Not made in Canada? Good!
At least, that seems to be the attitude of the Bank of Canada
The recent paper mill closures and bankruptcies are an indication of how tough things have become in our industry. Domtar closed down some machines, Curtis Paper and Eastern Papers in the U.S. went bankrupt. Spexel Papers in Beauharnois, Que., filed for bankruptcy in April. It is a rough time in the printing paper business.
The bankruptcy of Spexel Papers is not what it appears on the surface. While it was known in the printing business for its lines of writing papers—Byronic, Balltast Bond, Concerto and Genoa Bond—a big part of its business was making currency paper for Canadian bank notes from $5 to $100 bills.
The Bank of Canada was Spexel’s base account. Unfortunately, for reasons that are not completely clear, the Bank of Canada decided to have the paper for the $20, $50 and $100 bills made in Germany by the same mill that makes paper for the euro. Logic would say that the German mill out-bid Spexel and the most cost-effective mill won. Unfortunately, the currency paper business is not a level playing field. In all the G-7 countries, the paper and printing of bank notes must be done in that country by companies owned by the citizens. The U.S. even has an act of Congress enforcing it. The exception to this is Canada, where foreign mills can make paper for Canadian bank notes but Canadian paper mills are not allowed to compete in most industrialized countries’ markets.
The official reason given Spexel by the Bank of Canada for going with the German paper company was to prevent counterfeiting. There are two different techniques for security in making currency paper: the European (euro) and North American (American and Canadian). Each has strengths and weaknesses. The Bank of Canada decided that the European method was better. Spexel said it was willing to invest in the European technology but it would take three to four years to acquire it. The Bank of Canada wasn’t willing to wait.
It is interesting to note that in Canada, in the last 40 years, no one has counterfeited Canadian currency paper. Most counterfeits use cheap office copier paper. The problem, according to the RCMP Counterfeiting Division, is advancements in digital scanning imaging. It is amazing what you can do with a cheap scanner and an inkjet printer. The biggest problem,says the RCMP, is lack of education and people not checking notes. For example, real currency will mark a blank, white sheet of paper when rubbed against it, while most counterfeit notes will not. An inexpensive black light detector can also be used to easily spot phony notes.
Why didn’t Spexel say something? The major shareholders of Spexel were two financial institutions, the Laurentian Bank and the Desjardins credit union system in Quebec. A number of employees said they were told to keep quiet when they raised concern about losing part of the currency paper contract. Did the banks not want to upset the Bank of Canada?
The sad thing is that Canada no longer produces its own bank note paper. The Beauharnois mill machine was the last one in Canada producing currency paper.
Canada, one of the world’s greatest producers of paper is now not even capable of producing its own currency. The question now being raised is when will the printing of Canadian bank notes be done outside of Canada? The company that owns the German mill now producing Canadian bank paper also owns British American Banknote, which prints about half of Canada’s bank notes. But then maybe it’s better it is not made in Canada.
Alexander Donald is the publisher of Graphic Monthly Canada.