Head of Goznak speaks about the peculiarities of the Russian roubles production and the role of cash in history 19 2016

Arkady Vladimirovich Trachuk General Director of GOZNAK
He also described what can be depicted on the banknotes, how the experiment of antimicrobial solution application to the Russian banknotes had ended, whom Russia switches the printing machine on for and why those who call the money rubbish are not exactly incorrect.  
RG: The new banknotes with the face values of 200 and 2000 roubles announced by the Central Bank will feature Russian cities. Have you got any versions, which cities will be presented for the citizens choice?  
Arkady Trachuk: Absolutely any city and even any region of our country may appear in the list. Thats actually the main idea to try and attract people to the discussion what they would like to see on the new banknotes. If you remember, the citizens of Vladivostok have already advanced an idea to issue Vladivostok 2000 banknote. The citizens of Yekaterinburg had a similar idea  
On the whole, the idea of attracting the citizens to the choice of a banknote image is very correct. Nobody belittles the merits of the artists and designers of the Central Bank and Goznak, but they are a very narrow group of specialists.  The more people are engaged in the idea working-out stage, the more interesting the results may be. There is an experience of holding similar events. We found the idea of the Olympic banknote design during the creative competition with the participation of students of the Institute of Painting, Sculpture and Architecture named after Ilya Repin in Saint-Petersburg. And right now a competition for the best design idea of the banknote dedicated to the FIFA World Cup, which is to take place in Russia in 2018, is being completed. Students and teachers of creative higher education establishments in 11 cities to host the World Cup.

RG: Will the new banknote differ in their security level from the previous ones?
Arkady Trachuk: The consultations about what the set of security features of the banknotes will include are only starting. I dont think it will contain anything extremely unusual, but we will certainly take into account the technological changes that have taken place lately.

We constantly hear that the cash payments in the country should be decreased. At the same time, an issue of new banknotes is announced. Is there any contradiction here?
Arkady Trachuk: I dont see any contradictions here. The main concern of the law enforcement authorities regarding cash payments is connected with the fact that banknotes of high face values are a convenient instrument for the illegal business. And the illegal business is a nutritive medium for criminals. The 2000 and 200-rouble banknotes are not of the highest face values. The 5000-rouble banknote has been and will remain the highest face value. It is important that the new banknote will create additional payment conveniences. I understand the Central Banks position very well in this sense.  
As for the cash payment level, the issue of the new banknotes will not affect it in any way. I think in the nearest years we will observe a slow growth of cashless payments and consequently some decrease of the cash payment share anyway. But it will not be caused by any special measures in the cash turnover sphere. It will happen as a result of the retail mastering consequent services, the increase of the number of terminals and more active usage of on-line banking services by the citizens, i.e. with the innovation spreading that takes place the same way as in the rest of the world.  

RG: How much time may the design development of the new 2000 and 200-rouble banknotes take?
Arkady Trachuk: Definitely not less than a year. Perhaps even somewhat longer.

RG: Please tell us what the modern banknotes are made of. It is not plain paper, is it?
Arkady Trachuk: Plain paper expression is not suitable for banknotes at all, because ordinary paper is made of wood pulp, but the banknotes are made of cotton cellulose. I.e. cotton is the banknote basis. It increases the wear resistance and makes the tactile feeling of the banknote paper absolutely special, which is important from both the security and tactile sense of the banknote points of view.
Besides the cotton cellulose itself, there is a whole number of other elements in the banknote basis. Those are security threads, special fibers, so-called planchettes imbedded into the paper pulp before the paper web is produced. A special security method inherent to the paper money only is composed of them. That is why they are ahead of plastic in the security level, for example.

RG: During the past two years, has the correlation of imported and homemade components in our banknotes changed?  
Arkady Trachuk: Practically it hasnt. Speaking about the main component cotton, unfortunately, the natural conditions havent changed, cotton still does not grow in Russia. It would be possible to view a transition from cotton to linen, but it is not a too productive task. The thing is that in this case the fibers are not of the required quality, and the paper is not very convenient for the banknote production.  

RG: Have you considered this variant?
Arkady Trachuk: Only in theory. However, one can do a lot of things hypothetically. For example, to produce banknote paper of wood pulp. The question is, should one do that?  
We are provided with cotton adequately today. Russia purchases cotton in certain quantities anyway, it is necessary for the textile industry and a whole number of other purposes. Moreover, we use not the marketable cotton but cotton blowings waste products of the textile industry. We have quite high requirements as to the materials, but nevertheless there are quite a lot of factories ready to supply such materials to us.

RG: Are these suppliers from Central Asia?
Arkady Trachuk: There are suppliers from there too. But there are farther countries too Egypt, Pakistan

RG: What other components of our banknotes are imported, besides cotton?
Arkady Trachuk: Some of the security materials, some inks in particular.
In fact, if it is required to produce banknotes of the Russian materials only tomorrow, we will be able to do that. We can achieve that, though with some loss of these or those quality parameters. However, in my opinion, we now have the optimal correlation of the Russian and imported materials that enables us to carry out the main task to produce high-security and wear-resistant banknotes.

RG: How much more expensive has our banknote production become due to the rouble rate decrease?
Arkady Trachuk: Some materials have become more expensive. But overall, the production costs has not grown much. At least, we dont need additional financing we manage using our own resources. Goznak has quite an active export policy, therefore weve got quite enough currency earnings to buy foreign materials.

RG: What does Goznak export now?
Arkady Trachuk: Paper, banknotes, technologies, and quite recently integration projects in the sphere of identification documents. On the whole, thats what we concentrate on in our work on the international market. Moreover, this year we have started to sell coins too.

RG: Whom does Russia sell them to?
Arkady Trachuk: To Angola, for example. Besides, we have won a tender for the coin minting for Columbia; we are now concluding a contract therefore I can speak about it already. Columbia is a new market for us. It is very interesting and important, with its own peculiarities. In spite of the fact that we seem to have a global business, we have not had similar markets before the Indian market is different from China. They are both different from the market of the Latin America or the Arabic countries. Every country has its own rules, approaches, traditions.

RG: What is the peculiarity of Columbia?
Arkady Trachuk: For example, in the fact that one should sign a contract and verify his signature with the fingerprints. It is quite unusual for us, because we are accustomed to settle all matters using express mail.

RG: How many countries purchase banknotes and banknote paper from Russia?
Arkady Trachuk: There are about 30 countries that we can call our customers. We have been supplying products to them during the past two or three years and are currently co-operating. We sell the ready banknotes to Yemen, Rwanda, Laos, Guatemala, Lebanon  
There are two variants of orders. An order for reprinting, when the banknote already exists in circulation and it is necessary to repeat the design. There are fewer orders like that, and to be honest, we dont take them with too much pleasure. In that case, there appears a whole number of questions connected with the intellectual rights of other security feature manufacturers, and it is necessary to agree with them separately. Naturally, it doesnt always pass smoothly in spite of the fact that on the whole we have quite working relations with our colleagues.  
We are happy to execute orders where the design development is required in full volume. We develop a few dozens of designs every year.
We work with Nigeria, Ecuador, Canada, China in banknote paper. We have worked with Indonesia for a long time. It is an old market, which used to be one of the first for us at the time, it was a very important experience of export sales. And that country remains our customers, we supply quite large volumes of paper there every year. We are looking forward to a new tender in the nearest future. We hope to win it, though the competition is high.

RG: Does that mean that the Western sanctions have not affected the business relations with your partners?
Arkady Trachuk:  Both yes and no. there are no official limitations anywhere. But there definitely is a certain strain in some countries. It is like a local chilling, to be on the safe side.    
The market of banknotes, identification documents that we also produce is politically motivated strongly on the whole. Because governments and central banks are the customers. We have to take that into account.  

RG: Does Turkey, countries of the European Union, the United States or Canada purchase anything from us?
Arkady Trachuk: there are quite strict limitations as to security features and banknotes. For example, the production of euro banknotes is only possible in the countries of the European Union.
On the other hand, there are private manufacturers in the European Union producing banknote for the third countries. We co-operate with them actively in various spheres, starting with technology exchange and up to material supply. Thus, speaking about the countries youve mentioned as governmental institutions, our interaction with them is extremely limited. Speaking about business located in those countries, we have good and fruitful contacts with them.

RG: What country is the most advanced in the banknote production technologies?
Arkady Trachuk: It is all very relative. I can express my point of view. I believe that Switzerland has a very exceptional approach to its banknotes. Perfectionism is in its basis. They want the Swiss banknotes to be the best from all points of view. From the point of view of security, from the point of view of the design, the modern apprehension of Switzerland. And they almost dont care how much their banknote production costs.  

RG: And how much is it?
Arkady Trachuk: Such information is not published in Switzerland, just like in many other countries. However, by my reckoning, the price is about three times different from that in the Russian market. At the same time, I can say without false modesty that our banknote security level of high face values, for example, is not much different from that of the Swiss banknotes at all.  

RG: About 50 countries have already transferred to the plastic banknotes. Is the matter closed for us?
Arkady Trachuk: You should address this question to the Bank of Russia. We can print banknotes on the plastic substrate the technology is clear, we have tried it. However, the plastic substrate is not produced in Russia. The expediency of its manufacturing organization for the provision of the Russian market only is a doubtful measure. Besides, the appearance of plastic banknotes will require a change of security features, and consequently further change of all the controlling and counting equipment along the whole application chain. Therefore, today there is no serious proof that the transfer to plastic banknotes would be economically profitable for Russia.  

RG: Is it true that the euro banknote is the cleanest and safe-health because it is covered with a special antibacterial composition?
Arkady Trachuk:  I have no idea. I believe it is an imagined problem.  
There probably are some microbes on the banknotes. Just like on all other things we use.
From the point of view of the policy of the Bank of Russia, it is absolutely clear the Central Bank carries out a policy of clean money, it withdraws soiled banknotes from circulation during their processing at its branches. It is practically impossible to come across heavily soiled banknotes reminding of rags in Russia.  

RG: Are our banknotes covered with special antimicrobial compositions?  
Arkady Trachuk:  There have been experiments. They showed that all that has no fundamental importance, but it makes the banknote production more expensive. Just like any other additional option.  

RG: Much more expensive?
Arkady Trachuk: Five kopecks per banknote is that noticeable or not? If we calculate per the millions of banknotes produced, it suddenly becomes very serious. Any action leading to addicional expenses should be evaluated according to its effect or the importance level of the problem we are trying to solve. I would like to repeat that we have never faced the problem of the banknote antimicrobial protection seriously.  

RG: Let us speak about the coins. Laos has abandoned them and theyre quite happy about it.
Arkady Trachuk: Many countries have abandoned coins. But, on the contrary, many countries support the coin minting and think it is important.  

RG: Russia too?
Arkady Trachuk: I believe Russia will use coins as long as it is convenient to use them, as long as one can buy something with a coin. During the last millennia, nobody has invented anything more durable for the low face values.

RG: You cant buy anything for 50 kopecks already.
Arkady Trachuk: We practically dont mint coins with the face values of less than a rouble. And the farther in, the less is the probability that we will do that again.

RG: Is Goznak ready to issue the Russian passports in the shape of plastic cards announced by the Federal Migration Service some time ago?
Arkady Trachuk: Goznak is definitely ready. Moreover, as far as we know, the federal authorities responsible for the program are also ready, but there are some changes in it.
If the decision to issue the plastic passports is taken, it is technically possible to launch the system quite quickly. But in any case, and its probably right to carry out a pilot project on the basis of a few regions. Such an idea has been discussed already. It will enable us to provide a corresponding reliability level when the technology is spread.  

RG: Will the plastic passports be produced using the Russian chip?
Arkady Trachuk: When the document was projected, it was geared to the Russian microchip. I don't think there's a necessity to envisage a possibility of another solution here.
The chip is not just a microchip one can buy in the market. It is a certain hardware and software suit including the corresponding software; it is projected specially for identification documents. Naturally, it can be replaced with a chip of another manufacturer, but that will require time and financial expenses, the system adaption. It is unfeasible. As the system has been projected for the Russian microchip, we should use it.

RG: Goznak has recently launched a system of issuing and circulation of the biometric travel passports. Will there be similar projects in other countries?  
Arkady Trachuk: We are completing a similar project in Abkhazia this year. But unlike Laos, domestic biometric passports will be issued there. The order is among the important ones for us.    

However, Goznak's main task for this year is to complete its transformation into a joint-stock company. We estimate that in May Goznak will operate as a joint-stock company. We have received all the necessary documents for that from Rosimuschestvo. Only formal procedures connected with the share issue registration, the legal body registration and opening of accounts will be left.  

RG: What new opportunities will the transformation into a joint-stock company open for Goznak?  
Arkady Trachuk: We have come to a limit of the organic growth in many markets where we are present. For example, we will hardly be able to increase the volume of orders in the international market 3 or 4 times. there simply is no volume like that there. And the situation is similar in other directions. Therefore it is important for us to receive an opportunity to grow not only organically, but also due to involving other companies and allied business into our orbit. So far, I will not comment our plans of purchasing this or that company. Today we are planning the perimeter of our interests. It will be possible to speak about concrete plans closer to the end of the year.  
Source: " ", 6951 (83), 19.04.2016
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