Chinese official says Indian bank notes are printed in China; RBI denies

It has been close to four years since the rupee last fell to record lows, and while the Finance Minister said that India has enough foreign reserves to stem the tide, many stakeholders find it hard to not twiddle their thumbs in anxiety. How often does the worst happen, when the people of the nation have lost faith in the value of their currency? More often than one can imagine. Below are a list of currencies whose value depreciated to such an extent that in some cases, citizens were forced to face the absurdity of paying a wheelbarrow full of notes for a loaf of bread. (Image: Reuters)

A host of countries, including India, have contracts with the Chinese government for printing of currency notes, Liu Guisheng, President of the China Banknote Printing and Minting Corporation (CBPMC), was quoted as telling the South China Morning Post.

A Reserve Bank of India official told Moneycontrol that the report was incorrect and that all Indian currency notes are printed in India.

China only recently started printing foreign currency, primarily after the launch of its Belt and Road Initiative in 2013.

The country has now increased production of currency notes in plants across the country to meet an unusually high quota set by the government this year, the Hong Kong-based paper reported.

Chinese Yuan bills accounted for only a small portion of these orders, an official told the news daily, adding that most of the orders were from countries that have partnered China in its 'Belt and Road Initiative'.

Various employees at currency note manufacturing units across the country claimed that last year was slow in terms of production and output, with many of the plants resorting to printing driving licenses and marriage certificates to prevent the machinery from rusting away.

This can be attributed to Chinese people's shift to online payment mechanisms, with many using their smartphones as wallets nowadays.

Guisheng confirmed that in 2015, Nepal became the first country to outsource currency printing to China, after which contracts were won from countries including India, Sri Lanka, Thailand, Malaysia, Brazil, and Poland.

Sources reportedly confirmed that this list could, in fact, be longer.

CBPMC has about 18,000 employees across China and runs more than 10 heavily-guarded facilities. In contrast, the world's second-largest currency producer, British company De La Rue, had just over 3,000 employees at the end of 2017.

Getting notes printed from China has become popular among developing countries since the sophisticated and costly technology needed for the metallic ribbon, embedded thread, and colour-shifting ink is beyond their reach. China can provide these services at relatively-lower costs.

China is currently the only country that can perform the Intaglio style of printing, which involves raising the print simultaneously on both sides of a banknote. In 2015, Chinese researchers also came up with a holographic feature called ColorDance that could improve a note's security at a low cost.

All this could be a sign that countries have a considerable amount of trust in the Chinese government as there is always a fear of replication and/or forgery.

India recently pulled out of the Belt and Road Initiative with Prime Minister Narendra Modi asserting that any mega connectivity project must respect sovereignty and territorial integrity of countries.