THE ABACA INDUSTRY will continue to prosper even with the shift to polymer banknotes from paper bills amid growing demand for natural fibers in the global market, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday.

The Philippine central bank also said polymer bills will help improve the quality of banknotes amid improving counterfeiting technology, even as a lawmaker and the abaca industry noted this type of bill may only add to plastic waste.

BSP Deputy Governor Mamerto E. Tangonan said during a briefing of the Senate Committee on Banks, Financial Institutions and Currencies that polymer banknotes are more difficult to counterfeit, cleaner, more environment-friendly, durable, and cost-effective compared with paper bills.

“In order to assess if the claimed benefits apply to Philippine conditions, the BSP with the approval of the President, embarked on a circulation test of the first polymer piso,” Mr. Tangonan said, adding that the central bank has developed an evaluation framework to be undertaken on 2024.

“The BSP simultaneously provided a comprehensive training and communication program for cash handlers of banks, cash in transit, and machine suppliers. At the end of the circulation test, the BSP aims to acquire significant stakeholder feedback, as larger volumes of 1000-piso notes circulate in the economy,” he said.

The BSP initially released the 1000-piso polymer banknotes to banks for circulation in April 2022.

Mr. Tangonan also said they are studying the impact of the shift to polymer bills on the abaca industry.

“The circulation tests of five hundred million pieces of 1000-piso polymer banknotes are estimated to affect 0.2-0.4% of abaca farming jobs, that is 210 to 481 jobs, and 0.1-0.2% of abaca export revenues, that is from P8.5 to P17 million,” he said. 

“The estimates were based on the assumption that abaca suppliers have no alternative markets that is, it is a do-nothing scenario. However, the BSP fully recognizes the vast potential and growth opportunities given the large global demand.”

Mr. Tangonan said abaca farmers do not directly supply abaca to the central bank for production of cotton-abaca paper bills. Instead, they supply to processors and exporters that would sell abaca pulp to manufacturers of specialty paper abroad.

“The share of the estimated abaca content of the Philippine banknotes to total volume of abaca fiber production in 2020 is just around 2%. Meanwhile, the share of abaca content of our banknotes to abaca export earnings is less than 2% at its peak. That is, when the BSP had multi-year procurement,” he added.

“There are vast emerging opportunities to widen and diversify the client and product base… With the support of key government agencies, the abaca industry could position itself in the emergent green economy,” Mr. Tangonan said.

However, Senator Pia S. Cayetano said paper banknotes use natural materials, as opposed to the non-biodegradable polymer bills.

“When we look at the sustainability picture, we always have to take different factors into concern. It may in fact use less water, may have a smaller carbon footprint, but it will not biodegrade. It will still be there and it is a product we created and will stay there forever, as opposed to abaca and cotton,” Ms. Cayetano said.

The Fiber Industry Development Authority has said once polymer banknotes become unfit, they would need to be shredded before they are recycled and become microplastics.

Ms. Cayetano also said that the BSP should continue to look at how the shift would affect the abaca farmers.

“I noted how you expressed that there are other ways to help the farmers, that only a small percent [is involved]. I listen and am conscious of that. But the fact remains that there is an effect,” she added.

Aurora Peralta, executive director of the Association of Abaca Pulp Manufacturers, Inc., also said shifting to polymer notes will affect demand for abaca, noting the BSP uses 1,000 to 1,800 metric tons of abaca fiber, valued at $10.8 million, for the production of the local currency. — K.B. Ta-asan