BSP eyes polymer banknote production in 2027

By Katherine K. Chan, Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) is planning to start locally producing the First Philippine Polymer (FPP) banknote series next year, a top central bank official said.

BSP Deputy Governor Mamerto E. Tangonan, who leads the central bank’s payments and currency management sector, said they are working on launching FPP banknote production within 2027 to reduce their reliance on imports.

“To give you an answer, it’s within 2027. So, we will produce our own (polymer notes),” Mr. Tangonan told reporters on the sidelines of a BSP Security Plant Complex tour on Monday.

“You know, we have to learn, learn to operate the polymer lines so that we’re not forever just importing,” he added.

However, Mr. Tangonan did not provide a specific timeline for the start of production.

Despite the planned localization, Mr. Tangonan also noted that they will have to continue outsourcing polymer bills from Australia to meet the country’s high demand.

The deputy governor said they will initially dedicate one line for the local production of polymer banknotes, which is estimated to produce 500 million pieces yearly.

Currently, the BSP’s currency printing facility at its Security Plant Complex (SPC) in Quezon City does not have the capacity to print polymer banknotes. The SPC only handles printing of the New Generation Currency (NGC) series, which is made from abaca-cotton paper.

The BSP outsources the FPP banknote series from Note Printing Australia, a subsidiary of the Reserve Bank of Australia, under a government-to-government arrangement authorized by the Philippine law.

The central bank first released the P1,000 polymer bill in 2022 and later launched the polymer versions of the P500, P100, and P50 banknotes in 2024, with the series dubbed as the “smarter, cleaner, and stronger” version.

The NGC series, which debuted in 2010; the enhanced NGC series, which was introduced in 2020; and the FPP banknote series are considered monetized.

Under its currency production plan, the BSP produces one to two denominations at a time, which Mr. Tangonan said was designed to ensure efficiency.

“We have a production plan for the whole year,” he said. “It’s a good practice to run only one product at a time because when you change the brand, you have to change the plate, and bring the machines down, (then) you have to clean it. The set up time takes up the production time.”

The BSP official noted that they would only abruptly shift from one denomination to another in case demand surges materially.

“So, unless you really need to do so for example, (in case of a) sudden shock in demand wherein because of some event there was an increase in the demand for P50 or P100 bills and we’re already set up for high-denomination, we need to run the low-denomination. Like that,” Mr. Tangonan said.

One shock, he said, could be a delay in the outsourced polymer bills.

“But with the way we handle the inventory now, it’s no longer necessary even with the shocks that we experience,” Mr. Tangonan added.

According to the deputy governor, 50% of the P1,000 bills in circulation are already made of polymer.

Asked about the other denominations, Mr. Tangonan said: “It’s still ramping up. But so far, we’ve gotten very good feedback from the public (and) the banks on the polymer.”

In its 2025 Annual Report, the central bank noted that polymer banknotes have “superior durability” than paper banknotes, supporting their shift to the former and commitment to making the currency lifecycle more cost-efficient and sustainable.

On average, paper banknotes last for one-and-a-half years, while polymer banknotes last for as long as seven-and-a-half years due to its resistance to dirt, water, and oil.

Meanwhile, Mr. Tangonan noted that demand for cash in the Philippines is holding up despite the rise of digital payments.

“It’s a paradox that both continue to increase alongside each other. This is observed in India, China… (where) digital payments are huge, but their currency demand is still going up,” he said.

He noted digital payments are not yet substitutes for cash, adding there are still digital payment gaps such as those seen among small merchants.

Digital payments made up 64.7% of the Philippines’ total monthly retail transaction volume in 2025 from 57.4% in 2024, based on the BSP’s latest Report on E-Payments Measurement.

This came as the volume of digital payments reached 3.937 billion last year, exceeding 2.149 billion paper-based transactions.

This marked the first year that the BSP hit its digital payments target.

The central bank wants digital payments to account for 60%-70% of the total volume of retail payments by 2028 in line with the Philippine Development Plan.