DNB W P

DNB Working Paper No. 104/June 2006 Hans de Heij

DNB W O R K I N G P A P E R

Public feed back for better banknote design

Public feed back for better banknote design Hans de Heij *

* Views expressed are those of the individual author and do not necessarily reflect official positions of De Nederlandsche Bank.

Working Paper No. 104/2006 June 2006

De Nederlandsche Bank NV P.O. Box 98 1000 AB AMSTERDAM The Netherlands

Public feed back for better banknote design Hans A.M. de Heij * De Nederlandsche Bank NV, Amsterdam, The Netherlands Proceedings of SPIE Vol. 6075 San Jose, California USA 17- 19 January 2006

Version 3, dated 12 June 2006

Presented at IS&T/SPIE's 18th Annual Symposium Electronic Imaging 2006 Conference 6075 Optical Security and Counterfeit Deterrence Techniques VI San Jose, California USA 18 January 2006

*) Correspondence: e-mail: [email protected]

Public feedback for better banknote design Hans A.M. de Heij De Nederlandsche Bank NV, Amsterdam, The Netherlands

ABSTRACT The euro banknotes recently celebrated their 4th year anniversary (2002 – 2006)! DNB has monitored the Dutch public’s acceptance of the euro banknotes through surveys in 2002, 2003 and 2005, contrasting its findings with those for the former guilder notes as well as the results of other recent consumer surveys conducted by the US Treasury (2002), Bank of Canada (2003) and several others. A unique time line is presented of the public’s knowledge of security features in the Netherlands over the years 1983- 2005. Keywords : market research, consumer research, public information , public awareness of banknotes, measuring method for the public’s awareness of security features, measuring method for the public's appreciation of banknotes, questionnaire/public opinion poll on banknotes, design of banknotes.

1. INTRODUCTION On 1 January 2006, the euro banknotes will have been in circulation for four years. It is a policy of De Nederlandsche Bank (DNB) to gain feedback on the euro notes used by the Dutch. DNB does so in two ways: 1) by measuring the public’s knowledge and appreciation of euro banknotes, 2) by following the Dutch media and individual comments from the Dutch public to the central bank. Another reason for this publication is the received interest in our previous contribution to the SPIE in 2002: ‘A method for measuring the public’s appreciation and knowledge of banknotes’ [14]. This article was quoted several times by other central banks [46, 47], by a banknote designer and paper maker [72, 75], by scientists [73, 85], by a cash users organisation [80] and a criticaster [65]. Usually the findings were accepted, but in some cases there were doubts. Prof. Dr. Heiner Treinen, an advocate of double-side intaglio, for example, questioned the results of opinion polls in his study of the subconscious perception of authenticity [73]. Central banks are taking more and more initiatives to enter the field of consumer or market research on public awareness of banknotes. DNB also recently received interest from other central banks (e.g. Spain and Chili). The influence of this public feedback on banknote designs, while still limited, will certainly be noticeable in the near future. The need to invite more user input in banknote design is also expressed by the European Central Bank (ECB) in its Monthly Bulletin of August 2004. With reference to the preparation of the second series of euro banknotes , the ECB writes [59]: ‘The definition of the functional requirements relies on marketing-based techniques. The derived specifications are used to initiate product design programmes for banknote design upgrades and new banknote series. The focus is on different kinds of customers and users: the general public (including visually impaired people), cashiers, vending machines, banknote processing machines, cash handlers, law enforcement authorities and the note issuing industry itself. Each has different needs in terms of convenience, authentication, efficiency, resilience and costs and these needs also differ for low, medium and high denomination banknotes.’

2. RESEARCH METHODOLOGY Since the introduction of the euro on 1 January 2002, DNB has organised several studies to receive public feedback on the new euro notes and coins. An overview is given in Table 1, which includes also public opinion research conducted by others like the European Commission, United States Treasury, Bank of Canada and ECB [31, 42, 46, 53, 57, 62, 68, 70]. This paper focuses on relevant research by DNB, comparing DNB’s findings with those of others.

Time Feb 2002 Feb 2002 Feb 2002 20021 Feb 2003 Feb 2003 Feb 2003 Oct 2003 Nov 2003 Feb 2004 Apr 2004 2 May 2004 Jun 2004 Sep 2004 3 Nov 2004 Dec 2004 Jan 2005 Feb 2005 Feb 2005 Mar 2005 Oct 2005

Research subject EUR banknotes EUR banknotes USD banknotes RUR banknotes EUR banknotes EUR banknotes CAD banknotes Banknotes with foil Need for 1 and 2 euro EUR counterfeits Use of 1 and 2 eurocent EUR counterfeits EUR banknotes - divers Perc. means of payment Need for 1 and 2 euro EUR cash handling EUR effect of training EUR banknotes EUR 5 and 20 emotions EUR security features EUR various

Area EMU NL USA Russia NL Austria CAN A, D, E, F, I, NL EMU NL NL NL EMU NL EMU EMU F, Lux NL NL NL, IRL, F, D EMU

Research done by ECB - Research Bus. Int. DNB - TNS NIPO US Treasury/BEP - D&T Central bank of Russia DNB - TNS NIPO OeNB - Inst. empirische SF BoC - Research Dimensions DNB/ECB - TNS NIPO EC - Eurobarometer, Gallup DNB - TNS NIPO DNB - Center DNB - Center GFK DNB - Center EC - Eurobarometer, Gallup TNS NIPO European Anti-Fraud Office DNB - TNS NIPO DNB - TNS NIPO DNB/ECB - TNS NIPO EC - Eurobarometer, Gallup

Interviews 5,890 2,002 1,423 + 12FG ? 2,015 1,00 1,563 + 12FG 108 12,017 17 (500) 1,932 7,038 2,019 12,006 2,904 53 + 38 1,501 300 602 12,035

Type of interview Face-to-face Telephone Telephone + FG (12) Observations Telephone Telephone Telephone + FG (12) Focus Group (6) Telephone Focus Group (2) Panel (2 months) Internet based quest. Telephone Internet based quest. Telephone Face-to-face Observations Telephone CASI 4 Face-to-face Telephone

Table 1. Overview of the public research done on euro and other banknotes since 2002. FG = Focus Group. 1

) As far as known. Based on reference [29]. ) From 26 April – 6 June 2004, in the town of Woerden. In total around 500 points of sale participated. 3 ) Perception research to different means of payment (cash, debit card, credit card, pre paid card) on safety, speed, ease of use and the costs [78, 99]. 4 ) Computer Assisted Self Interviewing. 18 years and older. 2

2.1 Periodic DNB surveys (quantitative research) The 2-year periodic research is important to DNB, because of the valuable information it provides on changing views. Both the methodology and the questions remain unchanged so as to facilitate comparing findings and ensure maximum reliability of the trends perceived. As the questionnaires are identical in set-up, the guilder-related findings and the eurorelated findings can be compared as well. In February 2002, DNB organised an additional poll in view of the introduction of the euro. As expected after the massive Euro 2002 Introduction Campaign and the extensive national campaign conducted in the Netherlands, public knowledge of security features in the Netherlands turned out to have increased from an average of 1.7 for the NLG notes in 1999 to 2.3 for the new euro notes. This increase was predicted in 2002 [14]. Appreciation of the euro notes was lower than for the guilder notes (i.e. a drop from 79.8 % for the Abstract Series to 65.7 % for the new euro series was measured). To measure appreciation of their notes, three other central banks used the same questions as asked by DNB. This made it possible to compare, for the first time in banknote history, public appreciation of banknotes in different countries! The European Commission periodically polls the European public on a wide variety of subjects, including the euro, every six months publishing the findings as Eurobarometer. There are also dedicated, so-termed Flash Eurobarometer surveys, e.g. ‘The Euro, 3 Years Later’, characterized by an open and transparent reporting style [42, 62, 102]. Some of the information thus gathered is also used in this paper. Six trials for one contact DNB reduced the number of interviewees in its periodic surveys from around 2,000 in 2003 to 1,500 in 2005. The reason for this policy is the widespread use of mobile telephones (cell phones), which has its consequences for telephone interviews in that potential respondents are often contacted at inconvenient moments. It is TNS NIPO’s experience that nowadays six trials are required to find one willing respondent. While the reliability of the research did not drop (i.e. 95% for all surveys conducted by TNS NIPO), the margin slightly increased (see Appendix I). Since the replies to questions concerning the text and picture elements on the euro notes are stable, DNB is considering asking the same questions in another four years for its future research efforts.

Latent knowledge: repeated questions and point out The more time respondents take to reflect on a question, the more knowledge they come up with on banknotes. Apparently, as it is not required for daily life, banknote knowledge seems to be stored in the back of people’s minds. In other words, there seems to be a latent knowledge of e.g. security features of banknotes. That is why it may be advis able to repeat questions and encourage the interviewee by asking Do you know any more? In comparing surveys, it should be kept in mind that the questions used are often not alike. In the DNB public poll the basic question reads Which security features in a banknote do you know? [14]. As known, people have difficulty putting security features of the banknotes in words [14]. This is why respondents could be asked to mark the features they know with a pen in a black-and-white copy of the relevant banknote. Pointing out stimulates the memory. When shown the note in question, people are able to recall significantly more security features than when asked repetitive questions. Repetitive questions, in turn, yield more answers than non-repetitive ones. 2.2 Focus group research by DNB (qualitative research) Often, market research is exclusively associated with quantitative research, like the large-scale collection of data. A drawback of this type of research is that it does not provide detailed insight into the answers provided. For this reason (additional) qualitative research may be used, like e.g. focus groups. In 2003, DNB gained its first experience with focus groups related to banknotes. For one euro research project, it received feedback on different foil applications on banknotes [39]. One year later, in 2004, DNB organised two focus group meetings, one with consumers and one with retailers, to receive feedback on the counterfeit crisis at that time in the Netherlands [49]. Below some methodological comments are given on the two different quantitative market research methods used: focus groups and individual in-dept interviews. Focus groups versus individual in-depth interviews Table 2 contrasts the most important differences between focus groups and in-depth interviews. Focus groups are more common in the Anglo-Saxon world. In 2004, the US Treasury and the Bank of Canada reported on their experiences with focus groups in a SPIE paper ‘Comparative analysis of public opinion research in the USA and Canada’ [46]. In both countries, 6 different banknotes were shown to differently composed focus groups (bank tellers, cashiers, consumers) nationally. In the USA, 12 focus groups were part of the research effort; in Canada, 12 focus groups were consulted and also 6 in-depth interviews with law enforcement officers.

Focus Group /Target Group - more common in Anglo-Saxon world - for strong opinions, high public involvement - interaction between participants - no individual test possible - opinion leader might influence others - idea generating - less suitable for reaction to range of products

In-depth interviews - more common on the continent of Europe - for low public involvement - no interaction between participants - test of individual, daily use - real opinion of one person - not conducive to many new ideas - reaction to range of products

Table 2. Some differences between focus/target groups and in-depth interviews.

Banknotes are products that do not generate much pubic involvement; the public never grows excited when discussing banknotes, except perhaps when it comes to counterfeits or when a new design is issued. With such subjects, in-depth interviews are advisable, as they often provide a detailed insight into deeper conscious and subconscious individual processes. In-depth interviews are also the most suitable method if respondents are asked to do a test based on individual decision making, like a security check on a banknote or an opinion of a new banknote design. A one-to-one relation of respondent and interviewer will in such a case provide the most realistic output. Another advantage of in-depth interviews is that they permit the use of a fairly large amo unt of stimulus material, e.g. up to around 15 different banknotes. People are very well able to react on a range of products, but, on the whole, are not very apt at responding to (oral presented) concepts.

Focus groups are usually deployed in order to generate ideas on a broad level. They are essentially idea generating vehicles. Focus groups are also preferred when a rough overview of opinions, beliefs and associations is required. In focus groups, however, the interaction stimulates respondents to keep giving new answers. A disadvantage is that a strong opinion leader in a focus group might influence the group discussion. Therefore, it is advisable to use the individual approach, especially when children and elderly persons are involved. The limitations of any qualitative research must be kept in mind. Respondents are selected on a non-random basis and their views cannot be regarded as quantifiable and able to project to any specific population or cohort or universe. The information obtained may be viewed as indicative of the prevailing attitudes but not to the extent that they may be considered representative of any defined population. Cultural regions of the EMU In conducting - for the first time - market research for ECB R&D projects within the EMU-area, the following question had to be answered: should all of the 12 countries making up the Euro zone be involved, or a number of cultural regions within the EMU area, if such regions are at all identifiable? The first part of the answer was found by preparing an overview as given in Table 3; six consumer test regions were identified. Since three of the identified areas are comparatively small, it seemed sensible to conduct consumer research in the three larger areas first. If the results within these regions proved to be in line with each other, they would be extrapolated to the Anglo-Saxon, Nordic and Greek regions.

Consumer test region 1. Anglo-Saxon 2. Germanic

3. Greek 4. Latin

5. Roman

6. Nordic Total

Main languages English German

Greek French

Italian Portuguese Spanish Finish

EMU Countries Ireland Austria Belgium (50%) Germany Luxembourg (50 %) Netherlands Greece Belgium (50 %) France Luxembourg (50 %) Italy Portugal Spain Finland

In mln 4.0 8.1 5.2 82.6 0.2 16.1 11.1 5.2 60.0 0.2 58.0 10.4 42.1 5.2 308.5

In % 1.3

36.4

3.6 21.2

35.8 1.7 100 %

Table 3. Overview of 6 identified consumer test regions for qualitative market research within the EMU-area. Population figures as at year-end 2003.

3. PUBLIC KNOWLEDGE OF DENOMINATIONS Practically all Dutch citizens are able to mention spontaneously the denominations 5, 10, 20 and 50 euro (see Table 4). Higher values were mentioned significantly less often, notably the euro 200 and 500 denominations. The least known banknote is the 200 euro banknote. However, the 100 euro banknote is becoming increasingly familiar. Remarkably, familiarity with the euro 5 note declined in 2005. Spontaneous awareness of currency of lower values is the same for men and women. However, higher values (100, 200 and 500 euro) are better known by men than by women. The younger generations (age 18-35) and people dealing with cash money for occupational reasons are the most familiar with the above-mentioned higher values of euro banknotes. An increasing number of Dutch people mistakenly think that the current range of euro banknotes includes the denominations 250 and 1,000 euro. One explanation for this misunderstanding is that the majority does not use these high denominations. After more than 3 years, 77 % of the Dutch never held a euro 500 note in their hands, 63 % never a 200 euro banknote and 25 % never a 100 euro note [84]. Another explanation is that the Dutch may perceive the euro denominations as the old guilder denominations, which did include a 250 and 1,000 value and were not much used in daily life either. The Dutch do know that the 25 guilder banknote has been replaced by a 20 euro banknote.

Euro 5 10 20 25 50 100 200 250 500 1,000

2002 94 96 94 1 93 74 49 6 62 2

2003 94 96 95 0 96+ 82+ 52 11 553

2005 9197 94 1 94 86+ 53 14 57 19

Table 4. Spontaneous awareness values for euro banknotes (in %) in the Netherlands. The denominations 25, 250 and 1,000 do not occur in euro [84]. +/- means a positive or negative significant difference compared to the results of the previous survey.

Prompted awareness When a denomination is mentioned to the respondent, people have a better memory: average prompted awareness is 6.4 (against 5.7 spontaneous). Six out of ten respondents (58 %) are aware of all 7 euro banknotes when prompted, against 32 % unprompted. About one third (30 %) is able to name six out of seven banknotes when prompted, about the same as the percentage of people producing this information non-prompted (29 %). A minority (11 %) cannot name more than five banknotes. Prompted awareness of non-existing euro notes is even higher than spontaneous awareness, especially of the 1,000 euro banknote (2002: 12%, 2003: 19%, 2005: 27%) . The confusion over a non-existing 250 has stabilised compared to 2003 (both 19 %).

4. PUBLIC KNOWLEDGE OF SECURITY FEATURES Since 1983, DNB has measured the public’s knowledge of security features. Over the years, this knowledge increased from an average of 1.03 in 1983 to 2.2 in 2005 (see Figure 1). There seems to be room for further improvement. People in the 18-35 age bracket can memorize on average 2.8 features (2005), and those aged 55-plus 1.5. Knowledge of security features is also correlated with gender and wealth. Men can name more security features than women (2.4 against 2.0). People in the highest social class are able to mention 2.6 features on average, while those in the lowest social class do not know more than 1.3 on average [84]. If banknote design and public information were further optimized, the awareness target could be set at an average public knowledge of 3 security features. In 2005, research by the European Commission’s Anti-Fraud Office (OLAF) reported an average knowledge of 1.3 security features, concluding that there was a ‘lack of knowledge about banknote security features aimed at the general public’. No link was found between the knowledge of the security feature and correct identification of genuine banknotes [68]. Declining incidence of wrong and partly wrong answers Around 15 % of the Dutch people cannot name one single security feature by heart, while many of those able to produce an answer are mistaken. Over the years, the gap between the categories correct and including wrong answers has clearly narrowed (Figure 1), owing to the decrease in partially wrong answers regarding blind marks, banknote numbers and type of paper over the years 1983 - 2005. Blind marks were answered by 49 % in 1983 and by 10 % and in 2005, banknote numbers by 16 % in 1983 and 3% in 2005, while the type of paper seems much more resistant: 10 % in both 1983 and 2005. This positive development reflects both better communication and banknote design [14].

1) 2)

1) = correct answers, 2)= including wrong and partly wrong answers

Figure 1. The average public's knowledge of Dutch banknotes security features. Thanks to banknote design and information campaigns the average number of correctly named security features increased from 1.03 in 1983 to 1.7 in 1999. In the years after the introduction of the euro, this upward trend in banknote awareness continued to rise to 2.2 in 2005 [14, 17, 34, 84].

After the massive introduction campaigns in 2001, DNB chose not to promote the euro banknotes actively in 2002 and 2003. The result was a regression of public knowledge of security features from 2.3 in 2002 to 2.0 in 2003. Public knowledge has to be fed regularly, as is confirmed by DNB-research in 2004: People cannot recall all security features and awareness of security features waters down quickly [49]. Being alert to the danger of counterfeits in late 2003 and early 2004, DNB took action, thereby increasing public knowledge to 2.2 in 2005. To raise this figure further, DNB’s strategy might be focussed on the laggards, i.e. the 15 - 20 % that cannot recall a single feature. In general, these people are found among elderly citizens, the lower social classes and women [84]. Actions by DNB The actions that DNB started in late 2003 – in some cases in collaboration with the ECB – and continued in 2004 and 2005, were : - the provision of specific DNB training sessions for retailers in co-operation with the National Forum on the Payment System (end 2003 and early 2004); - the electronic learning module ‘Learn 2 Verify’ produced by Keesing, around 10,000 copies; 5,000 for DNB, year-end 2003; - the release of the DNB leaflet ‘Real or counterfeit?’ on euro security features, around 50,000 copies, year-end 2003; - the release of the ECB/DNB leaflet ‘Feel Look Tilt’, around 100,000 pieces, May 2004 [55]; - the report on tested counterfeit detectors for retailers on website DNB, mid 2004, - the production of the CD ROM ‘Real or counterfeit?’ (also freely down loadable), around 85,000 copies, July 2004; - on-line education course ‘Real or counterfeit?’ (same as CD-ROM) on website dnb.nl, August 2004, - freepost service for the public to send counterfeit banknotes by mail, 2005, - the release of the ECB/DNB poster ‘Feel Look Tilt’ around 3,000 copies, August 2005, - the release of a primary school learning kit designed to teach children aged 11 or 12 how to spend money and how to check banknotes. This project was run in collaboration with a Dutch organisation NIBUD, September 2005 [95]; - the adaptation of the DNB education centre (2005), - a survey measuring Dutch citizens’ ability to detect counterfeits, autumn 2005 [100], - …

Figure 2. Overview of Dutch respondents (in %) that can not recall a single security feature over the years 1983 - 2005 [14, 17, 34, 85].

Large group that does not know any feature As stated, 15 % of the Dutch public cannot recall one single security feature in 2005 (see Figure 2 and Table 5). In 2004 a higher percentage was reported: 26.8 % of the Dutch could not mention one security feature [57]. And an even higher figure, 40.5 %, was the outcome of another DNB survey [54]. Clearly, the research methodology employed may influence the findings. This is also the main reason for DNB not to alter the periodic questionnaires. Which public security features are communicated to the public? Before the public knowledge results are given, it is relevant to know which of the public security features are promoted by the central bank. Table 5 shows the euro features as were communicated to the public, setting these against the promoted features of the new designs of the USA dollar and Japanese Yen.

EUR (2002) 1. Watermark 2. Security thread 3. Hologram 4. Special ink 5. Tactile properties 6. See through register

USD (2004) 1. Watermark 2, Security thread 3. Colour shifting ink 4. Colour (offset) 5. Micro printing

JPY (2004) 1. Watermark (incl. bar pattern) 2. Hologram 3. Latent image 4. Pearl ink 5. Micro printing 6. Intaglio printing, including tactile marks

Table 5. Overview of the public features used in the EUR (2002), the USD (2004) and the Japanese Yen (2004).

Watermark still best-known feature (but image watermark not recalled!) The watermark remains the most frequently mentioned security feature, followed by the silver coloured, shining foil stripe (see Table 6). The feel of the print and the type of paper gained in familiarity. Although the watermark is the best-known feature in the Netherlands, the vast majority of Dutch citizens cannot recall what it looks like: 90 % cannot describe the watermarks in euro 5 or euro 50 banknotes. Some think the watermark represents an animal (1%) or bridge (1 to 2 %) [84].

Euro banknote security features (only NL) Name Time Research done by Number of respondents Method Watermark Hologram/silver foil Security thread Special ink: glossy gold stripe (irid. str.) Special ink: colour changing ink (OVI) See-through register Raised ink, relief Type of paper Ultra violet (UV) total - dull paper - iridescent fibres (red, blue, green) - ink brightens up (front, e.g. flag, sign.) - ink brightens up (rev. e.g. bridge, map) Infrared (IR) Don’t know any security feature Average knowledge of security features

DNB

DNB

DNB

DNB

Periodic Feb 2002 TNS NIPO 2,002 by heart repeated 70 61 31 5 5 7 7 7 11 1 5 3 2 2 11 2.3

Periodic Feb 2003 TNS NIPO 2,015 by heart repeated 65 52 13 3 3 5 5 8 16 2 9 3 2 3 18 2.0

Periodic Feb 2005 TNS NIPO 1,501 by heart repeated 68 49 12 3 4 5 9 10 23 5 12 3 3 5 15 2.2

Panel May 2004 CentER 1,932 internet question 88 72 58 19 12 15 30 54 6 31 11 6 40.5 ±3

Jun 2004 GFK 7,038

Dec 2004 TNS NIPO 254

by heart

by heart

58.5 30.5 11.4 12.8 6.8 3.7 9.4 5.8 15.6 3.1 9.4 1.8 1.3 1.9 26.8 2.7

44 23 31 10 14 12 11 36 36 4 -

Table 6. Acquired knowledge of the security features of euro banknotes in the Netherlands in 2002, 2003 and 2005 (in %) [14, 17, 34, 54, 57, 70, 84].

The data in the three tables of DNB’s periodic surveys are 100 % comparable. The data in the other columns are less easily comparable because of the different methodologies used. From the different surveys it may be concluded that the average knowledge of public features in the euro zone is in the range of 2 – 3 features. A second conclusion is that the surveys in the Netherlands show the same ordinal ranking of the features: watermarks being the best-known features, with the hologram/silver foil coming second, and the security thread third, etcetera. New feature: tested by scratching In 2003, people developed the habit of scratching their nails over the so-termed ISARD pattern on the front of all euro denominations (Figure 3), a standard element consisting of 15 parallel intaglio lines [81]. Initially incorporated into the euro notes as a central bank feature (level 3), it now serves as a public feature (level 1) [71]. This is illustrated by Table 6, which shows a rise in the score on raised ink relief: from 5 % in 2003 to 9 % in 2005. Scratching a nail over an intaglio pattern is not a new habit. At the time of the Dutch guilder banknotes, many people were aware that scratching a nail over the pattern of parallel intaglio lines printed on the reverse side of the Dutch NLG 50/Sunflower note (issued in 1982) would produce the sound of a buzzing bee. The watermark in this note represented a bee, i.e. the insect discernible on the sunflower. These former NLG-notes also bore a visible ISARDpattern, but nail scratching at that time was seldom reported.

nail scratching pattern: buzzing bee Figure 3. Left: NLG 50/Sunflower with buzzing bee mail-scratching pattern (parallel lines printed in intaglio). Right: intaglio line pattern ISARD on euro banknotes, today used by the public to do the nail scratching test.

Knowledge of retailers Especially the retailer-related features became more familiar in 2005, like the different colours of the fluorescent fibres, the UV dull paper and the images appearing under infrared light. And since UV checks are performed more frequently now, counterfeiters will try to copy these features. In 2004, around 1/3 of all the common class counterfeits seized bore imitated UV fluorescence/dullness features. Still, about half of all professional cash handlers do not use any devices. A minority of the retailers, around 10 %, use iodine pens and IR viewers. No relation found between size and knowledge of security feature DNB found that the space consumed by a given euro banknote security feature and public awareness of this feature are not correlated [77]. However, larger public security features would have the advantage of being more easily communicable and verifiable. Knowledge of picture and text elements Just as at the time of the NLG banknotes, the public can recall a maximum of 4 picture elements; most people can mention one or two. The same holds for the text elements. In general, people can recall one or two text elements and hardly anybody can recall more than 4. The best recalled images and text elements of the 50 euro banknote are given in Table 7. The questions on picture and text elements are only asked for the euro 5 and euro 50 banknotes.

Public knowledge – euro 50 banknote Picture elements Orange colours (39 %) Other colours than orange or brown (31 %) Brown colours (29 %) Hologram/foil stripe (9 %) (part of a) building/historical building (9%) Bridge (5 %) Gate or door (5%) Cannot recall a single feature: 21 %

Text elements Figure 50/the number 50 (73 %) Word EURO (20 %) Banknote number (8 %) Word EYPO (5 %) The euro symbol € (4 %) BCE/ECB/etc (initials ECB in 5 versions) (3 %) Signature/signature Duisenberg (3 %) Cannot recall a single feature: 24 %

Table 7. Spontaneous knowledge of picture and text elements of the euro 50 banknote [84].

Comparing DNB findings with others Table 8 provides the same overview as Table 6. Instead of the NL-area, now the figures for the EMU-area are given. An important conclusion is that pointing out leads to significantly higher scores than produced by heart, as may be deducted from Table 8. And produced by heart provides systematically higher scores than by heart. Answers given in internet questionnaires lead to higher scores than produced by heart (see Table 6).

Security features of euro banknotes (all EMU) Name Time Research done by Number of respondents Method Watermark Hologram - stripe - patch Security thread Special ink - iridescent Special ink - colour shifting Raised print Feel of the paper See-through register Small letters, micro text Different size Don’t know any sec. feature

EU ECB Wave 4 Feb 2002 RBI 5,890 by heart repeated 64 57 34 57 40 32 35 22 48 -

Commission

OLAF Jan 2005 Université P. Mendès 53 1

Jun 2004 GFK

Dec 2004 TNS NIPO

397,856

point out

by heart

DNB/ECB Picto Mar 2005 TNS NIPO

by heart

by heart

29.3

12

2,904 by heart repeated 36

48

49

602 2 by heart repeated 55

30.4

8

37

56

32

33

18.7 5.3 3.8 6.9 6.8 3 0.9 30

8 2 2 9 38 3 -

34 12 14 23 56 12 -

46 23 23 24 51 22 -

21 3.8 3.8 15 5.7 -

42 5 10 9 23 8 2 15

Table 8. Overview of the euro banknote security features mentioned by the EMU-public in different surveys [14, 57, 68, 70, 91]. Answers in %. UV and IR properties are not included. 1

) = only in France, ) = only in France, Germany and Ireland.

2

Figure 4. A section of the ECB website, July 2005, including the communication symbols representing ‘feel’, ‘look’ and ‘tilt’. The pictograms start moving when touched by the cursor: the hand rubs the note, the sun turns around and the third symbol tilts backwards. This is a fine example of introducing humour in banknote checking (the homo ludens philosophy).

Pointing out stimulates people’s power to recollect public features. If all public security features on the banknotes were marked with way-finding features or pictograms, these elements would serve as stepping stones in finding them. This opens up new possibilities for communication. Leaflets would no longer be required, since the note proper would contain the necessary instructions. In case of counterfeits, people would just have to examine the note to recall all the features. Furthermore, they would know what to do: feel, look or tilt! Slogan: Just follow the pictograms! [14, 63, 64, 98, 101]. In May 2004, the communication symbols appeared in the new communication tools Feel Look Tilt of the ECB [55]. As of 15 July 2005, the symbols are also to be found on the ECB website www.ecb.int (Figure 4). These communication symbols are developed as part of a set of two: 1) communication symbols, to be used in communication tools (see Figure 5), 2) way-finding features (only feel, look and tilt), developed to be used on banknotes (see Figure 6).

FEEL Rub, scratch, feel with the finger or nail. Ink relief (intaglio), type of paper/substrate, … LOOK Hold to the light. Watermark, security thread, see-through register, …

TILT Move, turn the note. Hologram, colour shifting ink, iridescent stripe, latent image, …

MAGNIFY Enlarge parts of the banknote. Micro text, thin lines, …

SPECIAL LIGHT Hold the note under special light. Ultra violet (UV), infra red (IR), …

FILTER Look at the note through a filter. Metameric colours, interference effects, polarisation effects, …

Figure 5. Communication symbols for security features on banknotes. Design: Bureau Mijksenaar BV, Amsterdam. Left-hand column: public features: Feel-Look-Tilt. Right-hand column: cashier features: check with a tool. Look is ‘look through’, transmission. An additional symbol is being designed for ‘look at’, reflection (a light sun before the note).

Figure 6. Way-finding features look, feel and tilt. To be used on banknotes.

Figure 7. The first time DNB used the communication symbols with a figure box was in its interactive training module ‘Genuine or counterfeit?’ (2004).

5. DIFFERENTIATION BETWEEN LOW AND HIGH DENOMINATIONS The public security features used for euro banknotes in the low denominations (euro 5, 10 and 20) differ from the ones used for the high denominations (50 to 500). As early as in the preparatory phase of the Euro 2002 Information Campaign in 2001, this distinction was found difficult to communicate (Figure 8). For each description - as well as for the illustrations - separate instructions had to be developed for the foil - stripe and patch - and the special inks: the iridescent stripe and OVI. The message did not really come across to the European public. As late as in December 2004, most cash handlers (close to 70 %) did not know that the two groups of banknotes bore different security features. Similar results were found by DNB: one out of ten respondents (9 %) believes there is a foil stripe on the 50 euro banknote. Unlike the 5 euro banknote, the 50 euro banknote has none [84].

Figure 8. Left: part of ECB leaflet ‘The Euro Our Money’ (2001) explaining the low and high denominations. Right: part of ECB leaflet ‘Feel Look Tilt’ (2004) explaining the colour changing ink in the euro 50 banknote and the gold coloured stripe in the 20 euro banknote.

The hypothesis that the general public would find it uneasy to have different security features on the low and high denominations induced DNB to ask the public about this distinction [84, 98]. Surprisingly, the majority stated they did not mind that the foil (77 %) and special ink (75 %) differed for low and high denominations. About one third, however, indicated they would like to see the same foil and the same special ink on all the euro banknotes. Foil features are more appealing than special ink features Although not perfect, foil features appear to be more appealing to the public than the special ink features. The foil stripe on the low denominations is best known by the Dutch (90 %), followed by the foil patch (59 %). The special ink on the low and high values are mentioned about equally often (OVI 25 %, gold coloured stripe 21 %) [84]. In 2004, the Bank of Canada reported on a survey regarding foil stripes and patches , for which focus groups were shown several foreign notes. The comments prove to be in line with the findings reported above: ‘The holographic stripe (Norway 200 Kroner) is very often placed at the top of the ranking, for the ease of use it provides. The stripe is large, wide and glittery. It is described as 'attention-catching, because it is so shiny and it glitters' [28]. Another explanation for the poor use of the special inks is that people do not like security features if verification thereof involves tilting, such as shifting colours. Not only was this reported at the 2003 Banknote conference [31], it was also the conclusion of a study by the Bank of Canada, i.e. that a ‘colour shifting ink is too difficult to see and always ranked toward the bottom of the list’. On the other hand, the holographic stripe and patch are almost always among the top selected features for their ease of use [28]. (although the eas iness of checking a foil/hologram may be open to debate!) ‘Feeling’ and ‘touching’ the most common verification method; ‘tilting’ the least common. To be checked, both foil and special inks require a banknote to be tilted. But tilting as a checking method appears not to be favoured by the public. The Central Bank of Russia reported also rather negatively on the use of features that are to be verified by tilting. The method most frequently used for verifying banknote security features - by common citizens - is touching, by which action both the physical properties of the paper and the intaglio relief and paper properties are checked (29.9 %, feel). OVI is reported to be used only by 2.1 %. This report is very negative about the latent image on the RUR notes: ‘For instance, the method for checking the latent images on banknotes in all denominations has never been recorded‘. The other recorded public checks are: overall inspection (20.6 %, look ), see-through examination (8.2 %, look ) and overall inspection of both sides (5.2 %, look ) [29].

6. APPRECIATION OF EURO BANKNOTES In the four years that the euro notes have been in Dutch citizens’ wallets, appreciation of the designs has grown to an acceptable report mark of 7 (see Figure 8). Even so, the gap with the appreciation of the former NLG-notes is still wide. Besides the appreciation figures for the old Dutch guilder notes, Figure 8 provides those for the euro in Austria and for the US-dollar and Canadian dollar [31, 33, 46, 64]. Also compared to these other countries, appreciation of the euro in the Netherlands is quite low. Design-related appreciation growing, except for euro 5 As they grow more familiar with the euro notes, the Dutch are developing preferences as regards the designs of the various denominations in the first euro series (see Figure 9). Asked specifically to name their favourite denomination in the series, people named the euro 20 banknote in 2002, the euro 20 and 100 banknotes in 2003 and the euro 500 banknote in 2005. With each new poll, the difference between numbers 1 and 2 was narrow. The euro 100 banknote turns out to be found the most pleasing design over the years . Appreciation of the euro 5 banknote has been stable ever since this denomination was first introduced. Each time it is found ugly; in 2005 by a majority of 55 % (and beautiful by 45 %).

Figure 8. Overview of the appreciation of the euro in the Netherlands (EUR-NL) over the years 2002 – 2005 and a single measurement in Austria EUR-A (2002) [33]. The figures may be compared with those for the former national NLG notes (1999) [1], the USD Large Off-centre Portrait Series (2002) [31] and the CAD Journey notes (2003) [46].

Figure 9. Appreciation of the first euro series (ES1) in the Netherlands over the years 2002-2005. Closely followed in measure of appreciation by the euro 20, 200 and 500 banknotes, the euro 100 seems to be the most appreciated design. Every year, the euro 5 turns out to be the least appreciated design.

7. QUALITY OF EURO BANKNOTES IN CIRCULATION Many Dutch people think that the euro 5 and 10 banknotes are not of the same quality as the other denominations. However, the technical specifications for the paper and (most of the) print are the same for all denominations. The experienced minor quality for the 5 and 10 euro may be explained by the sizes of these two denominations. Another aspect is the low return frequency, especially of the euro 5 banknote. The notes do not return to the central bank to be - after sorting - destroyed. As a result people often carry worn euro 5 banknotes in their wallets. Still a majority qualifies these notes as clean (61 % in 2005), although compared with 2003 this majority is decreasing. The euro 50 banknote is experienced as significantly cleaner (94 % in 2005). For all denominations it holds that the circulation quality seems stable, with around 85 % being considered clean (see Figure 10) [84]. The phrasing of the questions is included in Appendix II.

EUR 5 71 %

61 %

EUR 50 91 %

94 %

Complete Serie 85 %

86 %

Figure 10. Neatness of the euro 5, euro 50 and complete series over the years 2003-2005 measured by DNB [34, 84].

8. EMOTIVE ASPECTS OF EURO BANKNOTES In addition to the regular telephone survey, in 2005 DNB conducted an additional survey - for the first time - to measure the emotive opinion of the design of the euro banknotes [84]. To do so, DNB employed a new instrument developed by TNS NIPO, called PrEmo (Product Emotion measurement instrument) [43]. PrEmo is a non-verbal, dynamic instrument measuring emotions evoked by the design of products, packages, adverts, etceteras. The emotions are not measured in a verbal cognitive way, but by a set of animations. A drawn character represents a specific emotion by its moving appearance and sounds. Expected emotions for banknote design are pride versus shame and euro minded versus nationalistic. However, PreMo proceeds from 10 standardised (see Table 9). The two specific banknote emotions are covered by these 10 (e.g. shame is covered by satisfaction/dissatisfaction and contempt). PrEmo measures equal products which differ in appearance. Rather than comparing a euro banknote with a euro coin or a dollar banknote, DNB compared two well known euro banknotes, one whose design is rather unpopular (euro 5) and one of a more appreciated design (euro 20). The euro banknotes as shown to the respondents, did not feature their denominations and were equal in size so as to minimise the effects of factors other than the actual design on people’s judgement. However, the question still remains if a banknote’s value is of influence on the emotional evaluation of the euro banknotes. It is plausible that, in the mind of the respondents, the banknotes’ designs are inextricably bound up with their values.

Positive emotion Satisfaction Pleasant surprise Fascination Desire Amusement

Negative emotion Dissatisfaction Unpleasant surprise Boredom Disgust Contempt

Table 9. The 5 positive and 5 negative emotions used in PrEmo, measuring the euro 5 and the euro 20.

Conclusions from the PrEmo survey The results of the emotion measurement are presented in Figure 11. The two banknotes did not score high on either the positive or the negative emotion scale from 1.0 to 3.0. In general, people have no strong emotions regarding euro 20 and, especially, the 5 euro banknotes. These finding also seem to confirm the statement that banknotes have a low public involvement (which might change in the event of a counterfeit alert or the introduction of a new design), but the low emotional score could also be caused by the design of the euro notes. The euro 20 banknote is considered emotionally more positive in almost all respects than 5 euro banknote, except for amusement. On almost all negative emotions the 20 euro banknote scores significantly lower, except on unpleasant surprise. On the aspects amusement and unpleasant surprise the scores are equal for both designs. If future euro banknotes should have a higher emotional appeal, desire, boredom and contempt are the aspects most in need of imp rovement. To achieve this goal, TNS NIPO recommended alterations in the design to avoid boredom. ´Appealing colours and pictures can make the euro banknotes more attractive and less dull. Also the size of the notes may want to be changed. The euro banknotes’ appearance should be changed at some (of these) points to evoke more, and more positive emotions´ [84].

= euro 5

= euro 20

Figure 11. The euro 5 and euro 20 banknotes as compared on the PrEmo emotion scale from 1.0 - 3.0. On the left, the 5 positive emotions; on the right, the 5 negative emotions [84]. Knowledge of public emotions regarding banknotes is limited. Figure 12 shows some banknotes with (probably) a different - and some, perhaps, higher - emotional appeal than the euro notes. Certainly interesting for future surveys!

Figure 12. Do portraits evoke stronger emotions than animals? And animals stronger emotions than plants or embryos? And plants more than buildings or an abstract design? Do banknotes that look sad call forth stronger emotions than banknotes that express joy? Top left: CNY 5/Portrait of boy and girl, issued 1980. Bottom left: RWF 100/Zebra, issued in 1978. Centre: CHF 100/ Embroyo, design, to issued in 2010 or later. Top right: NLG 100/Stone Owl, issued in 1992. Bottom right: DKK 200/Johanne Louise Heiberg, issued in 1997.

9. MESSAGE OF EURO BANKNOTES The low emotive profile of the euro notes is the result of the ECB’s banknote design policy. A more striking design would probably have been rejected by most Europeans, said former EMI president Mr. Alexander Lamfalussy - EMI is the predecessor of the ECB - speaking at a press conference held at the opening of the euro design exhibition in September 2003. Also former ECB President Wim Duisenberg indicated that, in retrospect, the right banknote design had been selected. Moreover, he made it clear that the design themes openness to others and bridges linking people were fully endorsed by the ECB Board [64]. The design policy of the euro banknotes is as follows. The euro notes should [38, 64]: - be easy to recognise, - offer protection against counterfeiting, - be visually attractive, - be clearly identifiable as European, - embody a cultural and political message acceptable to all Europeans (openness to others and bridges linking people). For the second series of euro banknotes (ES2), the Governing Council of the ECB decided in 2004 that the artistic design would be based upon the current design (of ES1), using the main design features, but allowing changes to ensure the proper integration of new security features. This design philosophy of upgrading is typical for the US-dollars and Japanese Yen notes. The European culture is more a tradition to design and issue a completely new series of banknotes. In the Netherlands e.g. it has always been a positive national event when the Dutch central bank issued a new banknote. What would be on it? How would it look like? Returning to the upgrade policy for new euro banknotes, the question is: would it be possible to improve the messages of the first series? The answer is definitely yes. An analysis of the euro banknotes shows that these messages are quite complex and basically break down into two parts: 1) the message of the series, 2) the message of each denomination (Table 10). Both are - for each denomination - built up from three design elements: 1) gate/window (message: openness to others), 2) bridge (message: bridges linking people), 3) EU-flag, ring of stars and the map of Europe (message: European banknote).

Perception level Series (ES1) 1. Main theme 2. Additional theme Individual note 3. Note theme 4. Main subject 5. Subject 6. Design element 7. Main image 8. Additional image

EUR 50/Renaissance

EUR 50/Mandolin

EUR 50/Lily

Ages & Styles 1 Europe

Ages & Styles 1 Europe

Ages & Styles 1 Europe

Renaissance Architecture Specific gate/window, specific bridge Non existing gate/window, non existing bridge Gate, bridge EU flag, map, ring of stars

Renaissance Music Music instrument

Renaissance Flora Lily

Mandolin

Specific lily

Stringed instrument EU flag, map, ring of stars

Flower EU flag, map, ring of stars

1) Ages & Styles: 5 = Classical, 10 = Romanesque, 20 = Gothic, 50 = Renaissance, 100 = Baroque and Rococo, 200 = Age of iron and glass, 500 = Modern 20th century.

Table 10. Perception levels of the current euro 50 note, with the gate as main front image. Also two other subjects matching the Renaissance theme are given as examples: a mandolin and lily, both typical of the Renaissance. The public perceives mainly the lowest levels 6 and 7 [2].

When asked ‘What kind of pictures, signs and colours do you recall on the euro 50 banknote?’, 9% of the Dutch interviewees come up with ‘(Part of) a building/historical building’ for an answer (2005). Around 5% mention ‘gate or door’ and another 5% ‘bridges’. Apparently, people do not see any windows in the euro notes, as this answer is not given. Awareness of both main images, gate and bridges, is declining: in 2003 people were better able to recall these pictures [34, 84].

Figure 13. EU-flag and bridge seem to be strong enough themes to create a euro banknote.

The recollection of the main images on the Dutch notes was much higher. In 1999, around 68 % answered correctly snipe with regard to the NLG 100 featuring this bird. The abstract NLG 100 still received a score of up to 12 % for stone owl in 1995. The note was named after the watermark in the note [14]. If, as seems to be the case, the bridge communicates better to the public than the gate or door, then why not print the bridge on the front of the note, as done in Figure 13? The gate or door could be left out; in the years 2002 and 2003, the bridge was better known by the public than the gate or door. In 2005 both main subjects were mentioned equally often, but only by about 5 % of the respondents [14, 17, 34, 84]. The gate, door/window image on the front of the euro notes seems to be not typical enough to identify a certain denomination, as was proved with a simple test done by DNB in 2005 (see Figure 14). When the arch of the euro 5 takes the place of the gate on the euro 50 people usually do - in a black and white image - not notice this at first glance. This phenomenon is similar to the portraits of presidents on the US dollar notes. Presidents may be switched without consciously noticing.

Figure 14. Euro 5 or euro 50 note? People get confused. When people are asked ‘Give your remarks to this note!’ it may be concluded that most people see this note as a euro 50. A minority seems to notice that this promotion banknote from HP (2005) is the 5 euro note with an additional 0 behind the 5. Most remarks are made about: 1) foil stripe instead of foil patch, 2) HP in stripe, sponsor is HP, 3) wrong dimensions (most say smaller; in fact it is an extended euro 5).

The most frequently heard remark refers to the absence of life on the euro notes. By showing old buildings without any human beings or other forms of life the euro notes are not about people, but about money. Mr. Jacques Hymans writes ‘Most strikingly, the euro notes feature no human figures at all’ [65]. This gap might be partly filled if, e.g., the euro 50 banknote were provided with a typical Renaissance flower like the Lily (see Table 10). Another observation of Mr. Hymans is that ‘the euro reflects highly the egalitarian idea that ‘Europe’ is all around us - but is nowhere in

particular’. And also: ‘Although the scenes are literally inhabited, in fact they invite ‘habitation’ by the holder of the notes’ [66]. The seven eras of Ages & Styles are usually either not recalled at all or inaccurately. Discussing the euro design in 1997, art students at the Utrecht Academy of Arts were not able to list the seven periods by heart. Mistakes are also easily made as the euro 100 represents two style periods. Printing the name of the note on the banknote, e.g. Renaissance on the euro 50, may serve as a mnemonic device [14]. A more radical solution would be to abolish the Ages & Styles theme and concentrate on Europe, now still merely an additional theme. This will further reduce the complexity of the euro notes’ messages. And would it not even be better to select more recognisable European images, like the Eiffel tower (on the euro 200) or the Mona Lisa (on the euro 50)? This would be far sooner recognised as European by both Europeans and the rest of the world! And, eventually, to give euro banknotes an unmistakable European identity without any additional main theme being required, just the EU-flag, ring of stars, the map of Europe and - today – the currency symbol € will suffice. An example coming close to this concept is shown in Figure 15. This design was entered by the Dutch banknote designer Jaap Drupsteen in the 1996 Euro Banknote Design Contest [38] and is an example of the so called ‘post-modern currency iconography’, which started in 1981 in the Netherlands with the issue of the NLG 100/Snipe [66]. The euro banknotes, bearing no portraits, are also an example of this post-modern currency iconography [66]. The recently published design for the new Swiss series ‘Switzerland open to the world’, with a potato, an embryo and even a skull in the watermark of the CHF 1,000, to be issued in 2010, will also join this new banknote design trend (Figure 12). On the one hand no longer a portrait on the Swiss notes, on the other hand a bit far-fetched subjects. And, from a perception point of view the following question raises: will the images be characteristic enough for the Swiss public to discriminate the individual denominations and will they be appreciated by the public?

Figure 15. Euro banknote design proposed by Jaap Drupsteen, 1996 [38]. The main theme is made up of the value and the colour of the denomination. The subjects are formed by the public security features, e.g. large portrait watermarks representing different Ages & Styles. There is no main (additional) image.

10. COUNTERFEITS In 2003/2004, counterfeit euro banknotes that had turned up in the Netherlands made the headlines, causing a minor crisis. The media attention reached its peak by the end of 2003, when the Dutch retailers vented their criticis m of especially the UV features in the euro notes, arguing that the blue lamp no longer sufficed as device for authenticating the notes. The Minister of Finance was called to account by the Dutch parliament, first in December 2003 and once more in February 2004 [41, 48]. The Minister based his defence partly on DNB’s surveys of the average public knowledge of security features! From low to high public involvement: counterfeits! While, in general, banknotes may not generate much public involvement, people do care once counterfeits start turning up. In this very period, DNB organised a focus group discussion on counterfeit notes by TNS NIPO. ‘Because you hear more about counterfeit money, you think there are more counterfeits in circulation than usual’ it was said [49]. Other research performed by DNB in 2004 affords insight into how people heard about the counterfeits. Most people read about this phenomenon in the newspaper or learned about it on television or radio (90.3 %), 13.7 % heard it from other people, 4.8 % knew it from their branch organisation and 4.5 % knew of nothing at all. About 80 % heard of it from one source, about 15 % from two sources and nearly 2 % from three sources [54]. From the responses obtained through the TNS NIPO survey, it may be concluded that the Dutch feel uncomfortable when interviewed and having to admit that they do not know much about their money. Often they feel embarrassed, ashamed. Most respondents say they seldom check their money, if ever. The public’s attitude seems to be that they consider themselves victims of a counterfeiter. ‘If you find yourself having been handed a counterfeit banknote you have had it’.

And to justify this attitude many find the security features unreliable , you cannot rely on them [49]. Chances of receiving a counterfeit At the height of this media attention - in February 2004 - people estimate the number of counterfeits mu ch higher than the number of counterfeits circulating in reality. Entrepreneurs estimated that - within a 5-year period - 0.5 to 10 % of the euro notes in the Netherlands would be counterfeits. Consumers even expected much higher levels: 30 -100 % [49]. This caused DNB to make some calculations. However, since the circulation of euro notes in the Netherlands is unknown, the total volume of discovered counterfeits could only be expressed in absolute numbers. DNB reported that the total number of counterfeit banknotes identified in the Netherlands was 26,151 in 2003 and 25,600 in 2004. The fact that the 2003 figure was only 8 % higher than the number of counterfeits in 2001 – the final year in which the guilder was in circulation – made no impression. Of more interest to the public is the chance of a person receiving a counterfeit. A first attempt was published by DNB at the BPC General Meeting in 2004 [60]. One of the conclusions was that the odds of winning a lottery are much higher than receiving a counterfeit in circulation. Another conclusion was that the total loss incurred by Dutch retailers because of shoplifting is much higher than the total value of the counterfeits. Later, a better-founded estimate was published in the Quarterly Bulletin of DNB. While not really specifying a chance of receiving a counterfeit banknote, it made clear that the total amount of counterfeits per million inhabitants in the Netherlands is lower (1,572 in 2004) than in the rest of the Euro area (1,901) and the USA (2,711) [98]. Usually the counterfeit level is defined by the number of counterfeits per million notes in circulation, which for the euro area stands at about 60 in 2005. As far as known to the author, no studies are available on what would be an acceptable level of counterfeiting in a cash payment system. New parameter: confidence in banknotes DNB also decided to poll Dutch citizens’ confidence in the euro banknotes. In addition to the cognitive average knowledge of public security features, DNB considers this information a more psychological indicator of the public’s trust in euro notes. Asked for the first time in 2005, the question concerned will be repeated in future polls. The first grade - on a scale from 1 to 10 - for confidence in the authenticity of euro banknotes is sufficient, but not high: 6.8. And the grade for protection of euro banknotes against falsification is 6.5. Women have less confidence in both of these aspects than men. The elderly have less confidence in the protection of euro banknotes against falsification compared to young citizens.

11. THE METHODOLOGIES EMPLOYED FOR THE DIFFERENT USER GROUPS 11.1 Visually impaired Just a few days after the introduction of the euro notes surprising pictures appeared in one of the major news papers in the Netherlands showing how the colour-blind perceive the new euro notes. These citizens hardly see any difference between the colours of the euro 5 and 10 notes . Also the euro 20 and 500 notes are seen as quite similar colours [12]. DNB also received a complaint that security features based on colour changing effects, like the OVI in the euro 50, cannot be discerned by the colour-blind [51]. It became clear that some people had been overlooked by the developers of euro notes. DNB made their apologies to the Dutch colour-blind and promised to make amends in future euro banknote series. The group of the visually handicapped people can be subdivided as provided in Table 11, the male colour blind clearly being the largest group. Clearly more research is needed. Also poor-sighted citizens complained about the legibility of the large numerals on the notes, especially on the euro 5. And the background to the large numeral on the euro 50 note impairs the legibility of the figure [10]. Dutch blind citizens reported they missed the tactile patterns on all the denominations of the euro banknotes and preferred the tactility of the NLG-notes. Why the tactile marks on the 200 and 500? We do not have those notes in our wallets! And: The euro notes may be differently dimensioned all right, but in a shop you do not ask for change in terms of banknote sizes to facilitate comparing these notes [10]. Since the euro 100, 200 and 500 all have the same height, tactile marks were designed on the euro 200 and 500 to discriminate these three denominations. DNB also received some suggestions from the blind as to ways to verify the dimensions of the notes, as a variant to the Cash Test [e.g. 69].

Visually impaired people 1. Colour-blind 2. Partially sighted/low vision 3. Blind a) early blind (< 4 years) b) late blind (> 4 years) Total (around)

Male 8% 0.65 %

Female 0.4 % 0.65 %

Total 4.2 % 1.3 %

0.015 %

0.015 %

0.03 %

8.7 %

1%

5.5 %

Table 11. Overview of the different groups of visually impaired people. Each subgroup has their specific design requirements for the euro banknotes: 1. Colour-blind: colour combinations (avoid e.g. red-green), discriminating subjects, … 2. Partially sighted: bright discriminating colours, large numerals on contrasting background, … 3. Blind: intaglio tactile marks/texture, different note dimensions, tools like Cash Test, …

The Netherlands Federation of the Blind and Partially Sighted asked DNB in 2005 for better tactile features on the notes and a greater difference in length (e.g. 8 mm) between the notes they use daily (mainly the euro 10 and 20 denominations). A standard note height is no problem for the Dutch blind, since this was already the case since 1965 with the former guilder notes. 11.2 Identification of user groups and their requirements After DNB had communicated that the former NLG-notes had 20 security features, journalists and Dutch counterfeit experts were eager to find out how many and which features were incorporated into the new euro notes. DNB’s answer: 37 [e.g. 3]. This answer served as an argument underpinning the security of the euro: counterfeiting would be almost impossible, and was used several times in other articles about the safety of the new euro banknotes [e.g. 6, 8, 9, 44, 63]. During the counterfeit hype in 2003/2004, DNB grew uncomfortable under this policy as Dutch retailers tried to persuade DNB into disclosing all the features (‘we know that there are more’).

User level/group Security features 1. General public incl. visually impaired 2. Cashiers/retailers

3. Central banks 4. Counterfeit deterrence

Subdivision Primary Secondary Verification aids human senses Auto recognition device for retailers Professional cash handlers Implemented in banknote

5. Forensic

Implemented in systems (copiers, DTP) -

Examples Used in television campaign, e.g. 3 features Used in public leaflet from central bank UV lamp, IR with viewer Yes/no detector, also vending machines CIT-companies, cash recycle machines Not published. Screen and scan traps, colour outside euro scale, rainbow print Not published Nano features, taggents, markers, DNA, …

Table 12. Overview of the user levels/groups of security features in any banknote.

The calculation of 37 features is based on all the security features used, divided over the different user groups as indicated in Table 12 (see also [2]). There seems to be a need to know the exact number of security features, since also other central banks in the Euro area mentioned the figure 37 in their documents. Later this number even increased to 40 [e.g. 81], while another newspaper wrote more safely ‘the exact amount of security features is a secret’ [97]. The comments made in the media were also found in a focus group survey commissioned by DNB in 2004: ‘All features are out of date, all have been counterfeited. Also the hidden features.’ [49]. One of the conclusions of this report was that people grow insecure from too many security features. Lesson learned: inform the public on the number of public security features (e.g. 6) and use this as a stepping stone in remembering the features (slogan: Check all six!).

Level Zero or what induces people to check security features? A banknote’s quality and typical feel are often the first characteristics to trigger the suspicion that one is dealing with a counterfeit, especially among cashiers, like retailers. However, this is not a method that permits a description in terms of an instruction - including pictures – for banknote authentication. And moreover, the characteristics concerned suffer heavily from circulation: turning from stiff, smooth and free of crumples to soft, limp and ceased. Such a trigger feature might also be described as a Level 0 feature (Level Zero). A blurred ink jet reproduction is another example. The public immediately notice there is something wrong with the note and start checking its watermark. Specific features to initiate Level 0 are often the same as the ones implemented in the banknote to prevent reproduction (Level 4), like: paper tint, scan and screen traps, colours outside the Euro scale and rainbow print. 11.3 User requirements for security features In 2002, the Bank of Canada asked respondents to define the ideal security features [28, 46, 47]. Table 13 lists these four requirements and extends them with three more. The most important requirement seems to be the time needed to check a security feature. For retailers, this would be around 2 seconds. According to the Central bank of Russia, the time to control the OVI on the rouble notes is 3.1 s, i.e. the shortest test, while checking the latent image with 18.4 s is most timeconsuming. Checking the relief of intaglio print on the rouble takes 4.0 s, the watermark 8.0 s and the security thread 10.1 s. Although fast, it was also reported that the OVI is only used by 2.1 % of the Russian respondents [29]. Checking features on the reverse side takes additional time and is therefore often omitted. One’s thumb and/or other fingers may cover a feature when the note is turned, e.g. the OVI on the high euro denominations. Relevant in this context is also the finding that a cashier does not want to check more than two security features and would rather check just one.

User requirement 1. Fast 2. Easy to use

3. Discreet

4. Reliable 5. Striking 6. Univocal 7. Easy to communicate

Remarks It cannot take more than a second or two to find out if the note requires closer examination. The ideal security feature should not require effort, expertise or machinery. It should be tactile or visual. The feature can be checked without special skills or knowledge. The feature can be checked intuitively and under all light conditions. Cash handlers and banknote tellers do not want the customer to know that the notes received are examined. ‘The ideal security feature would be something you could feel and see right away. But secretly, not conspicuously.’ Security feature should work every time and be counterfeit-resistant and durable. Security feature should be striking and provide fun during checking (the playing man: homo ludens). Security features should be unequivocal, like a yes-no decision. Features should be easily explainable both personally as in written training material.

Table 13. User requirements of a banknote. Requirements 1 - 4 are formulated by the Bank of Canada [28, 46, 47].

The settlement of a complete cash transaction takes 19 s and should involve at least the following three efficiency actions: 1) counting the number of coins and banknotes involved; 2) handing over the money and receiving the change; 3) performing an additional check for counterfeits. For step 3, usually not much time is taken. ‘Shopkeepers seldom find the time to verify the notes received. Some retailers said they would verify banknotes as a rule if they received counterfeits on a frequent basis’ [49]. Counterfeits will have a negative influence on the efficiency of cash payments. Shopkeepers will lose time and - if a counterfeit is accepted money. The 19 s for settling a full cash transaction by retailers was reported in a DNB-study of the efficiency of different means of payment, conducted under the auspices of the Dutch National Forum on Payment Systems. Cash payments are quicker than debit card (26 s) and credit card (28 s) payments, but more time-consuming than settling an e-purse payment (14 s) [53]. It is remarkable that the most widely used definitions of efficient cash payments do not address the time required to settle the cash payment (see, e.g., ‘A cash payment between two persons is efficient when the total number of coins and banknotes used - including the change- is the minimum of all possible combinations of the amount of coins and banknotes needed to realise this cash transaction’ [60]).

In 2004, DNB conducted a survey of the way how different payment instruments, like cash and debit card, are perceived. From this survey it emerged that most people are averse to cash payment because of the time it takes to (1) search for the right amount of coins and banknotes and (2) wait for change. Other reasons for aversion to cash payments are: theft and loss (both safety), shortness of cash and an overstuffed purse (both on ease of use). As to the costs of cash payments, people are averse to the card holder fee - which grants them access to the ATM - and do not like the loss of interest bearing cash [78, 99]. Another sustainable competitive advantage of coins and banknotes over other means of payments is that cash payments are anonymous. 11.4 Retailers Cash handlers may handle up to 200 or more banknotes a day. This considered, retailers may well be considered key players in preventing counterfeit circulation. As said, retailers like to check a security feature fast (2 s) and no more than two features at a time and do so discretely, so as not to invite discussions with clients (Figure 16). A yes-no decision, like a red-or-green light or a beep, would meet their requirements. In case of a red light, the cashier might tell the client: Look, it is not me telling it might be a counterfeit, it is the machine. If you do not agree I will ask my boss to come.

Figure 16. Holding the banknote up to the light can hardly be done discretely. ‘Nobody checks their money. It would feel strange acting like that, as if I were betraying someone’s trust’ [49].

Some retailers in the Netherlands have counters with lights shining up from below. It is a natural reaction to put the note(s) from the customer on the counter to avoid errors about the value of the notes handed. While returning the change, the shopkeeper is able to check discretely and at a glance four euro security features: the watermark, the thread, the seethrough register and the perforation of the hologram! To help retailers choose an authentication device, DNB was the first central bank to organise a detector test and to publish the result on its web site www.dnb.nl (in April 2004). The report is based on tests performed on both genuine and counterfeit euro banknotes. This publication was well received by the retail organisations in the Netherlands and DNB updates this report twice a year [71]. 11.5 Automatic Teller Machines (ATMs) Especially the euro 5, 10, 20 and 50 notes are more -and-more used in all kind of ATMs (Figure 16c). Feeding the machines often leads to confusion. The note may be rejected, upon which the customer, now grown insecure, will proceed to re-feed the note, but this time in a different orientation. The feeding instruction for euro notes is often to 1) push the note to the left and 2) push the note forward. With a uniform note height the instruction would become simpler and notes would be less likely to skew. As far as is known, banknote acceptors receive no landscape or Long Edge First (LEF) oriented noted, but only Short Edge First (SEF) or portrait-oriented notes. In the case of ATMs, the banknotes are supplied landscape-wise, but more recently introduced machines also do so portrait-wise [82]. To come to the public’s aid, the banknote designers may need to study the design of e.g. hotel room keys and telephone cards (see Figure 16a and 16b).

Standard note height The Dutch were used to a standard note height of 76 mm and length increments of 6 mm in Dutch guilder banknotes. A banknote series consisting of various lengths and heights, such as the euro banknotes series, was new to them. A survey conducted by DNB showed that the Dutch consider the euro 5 note too small (height 62 mm) and the euro 100 note too large (height 82 mm), see Figure 17. [49, see also 19]. This criticism is understandable if a recent study of typically European wallet sizes is taken into account. A note height of 70 – 75 mm would fit best in a European wallet with its typical dimensions of: (length) x (width) = (200 - 250 mm) x (90 – 120 mm).

Figure 17. Wallet with banknotes; euro 100 notes are often sticking out of a wallet.

(a) (b) (c) Figure 18. (a) Feeding direction on hotel room key of the Frankfurt Hilton. Mark the tiny notch in the bottom-left corner, which is there for the visually impaired (2005). (b) Feeding direction on telephone card issued on the Falkland Islands (1992). (c) Banknotes are inserted vertically and portrait-wise into banknote acceptors. Picture: bill acceptor at Copenhagen International Airport (2005).

The Netherlands Bankers’ Association recommended introducing a standard note height in future euro notes, because [92]: ‘- The use of various automated machines is on the increase.. One uniform standard height will render the use of different cassettes for the different denominations unnecessary. - It is easier for consumers to use the machine (smaller notes have a tendency to shift because the machine slots are designed to accept the largest notes). - It is easier for cash recycling machines and multi-dimension processing. - It may be the answer to the complaints that the 5 euro is too small, weak and looks cheap. - A smaller euro 100 note may be the answer to complaints that the note is too large for an ordinary wallet.

50 50

thread

fibres

ink

foil

(a) (b) Figure 19. (a) Trend towards the use of more and more bands in a banknote. (b) Banknote design: landscape orientation. (c) Banknote design: portrait orientation.

(c)

- It may provide efficiency advantages in respect of notes handling logistics. - A uniform height will bring the euro in line with the other currencies (the standard height varies between 65 mm - 75 mm, worldwide)’. Usually there are one or two types of cash box inside an ATM. Issuance of the smaller euro 5 notes often requires a third cassette, which may explain the poor quality of these notes: these notes are not issued by ATMs. Commercial banks are not very willing to invest in more cash boxes. One of the reasons for not loading low values into ATMs might also be the need for more frequent refilling. A single note height would lead to one type of ATM cassette, permitting issuance of all denominations! A trend in banknotes is the use of bands, by way of a security thread (including the wander zone), foil stripe, fibres and special ink properties (see Figure 19a). A larger note length may support future designs, while a larger height does not create more space for these bands. Vertically formatted banknotes are not (yet) very popular and may be found today in Cape Verde, Israel, Serbia, Sri Lanka and Switzerland (see Figure 19c).

12. BANKNOTE PSYCHOLOGY The use of images of banknotes in visual instructions is on the increase in Dutch society, as illustrated in Figure 18. While not considering taking action to discourage this trend, DNB is understandably not in favour of the use of crosses printed over euro banknote images as this may be mistakenly interpreted as suggesting that cash as a payment instrument is not quite reliable or that the banknotes are not accepted everywhere. Final: European identity We do not know to what extent the design of the euro coins and banknotes may help enhance the public’s awareness of a European identity. What we do know, however, is that the introduction of the euro did not make the Dutch feel more European. As is reported in the two special Flash Eurobarometers published in 2003 and 2004, 84 % of the Dutch (2003: 90%) said that the introduction of the euro had neither strengthened nor weakened their sense of being European, against 78 % (2003: 80 %) for the Euro area [42, 62]. There are many signs that the designs of the euro coins and banknotes appeal to a sense of European identity, as is illustrated in this paper. But there seems to be much room for improvement. Perhaps the second euro series will also satisfy the Dutch journalist who wrote in the first weeks of the euro notes’ circulation: ‘I see characters that do not inspire me, the letters BCE ECB EZB EKT EKP. Am I living in Eastern Europe or something?’ [11].

(a) (b) (c) Figure 20. Crosses through banknotes in the Netherlands in 2005. (a) Sticker used by Dutch retailers to warn customers that they do not accept 100, 200 and 500 euro banknotes. (b) Instruction by the Amsterdam public transportation system informing the public that the ticket machines only accept 5 and 10 euro notes. (c) Instruction on ticket machine of the Dutch railroad system: unsuitable for coins and banknotes.

After the setback in 2005 as a result of the French and Dutch publics’ ‘no’ to the European Union Constitution, the launch of the second series of euro notes is an opportunity to show that the EU and ECB are able to create an outstanding and appealing product with which Europeans like to identify. Appealing European money will foster pride in being European!

13. CONCLUSIONS 1. The euro banknote designs have been accepted by the Dutch public. The notes are appreciated - each year more so and the public’s knowledge of the security features is also high (average of 2.2 in 2005). Each year more people are able to tell which of the euro designs they prefer. 2. From a design point of view the first series of euro banknotes is a success. However, the present design leaves much room for improvement and optimization, especially in terms of recognition and suitability for daily use by the public. 3. In general, people feel no strong positive or negative emotions towards the euro banknotes. 4. People experience a (historical) building as the euro banknote’s chief message. The messages of the euro notes appear to be too complex for the public (Ages & Styles, Europe, gate/window, bridges). The public ’s ability to name spontaneously the main images, gates/windows and bridges, is poor. More variety in the buildings would increase the notes’ recognizability and appeal, as would the use of images of living elements like people, animals and/or flowers. To reduce this complexity, even the main theme Ages & Styles may need to be abolished, creating more room for Europe as the main theme. The same applies to the gates /windows element. 5. The d istinction between low and high euro denominations is not effective as it leaves both the public and retailers confused about the security features, besides making the public information tools too complex. 6. The average number of security features spontaneously produced by the Dutch public appears to be 2.2 in 2005. To increase this average, communication should focus first of all on the 15 to 20 % Dutch citizens who cannot tell a single security feature. In general, these people are found among elderly citizens, citizens in the lower social classes, the less educated, women and people who do not deal with money (‘non retailers’) on a daily basis. 7. Touch features. The first feel of a (counterfeited) banknote is what triggers the attention of the public and cashiers in particular. 8. Tilt features - and especially colour switching features - are less popular than feel and look features. 9. Foil features are better recalled by the public at large than special ink features, and, therefore, seem to be mo re popular.

10. The Dutch consider the euro notes in circulation as clean (86 %). The euro 50 banknote is significantly more judged as clean (94%) than the euro 5 banknote (61%). 11. For several reasons, the euro 5 euro banknote seems to be less successful than the euro 50 one. In 2005, the Dutch find this 5 euro note downright ugly. 12. All surveys reported on point in the same direction. Major contradictions are not found. 13. Measuring appreciation seems a better method to determine the public’s opinions about the different euro designs than measuring emotions.

ACKNOWLEDGEMENTS I would like to acknowledge Dr. Ton Roos (DNB) for his support, his advice and suggestions throughout my research project. I am also grateful to Mr. Richard Heuver (DNB) for providing me with the necessary statistics and to Mr. Fred Collens (DNB) for editing the English text.

APPENDIX I

Key information derived from public polls by DNB

Research variable 1. Sample size 2. Method 3. Interviews by

Specification 2,000 (2002, 2003) 1,500 (2005) All categories of citizen (general public) Telephone

4. Reliability

Around 95 %

5. Accuracy

+/- 1.7 % (at 82 %)

6. Sample period 7. Frequency 8. First measurement 9. Longitudinal research 10. Anchor note 11. Control questions 12. Report time 13. Costs 14. …

February Every 2 years 1981 1981-1999 (NLG) 2002 - 2005 (EUR) NLG 100 EUR 50 Yes 6 Weeks Around EUR 30,000

Remarks In 2005 reduced to around 1,500 with preservation of appropriate accuracy. 18 years and older. Contrary to selection of focus/target groups. Before 1999, NIPO used to visit the interviewees at their homes. As of 2001, the interviews have been conducted by telephone. All market research has a reliability of 95 %, independent of the sample size. The accuracy margin of the answers depends on the sample size. For 2,000 interviewees and, e.g., p1 = 82 % (meaning: 82 % answered the question) and for other sample sizes and p1=82 %, the following margins apply: n = 300, margin is +/- 4.3 % n = 1,000, margin is +/- 2.4 % n = 1,500, margin is +/- 1.9 % n = 2,000, margin is +/- 1.7 % 4 weeks in February, each week 500/375 respondents In odd years, except in 2002 (additional poll because of the introduction of the euro). In 1981 only appreciation; since 1983 both knowledge and appreciation. Clear trends and new systems, e.g. the introduction of UV-lamps by the Postbank in 1987 and the introduction of the euro in 2002. Anchor note = banknote model each time included in the survey as a reference. Important for qualitative judgements.

Including report. Research costs are low.

Table 1. Overview of the different research variables of the DNB opinion polls measuring knowledge and appreciation of banknotes.

1. Total number of respondents 2. Total number of answers 3. NIPO average number of security features 4. Don’t know 4/1 (number don’t know/total number) 5. (2 -4) / total number of respondents 6. Wrong: Wadden island not depicted 7. Wrong: Printed barcode 8. Wrong: Signature 9. (2-4-6-7-8) / number of respondents

NIPO 2002 2002 4,770 2.38 226 11 % 2.27 6 3 10 2.26

NIPO 2003 2015 4,463 2.21 372 18 % 2.03 1 3 3 2.02

TNS NIPO 2005 1501 3,515 2.34 220 15 % 2.19 0 3 3 2.19

2.3

2.0

2.2

NIPO 2002 196 150 26 4 2 46 424 0.21

NIPO 2003 229 166 38 5 3 127 568 0.28

TNS NIPO 2005 179 147 40 1 3 66 436 0.29

Used in report: rounding off of item 9

Table 2. Overview of the data used.

Security features Partially correct 1. Marks for the blind 2. Type of paper 3. Banknote series numbers 4. Washable, colour fast 5. Cannot be copied on copy machine 6. Other answers 7. Total 8. (7) / number of respondents

Table 3. Overview of partially correct security features mentioned by the public. These answers count as correct answers.

Appreciation of series as ‘beautiful’ Denomination NIPO 2002 5 54 10 64 20 69 50 68 100 68 200 69 500 68 Total 460 Total/7 65.7 %

NIPO 2003 49 65 72 65 72 71 71 465 66.4 %

TNS NIPO 2005 45 67 74 71 76 75 77 485 69.2 %

Table 4. Results for the appreciation of the euro banknotes as a series on the basis of the beautiful score for each of the seven individual denominations.

APPENDIX II Phrasing of the questions (DNB) 1. Questions related to the quality of the euro banknotes currently in circulation The questions as incorporated in DNB’s opinion polls for 2003 and 2005 were: DNB Question 1 and 2 What is your opinion of the quality of the euro 5 notes? How would you judge these notes in general in terms of soiling, crumpling, wear-and-tear, writing, repair tape etcetera? Would you say that, on the whole, the euro 5 notes are … (respondent may choose from the following answers) [1] very clean [2] clean [3] neither clean nor dirty

[4] dirty [5] very dirty [6] do not know/no opinion

Same question for euro 50 note: replace euro 5 note by euro 50 note. DNB Question 3 Let us go back to the euro notes in general. Are you satisfied with the quality level of euro banknotes in circulation in terms of soiling, crumpling, wear-and-tear, writing, repair tape etcetera? Would you say that, on the whole, the euro 5 notes are … (respondent may choose from the following answers) [1] very satisfied [2] satisfied [3] neither satisfied nor unsatisfied

[4] unsatisfied [5] very unsatisfied [6] don't

2. Questions related to confidence in the euro banknotes DNB – Question on confidence in euro banknotes 1 Now let us talk about something else. Banknotes should be reliable and resistant to counterfeiting. How would you grade your confidence in the authenticity of the euro banknotes in your wallet? [1] [2] [3] [4] [5]

1 2 3 4 5

[6] 6 [7] 7 [8] 8 [9] 9 [10] 10 [11] Absolutely no idea

DNB – Question on confidence in euro banknotes 2 How would you grade the security measures against counterfeiting and forgery of the euro banknotes? [1] [2] [3] [4] [5]

1 2 3 4 5

[6] 6 [7] 7 [8] 8 [9] 9 [10] 10 [11] Absolutely no idea

APPENDIX III Typical Dutch Received feedback on the introduction of the euro coins and banknotes in the Netherlands

Before and after the introduction of the euro banknotes on 1 January 2002, the Dutch central bank (DNB) received many reactions to the design of the euro banknotes, either directly from the public or through the media. This public feedback is collected in this Appendix. In the years 2002 and 2003, the Dutch public clearly considered DNB one of the chief authorities on the introduction of the euro, given the question most frequently asked of DNB in these years: Where can I change guilders to euro? In 2004, How can I retrieve my pension claims? took over the position as most frequently asked question [74]. Circulation Due to the effect of migration - the Netherlands is now a monetary province of the euro area - it is no longer possible to know the exact circulation of euro notes in the Netherlands, just as in the guilder era DNB could not possibly specify the amount of guilders in circulation in one of the Dutch provinces. Net issues are used instead, which are defined as the total amount of banknotes issued banknotes by DNB. Strikingly, the circulation of the euro 20 note is negative. The reason for this is not so much that the Dutch public would dislike the 20 euro denomination, but that the euro 20 banknote is often the highest denomination in the ATMs of neighbouring countries. And these euro 20 notes migrate to the Netherlands, since the euro 50 banknote is most often provided denomination by the ATMs in the Netherlands. Looking at the total amount of euro notes in circulation just one conclusion is to be drawn: the euro notes are very popular, also in the Netherlands. In terms of numbers, since the euro banknotes’ launch in 2002, the total euro circulation has autonomically grown at a pace of 10 % per year, from around 7.3x109 notes at the new currency’s launch to around 10x109 notes in 2005. In terms of value, an even higher annual growth is measured of around 20 %, from EUR 350.109 at year-end 2001 in the national currencies to around EUR 525x109 in 2005 [98]. In 2005, an overwhelming majority, i.e. 95 % of the Dutch respondents to be precise, answered that the euro banknotes are easy to distinguish and manipulate (against 93 % for the Euro zone). People experienced the euro coins as more difficult to distinguish: only 65 % considered this easy, against 59 % in 2004 (cf.73 % for the Euro area) [102]. From the 12 countries within the Euro area, the Dutch are the ones who most often still count in the old national currency, the guilder or NLG (2004: 67 %, against 49 % for the Euro zone) [62]. Usefulness of a 1 and 2 euro note The discussion within the Euro area about the public need for euro 1 and 2 banknotes was certainly not supported by the Dutch: in 2004, 88 % said not to favour the introduction of a euro 1 banknote (2003: 89%), against 69 % for the total Euro area (2003: 67 %) [42, 62]. This study’s outcomes are closely similar to other findings [57]. DNB’s position in this context was not to introduce such low denominations. Apart from respecting the public’s opinion, DNB’s arguments were that the average quality of these notes would drop below the level deemed acceptable. Also, the costs would be too high and inefficiencies in cash payments would be created. Abolishment of 1 and 2 eurocent Two years after their introduction, the usefulness of 1 and 2 eurocents was called into question in the Netherlands. The discussions were conducted in a formalised manner within the National Forum on Payment Systems. It was concluded that savings up to 30 million euro a year could be achieved if the 1 and 2 eurocent coins were abolished. Also from a theoretical point of view, it was concluded that the efficiency of the denomination structure of the euro cash system would stand to gain from abolition of the said coins. Another argument was that DNB had learned from repeated questions in a so-called CentER panel that the public might be in favour of cash payments in shops being rounded off to the nearest 5 eurocents.

Figure 1. The one and two eurocents are no longer used in the daily cash payments in the Netherlands. On the national side: a portrait of Queen Beatrix.

To verify whether the public would agree, DNB organised an empirical trial to evaluate the daily use of the 1 and 2 eurocent coins. This trial was done in the town of Woerden and ran from 26 April - 6 June 2004. Around 130 shops, catering, gasoline stations and some others participated in this experiment; around 500 points of sale in all. One of the key questions was whether the cash transactions are settled in less time if the round off rule is used1 . The outcome of the trial was that 83 % of the Dutch public are in favour of, or indifferent to, rounding off cash transactions. It had been agreed in advance that the threshold value for the opponents should be less than 20 % for a countrywide implementation. At 16 % of the opponents, this was the case. Rounding off cash transactions does not mean that the 1 and 2 eurocents will disappear altogether. The introduction of the round-off rule in the Netherlands was formalised by the Dutch Minister of Finance, but a withdrawal of the 1 and 2 eurocents as legal tender would need to be decided on by all the Ministers of Finance of the EMU [60]. The Netherlands are, after Finland, the second country within the Euro zone to introduce a cash round-off rule to the nearest zero/five eurocents. The Dutch will not regret this measure judging by European Commission’s finding that 50 % of the Dutch is of the opinion that there are too many euro coins, against 40 % for the Euro zone. Asked which coins should be withdrawn, the Dutch answered the 1 cent coin (77 %), the 2 cent coin (69 %) and the 2 euro coin (10 %). In 2005, the Dutch seem to be more satisfied, although 33 % hold that there are too many coins (against 36 % for the Euro zone [102]). According to the Dutch - 45 % both in 2004 and 2005 – the withdrawal of the smallest-value coins will not lead to price increases (the highest score in the Euro zone [62, 102]). Money illusion In 2004, DNB reported that the psychological inflation of the euro amply exceeded real inflation. Dutch consumers said that the price rise over the years 2001 - 2005 is 12 %, while in reality prices went up 8.4 % [88, 89]. This effect was (partly) explained by Philip Franses, who reasoned that the Dutch people were ready to pay up to an average of 60 % more in euro than in Dutch guilders. Franses’ study was focussed on e.g. the price people were prepared to pay while on holiday for a set of towels at the swimming pool or for hiring of a tennis court. According to Franses, people tend to calculate using the value unit one. If this unit changes, it is difficult to estimate prices. If a foreign currency unit has a higher value than the home currency unit, people tend to spend more money, an example of money illusion. In case of a lower value for the foreign currency unit, people tend to spend less [87]. Attitude of the Dutch to the euro On the basis of the report of the successive Eurobarometer surveys commissioned by the European Commission over the years 2002 - 2005, it may be concluded that, from the 12 Euro zone countries, the Dutch are least in favour of a European Monetary Union with one single currency, the euro. Still a large majority of around 70 % of the Dutch support the euro, while the average for the whole European Union (25 countries) is around 60 %. Especially in 2004, no other population in the Euro area was more negative than the Dutch, of whom only 39% were of the opinion that the introduction of the euro was positive for their own country [62, 67]. As reported before in 2002 [14], the appreciation of a banknote design may depend in part on the inflationary or political aspects associated with the currency. Although the Dutch attitude may tend towards the negative, appreciation of the euro banknote designs went up several percentage points in the years 2002 - 2005.

1

The round-off rule: - round down to zero: cash totals ending on 1 and 2 eurocent, - round up to five cent: cash totals ending on 3 and 4 eurocent.

The perceived value of the euro in the Netherlands might have been influenced by the abolishment of 1 and 2 eurocent in 2004. Design/iconography Positive reactions given to the design of the euro notes are: ‘All these stripes and cubes on the guilder notes were more for the intellectuals, not for the common man in the street. The euro notes are different, much better than the guilders’ [7]. And: ‘I like the euro notes; they are beautiful. In contrast to the dollar notes they are easy to recognise by colour and size’ [9]. But many regretted the end of the highly appreciated Dutch banknotes; people found the euro notes too pale and lacking in character [14]. These reactions were not only given in 2001 and 2002 but continued to arrive, like the letter to DNB written on 1 August 2004 on the occasion of the ECB announcing a second series of euro banknotes: ‘Dear Mister Wellink! Since work on the €-banknotes will start, please kindly use your influence so that the one that designed the 50 guilder Sunflower will receive the assignment for a complete new set of € banknotes. The recent Austrian trash is really too ugly and too dirty to be trustworthy. Only Dutch designers are capable of creating a valuable and artistic euro’ [58]. This reaction is in line with the TNS NIPO report: ‘The basic attitude of the Dutch to the euro is negative.’ [49]. According to this report the disadvantages as perceived by the public were: lack of tradition, price rises, euro less beautiful, shortage of change money. Lack of tradition was explained as ‘not being able to relate to the images of the euro’. This not only accounts for the perception of higher prices, but also refers to the design of the notes, as a well-known Dutch writer wrote: ‘We should never have changed to this ugly euro. Yes, that also, these notes are ugly. They become dingy and then look like Polish zlotys’ [83]. Construction of bridge on euro 5 In 2005 a Dutch news paper reported that the construction of the bridge on the euro 5 would not be common for the Classical period. The pillars of the bows of the second layer should not be founded in the centre of the bows of the first construction layer. The same argument is valid for the second and third layer of the aqueduct. The euro 5 notes would be used as education material in applied mechanics on the University of Groningen [103]. Unmeant symbolism Some Dutch people discovered unmeant symbolism in the euro notes. The Free Reformative Church were complaining about the ring of stars in the euro flag on the euro notes, which could be interpreted as paying homage to the Catholic Church [35]. Classic theme on euro 500? One comment on the euro banknote design contest in 1996 was that the different styles attributed to the denominations might have been chosen the other way around: the euro 500 should have been Classical and the euro 5 should have been Modern. If the euro 5 note were to become a coin, the series would still have a beginning, a first period. And the Classical period would be more appropriate for the highest value, this being the era we tend to respect more than the present age. Wording of security features As is already known, people have difficulty putting the security features in words [14]. This problem was experienced again during the preparation of the Euro 2002 Information Campaign. Despite a careful description, confusion occurred about the features. Even the (expected) more simple ones, like a security thread and a foil stripe were mixed up in the Dutch media when the first counterfeited euro notes appeared in July 2002: ‘… a silver security thread and a type of hologram’ [23] and ‘… the silver thread through the note… and the silver-coloured stripe…’ [24]. The security thread in the euro notes is not silver, and held against the light it is dark-coloured. Communication consultants rather speak about the glossy gold stripe instead of iridescent ink or about tactile relief than intaglio. But, apparently, these terms are still too difficult, given the fact that the public does not seem to use them. Even

the central bank sometimes has to search for the right words, like in this interview with the Dutch Governor: you should look at the number of … what is their name again … fibres [44]. Listening to the Dutch interviewees at TNS NIPO learned that the public describes the foil, the hologram as: silver strip, silver thing, silver sticker, glimmer, silver, reflective strip, hologram colours, rainbow colours, turning, turn round thing, moving, moving pictures. The DNB research conducted in 2004 showed that security features may also be misinterpreted [49]. The survey commissioned by OLAF also reported confusion about public security features: ‘the hologram was often confused with the watermark or the iridescent stripe, and the watermark, with the security thread.’ Here, too, the terms used to refer to the features are probably too difficult for the majority of people, since the report continues with: ‘On the other hand, the explanations given by participants showed that they were familiar with some of the security features’ [68]. In 2004, the ECB was no longer content with the first verbal definitions of the euro security features. For the new ECB communication tools, the vocabulary of the public features was made less technical in order to be better accessible to the public at large. Successful terms for public security features typically have one or two syllables and describe the feature in words that the public understands. Brand names (DOVID, MVC, Kinegram, STEP, etcetera) or the correct technical name (iridescent pigments) should be avoided. Seen thus, see-through register and security thread are also not appropriate. There is a public need to refer to coins, banknotes, and security features by names [e.g. 14, 90]. To be sure, if the terms describing the security features are well understood, public tests should be performed. Security features are complex and experienced as untrustworthy Feedback on the first series of euro notes also showed that public security features are complex, and that some are too complex. Especially the holographic foils on the euro notes are criticised. Foil manufacturers seem to be on the wrong track given the fact that the holograms on the four highest denominations of the euro banknotes are awarded because of their ingenious complexity of the images [30]. Two remarks from the focus group study of DNB in 2004 illustrate the complexity experienced: ‘You have to watch too many things. I am already happy that I can discriminate between the notes.’ and ‘I would only look at the colour and the foil stripe… but what they should look like I do not know’[49]. Signature All euro banknotes bear the ECB President’s signature. At 1 November 2003, Mr. Jean-Claude Trichet became President of the ECB and the signature of Mr. Wim Duisenberg was replaced. When people got the first notes in hands with the signature of Mr. Trichet, they doubted the genuineness of these notes. Retailers, bank employees and - of course - collectors asked DNB about this changed signature. Many people do not know that banknotes with both signatures (Duisenberg and Trichet) are in circulation [61]. Other public remarks were that the President Trichet was not yet President in 2002 (the year on the notes did not change to 2003 [61, 79, 104]. As changing the signature on banknotes creates small variations in the banknotes, it is a questionable custom from a public communication point of view. On the one hand, the issuing authority expects that the public will notice small changes in a counterfeit banknote, while on the other hand the banknotes are changed by a signature; this seems inconsistent. It is also not optimal for automatic banknote processing if the note undergoes changes during circulation, for the changed area often needs to be covered during fitness inspection. To the public, the signature seems to be unimportant, for only 3 % recall having seen a signature on the euro notes [84]. Surprisingly, collectors do not score much higher, witness the fact that a magazine for banknote collectors asked its readers on the basis of a photograph showing the two signatures: ‘Which of the two is Duisenberg’s?’ [86]. Also a recently published study in Currency News reports that the signature is the least important feature for user levels 1, 2 and 3 [94]. In most countries, signatures on banknotes are not legally required, though. It is a custom that dates back to the times when banknotes were signed by hand by the central bank and banknotes were coupons that were freely exchangeable against coins. Today the signature signifies that the new design has been approved by the President or Governor. This meaning would argue in favour of never changing a signature on a given banknote design. Mr. Wim Duisenberg’s signature has been printed around 3.5x109 times on NLG notes and around 25x109 times on euro notes. For both currencies, the same signature was used, i.e. the one first used on the NLG 50/Sunflower issued in 1982! [15, 93].

Date on banknotes Several customs are found for providing a date on the banknote: - approval date/year of the printing proof, - date/year of first issue, - date/year of a new president/treasurer/governor. When a new Treasurer and/or the Secretary of the Treasury is appointed in the USA, a new series is created to accompany the introduction of the new signature(s). The USD 20 note in the 1996-2001 series differs from its predecessor in that it features a larger off-centre portrait. The Series in question breaks down in to the 1996 series, the 1999 series and the 2001 series. The relevant year is printed on the front of the notes. The follow-up to these Series 1996-2001 is the 2004 Series (the first to feature more colours). Sometimes a second date can be found on the notes, the year of production. This is e.g. the case on Canadian dollar notes which show on the reverse side, in small print: printed in 2000/imprimé en 2000, and the year of issue on the front. Like the signature, also the date on the banknotes is not something the general public will remember by heart. Just 1 % of the Dutch people recall that euro banknotes contain dates [17, 34, 84]. Numbering of banknotes The number on the euro notes is not a public security feature, but serves as information for the central banks (ECB plus National Central Banks or NCBs). Especially during the first months in 2002, the numbering system of the euro banknotes, which was not made public by the ECB, was a subject of much discussion and speculation. Within a few days the correct translation of the letters circulated on the internet (P = DNB or for the public The Netherlands). Little more time was required for decoding the letter in the plate number on the front of the notes (G = Joh. Enschedé). Its policy being that correct solutions should be affirmed, the ECB quickly provided standard answers to all the NCBs. Later all the NCB or country codes could be found on the ECB website. Some more mathematical skills were demonstrated by a Dutch student. He contacted DNB in January 2002 saying he had found the numerical equivalent of the country code (P = 26). DNB confirmed the calculation and Mr. Antens published the calculation of the check digit 9 on the euro notes [25]. Communication and training Anticipating on questions Aware of the public’s appreciation and interest in the NLG notes, in 2001 and 2002 DNB prepared several publications dedicated to the design of the new euro coins and banknotes, like the colours (proposed by DNB), the main images, the security features and the signature of Mr. Duisenberg [3, 4, 5, 15, 18, 20]. Also absent islands - Wadden, but the island of Texel on the notes! - were explained by DNB [13]. Influence of training on knowledge Providing training sessions in authentication on the basis of security of features is very helpful, as was demonstrated by the Pierre Mèndes University, which found that cashiers' awareness of security features had doubled after attending the training sessions (from, on average, 3.5 to 7 features). In preparing a training programme one needs to keep in mind a conclusion of the Bank of Canada: Without meaning or relevance, there is little motivation or interest to learn more about security features [28]. The question for central banks: how to maintain over time the public knowledge of the security features learned? Dutch citizens might be expected to know more about the euro 20 and euro 50 notes, as these notes were depicted in public communication tools like leaflets, advertisements, posters etcetera. But no proof for this could be found in the research conducted. Some fun in public information Although there is no real evidence, it seems that a modicum of fun in public information appeals to the general public. In the training CD-ROM ‘The new colour of money’ from the Federal Reserve System, issued in 2004, for example, the fluorescent fibres are represented as wriggling worms. The philosophy underlying this use might be the playing man, the homo ludens. It is clear that this way of communicating should be implemented prudently, since people also seem to expect serious information on banknotes and some dignity. Security features could also be promoted with the help of cartoons/comic strips, as experienced in the Netherlands and elsewhere.

Communication concepts Before a banknote is designed, the communication concept should be established. Which public features will be promoted? Is there a theme? Are there stepping stones to remember them? Do they appeal to the public? TNS NIPO suggested drawing up a ranking of which features should be checked first [49]. Looking at the average number of security features known by heart (around 2), it seems logical to select a maximum of 3 features to be checked first. Table 1 presents a possible communication mix of security features based on the Feel-Look-Tilt principle.

Public Security features Feel Look Tilt

Front

Reverse

+ o +

o + o

Table 1. A model for the marketing mix of six public features in a banknote. + = primary public security feature o = secondary public security feature Slogans The slogan Feel-Look -Tilt was developed as part of the information campaign after the notes were designed and printed. An analysis shows that the slogan does not really cover the four main security features, since Feel is missing, as is illustrated in Table 2. Learned feedback: define the public security features before the slogan is made. The slogan was first introduced as Look -Feel-Tilt. It was successful during the introduction campaign, since 45 % of the people recalled this slogan unprompted [31]. By the end of 2004, the slogan was known less well. Euro Series 1 1. Watermark 2. Thread 3. Foil 4. Special ink 5. Tactile properties 6. See-through register

Slogan Feel- Look-Tilt LOOK LOOK TILT TILT FEEL LOOK

Communication medium TV commercials, comprehensive leaflets, posters, … Detailed brochures, electronic learning modules, …

Table 2. Overview of the main public features of the euro banknote (ES1). The 4 main public security features are based on look and tilt. In italics the secondary public features.

DNB Governor Wellink devised a creative variation on the theme: Look-Feel-Turn around (in Dutch: Kijken-VoelenOmdraaien) [40]. Other slogans One of the first slogans to promote money dates back to 1813 and was used by an English coin manufacturer: Pure copper preferable to paper! (Currency Museum of the Bank of Canada). Today it seems to become a trend to have a slogan for the introduction of a new note. The motto for the new Swiss banknote series in 1995 was 5 easy to check and the introduction slogan of the new USD-notes in 2004 was: Safer. Smarter. More secure. A new slogan might be Look for the colour, colour being the most characteristic property of a banknote. The public security features could be based on the same colour as the note. In a blue note, for example, all the public features are blue. i.e. a blue watermark, a blue foil, a blue thread, blue tactile areas, blue fluorescent fibres etcetera. The same goes for a green note, and so on. (Make sure that the colour blind are also able to use this colour marking!) Quality and other remarks Although produced within strict tolerances, minor differences occur between euro notes of one denomination, the reason being that they are produced at 9 accredited paper mills and 15 different printing works. The collectors were among the first to spot these small variations. Later, in the spring of 2005, one of the major newspapers in the Netherlands

headlined: Poor printed new fifties look like counterfeits! [76]. By the end of 2005 Mr. Douwe Brongers published also about the variations in uniformity of euro banknotes [104]. Also the wandering security thread may mislead judgement. In DNB’s most recent survey, interviewees came up with answers like There is something wrong with this note, the watermark has moved too close to the edge. This survey was prompted by the wish to back up DNB’s statement that people are very well able to distinguish genuine and counterfeit notes from each other if the public security features are used [100]. A stable production is also necessary for vending automates: colour, opacity, thickness and other measurements critical for acceptance by an ATM require a constant, stable production. Special substances in the banknotes The discussion about TBT (tributyltin) in the euro banknotes was never a really topical issue in the Dutch media. TBT is used as a stabiliser, e.g. in food packaging, textiles etc. 1 kilogram of euro banknotes may contain 7.5 micrograms of TBT. The ECB responded that the average person would need to eat more than 2,500 euro banknotes a day over a prolonged period of time to cross the Tolerable Daily Intake (TDI). Some more attention in the Netherlands was given to the emission spectrum of the euro, published by some researchers from the University of Utrecht. They wanted to know whether, as they expected, europium was used in the euro notes! [16]. DNB answered that this was possible. Responsible for the luminescence of the euro notes are both organic and inorganic pigments, which may contain rare earth elements like europium. DNB also received a question from a cashier concerning the presence of colophony (rosin) in the euro banknotes. Colophony may cause allergic reactions and is regularly used in commercial paper types. The answer is that colophony is neither used in the banknote paper production, nor in the inks. Remarks about the cotton used for the euro In 2004, DNB was approached by the non-profit organisation Solidaridad about the use of cotton for banknote paper from small farmers. Their complaint concerned a lack of fair trade, since the cotton production in China and the USA is largely subsidised. DNB reacted positively and organised some trials at paper mills using cotton coming from small farmers in Peru, India and Uganda [96]. The concept of fair trade should be kept segregated from genetically modified cotton and biological friendly produced cotton; both were no item for Dutch journalists.

REFERENCES Marked reference numbers refer to references used in Appendix III. 1.‘Nederlandse bankbiljetten. De bekendheid en waardering van bankbiljetten’ NIPO, prepared for De Nederlandsche Bank NV, Amsterdam March 1999 2. De Heij, H.A.M.; ‘The design methodology of Dutch banknotes’, Optical Security and Counterfeit Deterrence Techniques III, Proceedings of SPIE Vol. 3973 (ISBN 0 - 8194 - 3591- 0), San Jose, California USA 27 - 28 January 2000 3. Albers, Joyce;’Van ontwerp tot biljet: DNB begeleidde het euro 200 biljet’ De Florijn, Jaargang 3, Nummer 14, De Nederlandsche Bank NV, Amsterdam 30 augustus 2001 4. ‘Echtheidskenmerken eurobankbiljetten en -munten’ DNB Magazine, Nummer 3/4 2001, De Nederlandsche Bank NV, Amsterdam 2001 5. Hoogendoorn, Marijke’De kleuren van de euro’ De Florijn, Nummer 19, De Nederlandsche Bank NV, Amsterdam 22 November 2001 6. ‘Voelen, kijken en kantelen’ De Telegraaf, Amsterdam 29 December 2001 7. Van Walsum, Sander;’Gulden was nooit trots van de natie’ Volkskrant, Amsterdam 31 December 2001 8. De Boer, Jeroen and Paul van Horn;’In het sombere scenario komt de omslag na het tweede kwartaal’ Beursplein 5, Amsterdam 2 January 2002 9. ‘Eurobiljetten betrouwbaar, maar lijken op Monopoly -geld’ Volkskrant, Amsterdam 2 January 2002 10. ‘Geen euforie onder slechtzienden’ NRC, Rotterdam 3 January 2002 11. Poortinga, Sipco;’Paniek tijdens de eerste eurodagen’ Metro, Amsterdam 7 January 2002 12. Van Goor, Meinard;’Kleuroblind’ NRC, Rotterdam 10 January 2002 13. Hoogendoorn, Marijke;’Texel stond er eerst niet op!’ De Florijn, Number 1, De Nederlandsche Bank NV, Amsterdam 10 January 2002 14. De Heij, H.A.M.;'A method for measuring the public's appreciation and knowledge of banknotes' Proceedings of SPIE, Optical Security and Counterfeit Deterrence Techniques IV, Volume 4677, San Jose USA 23 - 25 January 2002 15. Hoogendoorn, M. ‘De euro heeft ook iets Nederlands!’ De Florijn, Nummer 2, De Nederlandsche Bank NV, Amsterdam 24 January 2002 16. Suyver, Frank and Andries Meyerlink;’€uropium beveiligt de €uro’ Chemisch2Weekblad, 16 February 2002 17. ‘Euro banknotes. A study about the awareness and recognition of the Euro banknotes among the Dutch public’, TNS NIPO, prepared for De Nederlandsche Bank NV, Amsterdam April 2002 18. Hoogendoorn, Marijke;’Bank verzorgt de 5 en 50 eurobiljetten’ De Florijn, Nummer 8, De Nederlandsche Bank NV, Amsterdam 18 April 2002 19. Lampe, W.’Acceptance of the euro banknotes and coins in Germany’ Deutsche Bundesbank, Banknote Printers’ Conference, Prague 27-30 May 2002 – confidential 20. Dijkstra, Marlies.;’Kennis en waardering eurobiljetten Rapportcijfer 7’ De Florijn, Nummer 12, De Nederlandsche Bank NV, Amsterdam 27 June 2002 21. ‘Rating’ Quaterly Bulletin, De Nederlandsche Bank NV, Amsterdam June 2002 22. 'A Focus Group Study to Assess Target Audience's Reactions to Proposed Next-Gen Currency Security Features' Deloitte and Touche and Shugoll Research, prepared for U.S. Treasury Bureau of Engraving and Printing, Washington USA June 2002 23. ‘’Goede’ valse eurobiljetten duiken op’ Parool, Amserdam 30 July 2002 24. ‘Ook in Nederland valse eurobiljetten’ NRC Rotterdam 30 July 2002 25. Antens, Coen;‘Bankbiljetten en de Primera División’ N&T Wetenschapsmagazine, July/August 2002 26. ‘Bestrijding van namaak eurobiljetten’ DNB/Kwartaalbericht, De Nederlandsche Bank NV, Amsterdam September 2002 27. Hoogendoorn, Marijke;’De P is niet zo Nederlands meer’ De Florijn, Nummer 22, De Nederlandsche Bank NV, Amsterdam 27 December 2002 28. 'Familiarity With And Attitudes Toward Canadian Bank Notes and Reaction To Next Generation Security Features' Research Dimensions, prepared for the Central Bank of Canada, Toronto - Boston December 2002 29. Lyutov, V.V. and A.V. Yurov;'Experience of application of security features for banknotes of the Bank of Russia' St. Petersburg 2002 30. ‘2002 Holography Awards demonstrates the industry’s innovation’ Product & Image January/February 2003 31. De Heij, H.A.M., Lisa a. DiNunzio and Olivier Strube; 'Comparence EUR - USD Banknotes Public's Appreciation and Knowledge' De Nederlandsche Bank NV, US Treasury BEP and European Central Bank, Presented at Banknote 2003, Washington DC, USA, 2-5 February 2003 32. ‘Education: Costly but it works’ Currency News, Banknote 2003, Washington DC, February 3 2003 33. ‘Evaluiering des OeNB/Ö3-Gewinnspieles: “MEHRscheinchen”’ Institut für Empirische Sozialforschung, prepared for Oestterreichische Nationalbank, Vienna, February 2003 34. ‘Euro banknotes. A study about the awareness and recognition of the Euro banknotes among the Dutch public’ NIPO, prepared for De Nederlandsche Bank NV, Amsterdam 1 April 2003 35. Steenbeeke, Martin:’Vrije Hervormden boycotten de euro’ NRC, Rotterdam 17 April 2003 36. ‘Kennis en waardering van bankbiljetten’ DNB/Kwartaalbericht, De Nederlandsche Bank NV, Amsterdam June 2003 37. Hoogendoorn, M.;’Bekend, maar niet zo mooi’ De Florijn, Nummer 14, De Nederlandsche Bank NV, Amsterdam 25 July 2003 38. ‘Euro banknote design exhibition’ European Central Bank, ISBN 92-9181-393-1, September 2003 39. Bos, Martine and Julie Visser;’Creating foil for Euro banknotes with public appeal’ Overall report qualitative research, TNS NIPO, prepared for De Nederlandsche Bank/ECB, Amsterdam 5 November 2003 - confidential 40. ‘Veilig en efficiënt betalingsverkeer verhoogt de welvaart’ Maatschappij Belangen 27 November 2003 41. ‘Brief van de Miniser van Financiën (Nr. 17)’ Tweede Kamer der Staten-Generaal, Vergaderjaar 2003-2004, SDU Uitgevers, ’s-Gravenhage 2003 42. ‘The €uro, two year later’ Flash Eurobarometer 153, Taylor Nelso Sofres/EOS Gallup Europe, prepared for European Commission, Dec. 2003 43. Desmet, Pieter M.A., ‘Measuring emotions’ Delft University of Technology, Department of Industrial Design (no dat e, 2003?) 44. Smit, Jan and Thieu Vaessen;’Gewend aan de euro? Nee, wie wel?’ HP De Tijd, The Hague 6 January 2004 45. ‘Nederlanders het negatiefst over euro’ NRC, Rotterdam 14 January 2004 46. Setlakwe, Linda, Lisa A. DiNunzio;’Comparative analysis of public opinion research in the U.S. and Canada’ Bank of Canada and United States Treasury Department, Proceedings of SPIE, Optical Security and Counterfeit Deterrence Techniques V, San Jose USA, January 2004 47. Church, Sara E. and Linda Setlakwe;’Analysis of counterfeits and public survey results as design input’ Bank of Canada, Proceedings of SPIE, Optical Security and Counterfeit Deterrence Techniques V, San Jose USA, January 2004 48. Zalm, G.; Answers of the Minister of Financeto questions of Dutch Parlement ‘Kamervragen Crone inzake valse euro’s’ and ‘Kamervragen Aptroot en De Grave inzake valse bankbiljetten’, February 2004 49. Bos, Martine, Julie Visser;’Beleving echtheidskenmerken en falsificatie euro bankbiljetten’ Report B6334, Prepared for Winkelman en Van Hessen and De Nederlandsche Bank NV, TNS NIPO Amsterdam 12 February 2004 50. Huisjes, Bert;’Nieuwe vijftigjes zo slecht gedrukt dat ze vals lijken’ De Telegraaf, Amsterdam 14 March 2005 51. E-mail to DNB from Ms. P. Mart ens, 23 March 2004 52. ‘Geen stortvloed aan vervalste euro´s in Nederland’ Press release De Nederlandsche Bank NV, 29 March 2004

53. ‘Betalen kost geld’ Werkgroep Kostenonderzoek Toonbankbetaalproducten, Maatscahppelijk Overleg Betalingsverkeer, De Nederlandsche Bank N.V., March 2004. A summery ‘The cost of payments’ can be found in the Quaterly Bulletin of DNB, March 2004 54. Vet, R.B.M.;’Resultaten enquête vals geld (uw vraag t.bv. persconferentie jaarverslag), internal document, De Nederlandsche Bank NV, Amsterdam 25 May 2004 55. ‘Feel Look Tilt’ Public information leaflet, European Central Bank, Frankfurt May 2004 56. Meijer, Rien; ‘Nieuw eurobiljet in de maak’ De Telegraaf, Amsterdam 28 July 2004 57. ‘Euro Bus June/July 04’ GFK Marktforschung for the ECB, July 2004 – confidential, available for central banks 58. Letter to President Wellink, sender known by DNB, 1 August 2004 59. ‘Euro banknotes: first years of experience’ European Central Bank, Monthly Bulletin August 2004 60. De Heij, Hans and Jeanine Kippers;’Efficient cash payments with euro coins and banknotes in the Netherlands’ De Nederlandsche Bank NV, presented to Banknote Printers Conference, Dresden, 6 - 9 September 2004 - confidential, available for central banks 61. Arendshorst, H. ‘’Nieuwe’ bankbiljetten gesignaleerd in Nedeland’ P -Florijn Nummer 12, De Nederlandsche Bank NV, Amsterdam 4 Nov. 2004 62. ‘The Euro, 3 Years Later’ Flash Eurobarometer 165, Taylor Nelson Sofres/EOS Gallup Europe, prepared for European Commission, Dec. 2004 63. Dijkstra, Marlies;’Een nieuwe generatie staat voor de deur’ DNB Magazine Nummer 4, De Nederlandsche Bank NV, Amsterdam 2004 64. De Heij, H.A.M.; ‘Attractive banknotes… a question of design management’ Keesing Journal of Documents & Identity, Issue 9, 2004 65. Hymans, Jacques E.C.;’Money from Mars? The euro banknotes and European identity’ Smith College Northampton, MA 01063 2004 66. Hymans, Jacques E.C.;’The Changing Color of Money: European Currency Iconography and Collective Identity’ European Journal of International Relations, SAGE Publications and ECPR-European Consurtium for Political Research, Vol. 10(1): 5-31 DOI: 10.1177/1354066104040567, 2004 67. ‘Nederlanders het negatiefst over de euro’ NRC, Rotterdam 14 January 2005 68. Gentaz, E.;’Evalutation of multi-sensory training in the detection of counterfeit banknotes for retail cashiers in Europe’ Centre Nationale de la Recherche Scientifique, Université Pierre Mendès France, Grenoble, France 17 January 2005 69. Spoelstra – van der Veen, H.; Letter to DNB, ‘euromaatje’’ Assen, 3 February 2005 70. ‘Professional cash handlers. Survey in 12 countries for European Central Bank’ TNS NIPO, prepared for European Central Bank, Amsterdam 7 February 2005 - only available for central banks - confidential, available for central banks 71. De Heij, Hans .A.M.;’Life Cycle Analysis of Security Features in Banknotes From Central Bank to Cashier’ De Nederlandsche Bank NV, Presented at Banknote 2005, Washington DC, USA, 20 – 23 February 2005 72. Mörk-Hamilton, Karin;’Designing Banknotes: Optimizing Security Features’ Crane AB, Presented at Banknote 2005, Washington DC, USA, 20 - 23 February 2005 73. Treinen, H.;Seeing is believing’ Summary of a study. Wissenschaft szentrum NRW, Institut Art beit und Technik, no date, received at the Banknote 2005. An earlier version was - confidential - presented in April 2004 to the Banknote Printers’ Conference in Dresden 6 - 9 September 2004 74. Brautigam, Margot;’Informatiedesk: 60.000 vragen en antwoorden’ P-Florijn Number 5, De Nederlandsche Bank NV, Amsterdam 1 March 2005 75. ‘Holier than thou – Louisenthal introduces new transparent feature’ Currency News Volume 3, Number 3 March 2005 76. Huisjes, Bart;’Nieuwe vijftigjes zo slecht gedrukt dat ze vals lijken’ De Telegraaf, Amsterdam 14 March 2005 77. Van der Woude, M.;’Analysis space versus public knowledge’, De Nederlandsche Bank, Amsterdam 15 March 2005 – confidential 78. ‘Hoe consumenten betaalmiddelen beleven: een publieksmeting’ DNB-Kwartaalbericht De Nederlandsche Bank NV, Amsterdam March 2005 79. ‘Een vals bankbiljet, wat nu?’ DNB Magazine Number 3, De Nederlandsche Bank NV, Amsterdam 2005 80. ‘The future of cash’ Brochure of CPR Billets, AGIS Consulting, Scan Coin and EFMA, April 2005 81. Crok, Mark;’Kijk goed uit je doppen’ Natuurwetenschap & Techniek, April 2005 82. De Heij, Hans;’Curved banknotes. Can the paper maker help?’ De Nederlandsche Bank NV, Banknote Printers’ Conference Paper Committee Meeting, Warsaw 17 – 20 May 2005 – confidential, available for central banks 83. De Winter, Leon;‘Poging tot belazeren’column, Elsevier, Amsterdam 21 May 2005 84. ‘Euro banknotes. A study about the awareness and recognition of the Euro banknotes among the Dutch public’, B-9073, TNS NIPO, prepared for De Nederlandsche Bank NV, Amsterdam 17 May 2005 85. Van Renesse, Rudolf L.; Optical Document Security’ Third Edition ISBN 1-58053-258-6 2005, Artech House Boston London 2005 86. Leserpost, Münzen & Papiergeld, Regenstauf, Germany June 2005 87. Peters, T.;’Het europrobleem dat zijn we zelf’ Intermediair #26, Amsterdam 30 June 2005 88. ‘De feiten: Gevoelsinflatie en de euro’ Nieuwsbericht, De Nederlandsche Bank NV, Amsterdam 8 July 2005 89. Nieuwsbrief, De Nederlandsche Bank, 22 July 2005 90. ‘Weer een Duisie weggepaft’ Metro, Amsterdam 10 August 2005 91. Sonke, Judith and Julie Visser;’Study on the effectiveness of pictograms on euro banknotes’ TNS NIPO, prepared for De Nederlandsche Bank/ECB, Amsterdam 19 August 2005 92. Willemsen, Yvonne;’Input from the Netherlands Bankers Association on the features of the new euro’ e-mail, Nederlandse Vereniging van Banken, Amsterdam 22 August 2005 93. De Heij, Hans;’Ook handtekening Duisenberg stabiel’ Florijn De Nederlandsche Bank NV, Amsterdam Augustus 2005 94. Ionov, Victor;’Assessing the quality of banknotes’ Currency News, Volume 3, Number 8 August 2005 95. Hoogendoorn, Marijke;’Geldkoffer voor scholieren’ Florijn Nummer 17, De Nederlandsche Bank NV, Amsterdam 8 September 2005 96. Van der Woude, Marcel;’Inzet van ‘eerlijke’ katoen bij productie bankbiljetten’ Florijn Nummer 17, De Nederlandsche Bank NV, Amsterdam 8 September 2005 97. Salome, Robert;’Bank onderschat vervalser’ Algemeen Dagblad 10 September 2005 98. ‘Actuele ontwikkelingen in het betalings- en effectenverkeer’ DNB/Kwartaalbericht, De Nederlandsche Bank NV, Amsterdam September 2005 99. Jonker, Nicole;’’Payment Instruments as Perceived by Consumers – a public survey’ DNB Working Paper No. 53, De Nederlandsche Bank NV, Amsterdam September 2005 100. Hoogendoorn, Marijke;’De dag van … Marco Wind’ P-Florijn Number 20, De Nederlandsche Bank NV, Amsterdam, 20 oktober 2005 101. Boersema, Theo;’Comprehensibility of graphical symbols for clearifying security features’ Delft University of Technology, Presented at ‘Annual Meeting of the Europe Chapter of the American Human Factors and Ergonomics Society’ Turin, October 2005 102. ‘The euro, 4 years after the introduction of the banknotes and coins’ Flash Eurobarometer 175, EOS Gallup Europe, prepared for European Commission, November 2005 103. Van Andel, Pek;’1.241 miljoen foutjes’ NRC , Rotterdam 6 December 2005 104. Brongers, Douwe;’No trusting appearances? Variations in uniformity of euro banknote no cause for alarm’ Keesing Journal of Documents & Identity, Issue 15, 2005

Previous DNB Working Papers in 2006 Arthur van Soest, Arie Kapteyn and Julie Zissimopoulos, Using Stated Preferences Data to Analyze Preferences for Full and Partial Retirement No. 82 Dirk Broeders, Valuation of Conditional Pension Liabilities and Guarantees under Sponsor Vulnerability No. 83 Dirk Brounen, Peter Neuteboom and Arjen van Dijkhuizen, House Prices and Affordability – A First and Second Look Across Countries No. 84 Edwin Lambregts and Daniël Ottens, The Roots of Banking Crises in Emerging Market Economies: a panel data approach No. 85 Petra Geraats, Sylvester Eijffinger and Carin van der Cruijsen, Does Central Bank Transparency Reduce Interest Rates? No. 86 Jacob Bikker and Peter Vlaar, Conditional indexation in defined benefit pension plans No. 87 Allard Bruinshoofd and Clemens Kool, Non-linear target adjustment in corporate liquidity management: an endogenous thresholds approach No. 88 Ralph de Haas, Monitoring Costs and Multinational-Bank Lending No. 89 Vasso Ioannidou and Jan de Dreu, The Impact of Explicit Deposit Insurance on Market Discipline No. 90 Robert Paul Berben, Kerstin Bernoth and Mauro Mastrogiacomo, Households’ Response to Wealth Changes: Do Gains or Losses make a Difference? No. 91 Anne Sibert, Central Banking by Committee No. 92 Alan Blinder, Monetary Policy by Committee: Why and How? No. 93 Céline Christensen, Peter van Els and Maarten van Rooij, Dutch households’ perceptions of economic growth and inflation No. 94 Ellen Meade, Dissents and Disagreement on the Fed’s FOMC: Understanding Regional Affiliations and Limits to Transparency No. 95 Jacob Bikker, Laura Spierdijk, Roy Hoevenaars and Pieter Jelle van der Sluis, Forecasting Market Impact Costs and Identifying Expensive Trades No. 96 Cees Ullersma, Jan Marc Berk and Bryan Chapple, Money Rules No. 97 Jan Willem van den End, Indicator and boundaries of financial stability No. 98 Zsolt Darvas, Gábor Rappai and Zoltán Schepp, Uncovering Yield Parity: A New Insight into the UIP Puzzle through the Stationarity of Long Maturity Forward Rates No. 99 Elisabeth Ledrut, A tale of the water-supplying plumber: intraday liquidity provision in payment systems No. 100 Ard den Reijer, The Dutch business cycle: which indicators should we monitor? No. 101 Ralph de Haas and Iman van Lelyveld, Internal Capital Markets and Lending by Multinational Bank Subsidiaries No. 102 Leo de Haan and Elmer Sterken, Price Leadership in the Dutch Mortgage Market No. 103 Kerstin Bernoth and Guntram Wolff, Fool the markets? Creative accounting, fiscal transparency and sovereign risk premia No. 81

DNB Working Paper No. 35/April 2005

DNB W O R K I N G P A P E R

Jan Kakes and Cees Ullersma

Financial acceleration of booms and busts

De Nederlandsche Bank