The new $10 polymer note went into circulation on July 9, the first time polymer notes have been used in Hong Kong. About 35 million polymer notes have been issued in the first week. I am pleased to note that the public's initial response to the polymer notes has been mostly favourable.

People seem to agree that the new notes are clean and durable, do not get dirty easily and have a "crisp" feel. Because polymer notes are sturdier and last longer than paper notes, and can be recycled when they are no longer useable, they should also be kinder to the environment and, equally important, more cost-effective.

The $10 note has a long history in Hong Kong. The first one was issued in 1846 by the Oriental Bank Corporation, which was the first commercial bank in Hong Kong. Of course 10 dollars were worth a lot more then than they are now. The monthly wage for an average worker at that time was around $2 to $3 and $10 would have been enough to feed a family for nearly four months.

Because of its high value and the small number in circulation, every $10 note issued at that time was signed by the bank manager and they were mostly used as a store of value rather than a medium of exchange. Nowadays, $10 notes are used every day. About 1.4 billion $10 notes have been issued - around 13% of all the notes in circulation, making them an important medium of exchange in retail transactions.

Good testing ground

Because of the large number in circulation, the $10 denomination is a good testing ground for us to explore ways to improve the printing technology and security features of notes. For example, a thin layer of protective coating was added to the $10 notes issued by the Government for the first time in 2002, and more durable paper was used when additional ten-dollar notes were printed in 2005.

The aim has always been to explore whether new technology can improve the quality of notes and it is the same this time: We are testing whether polymer can make our notes more secure against counterfeiting, more cost effective, cleaner and more environmentally friendly.

Direct comparison possible

A lot of work has gone into this project, even though we decided early on to keep the design of the new note close to that of the existing paper notes, to avoid having two very different designs circulating at the same time and to allow people to make a direct comparison between paper and polymer.

The use of polymer does, however, allow us to introduce some new security features that are not available with paper notes, such as the clear window and colour-shift ribbon. These also make the new notes quite easy to identify.

International effort 

Readers may be interested to know that this is also an international project, since the polymer substrate is supplied by the manufacturer in Australia and shipped to Switzerland for printing. Hong Kong Note Printing Limited has played an important role in providing technical support and advice.

The banks, transport companies and retailers have also been very co-operative in making sure their note-counting machines and ticket and vending machines will accept the new notes: I would like to thank them all for their help.  

Comments welcome

People have already asked whether the introduction of this note means that we are planning to extend the use of polymer to the other denominations. The answer is that we have not yet decided.

This is a trial issue and we want to evaluate, over the next two years, the public reaction to the new notes and whether they really deliver the benefits - in terms of durability, security and cost effectiveness - that we are expecting.

Members of the public are welcome to send their comments on the new notes to polymer_note@hkma.gov.hk.

This column by Hong Kong Monetary Authority Chief Executive Joseph Yam first appeared in Viewpoint, on the authority's website.