...important of whether the destruction of banknotes could be delegated to an external company, which Norges Bank decided to do. To our knowledge, no other central bank has outsourced this task to the same degree. This article presents the considerations taken into account, the system established to make adequate provision for security, and experience so far.

Background

Integrated automated processing and destruction

Norges Bank has had automated counting and authentication of banknotes for many years, with the automatic sorting out and removal of notes of such poor quality that they have to be destroyed. Since about 1980, the actual destruction of damaged notes has also been an integral part of the automated processing. In the 1980s, banks extensively developed their network of ATMs partly to reduce cash handling costs. Notes of a high quality were required for ATMs, which led to banks' increasingly demanding high quality notes from Norges Bank. The sorting of notes according to quality and, in time, other services for banks (1)), took place in connection with Norges Bank's automated processing of notes, and generated economies of scale and scope, as several services were performed in one and the same operation.

Changes in the organisation of the supply of notes and coins

The scale of Norges Bank's services for banks expanded, and a growing proportion of Norges Bank's processing activities consisted of commercial services for banks. The distinction between central bank services and services for others gradually became less clear, and as...

NOTE: All illustrations and photos have been removed from this article.



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