario with respect to holding money, the treatment and handling of damaged or defaced bills. Given the difficulty of earning money, this can be a worrying scenario for the average Filipino. The author herself remembers worrying about a significant tear in a P100 bill she had, thinking that the same may be rendered useless by such damage.

The BSP addresses such concerns in its currency fitness guide. It categorizes damaged bills into two: The unfit banknote and the mutilated banknote.

According to the guide, an unfit banknote is a note that has any of the following characteristics: 1.) soilage or presence of dirt or substance in the note resulting in its discoloration or aging; 2.) stains and markings including writings and inkstamps; 3.) limpness; 4.) any fading in the design of the note; and/or 5.) presence of heavy creases in the note. Any unfit note can be easily remedied by having the same brought to and exchanged with any bank.

When a note is mutilated, however, the remedy is more complicated. A mutilated note is a note that meets any of the following criteria: 1.) has a tear, hole or missing part; 2.) adhesives or any material sticking on the paper such as tape, stickers, glue, gum or staple wire; 3.) splitting of subtrate or when there’s a separation of the front and back sides of the banknote; and 4.) charred or decayed notes due to being burnt or being exposed to water or to a chemical. When a note is mutilated, it cannot simply be exchanged at a bank. According to the currency fitness guide, the same should be immediately submitted through any bank which shall forward the note to the BSP for analysis and determination of redemption value.

The mutilated notes must be placed in appropriate containers to avoid disintegration or further deterioration while in transit. For purposes of redemption, the BSP provides that the mutilated notes shall be valid for redemption only when the following requirements have been met: 1.) the remaining surface area is no less than 3/5 of the original size of the banknote; 2.) a portion of any one of the signatures of the Philippine President or the Governor of the BSP remains; and 3.) the presence of the embedded/windowed security thread (EST/WST) unless such has been lost or damaged due to fire, water, chemical or bitten by termites/rodents and the like.

In submitting such notes however, it is important to get a temporary acknowledgement receipt in exchange for the note.