Why do some countries print money abroad?

Last September, the Liberian government announced it had lost $ 104 million. The reason was not because of any weak investment decisions, or some accounting fraud but money - cash - was really missing.

Banknotes were ordered by the central bank of Liberia from printing plants overseas and disappeared after passing through the country's major ports and airports.

Meanwhile, just a month earlier, Indians expressed indignation on social media about printing money. An article published in the South China Morning Post stated that the state-owned Chinese money printing and printing corporation had won an Indian rupee printing contract, raising national security concerns.

The Indian government has denied this, saying the information in the article is "baseless" - they actually print all currencies from four high-security security presses in the country.

Both of these cases raise the question whether we should care where the money is printed.

Is printing money abroad a common practice?

British money printing company De La Ru introduced a £ 5 bill made of Polymer

Some countries, like India, produce all cash at home. For example, the United States has a legal obligation to print paper notes in its territory.

But for some countries, printing money abroad is common, as Liberia doesn't even have its own mint.

There are several highly specialized companies that print cash for most currencies in the world.Banknote maker De La Ru (UK) estimates the commercial money printing market accounts for 11% of the total paper money produced.

The largest banknote manufacturers are mainly in Europe and North America.

British company De La Ru is the largest banknote manufacturer in the world. It generates cash for about 140 central banks. Each week, it produces enough notes that, if stacked, will be twice as high as Mount Everest.

De La Ru's competitor, Giesecke & Devrient, Germany manufactures banknotes for about 100 central banks, while Canadian, US Bank and Sweden-based Crane are also Big money printing house. But note that although it is a large business, it is also a very secretive business. They all refused to disclose exactly which central bank hired them to produce money. Many governments also do not want to talk about this.

Why do some countries not print money themselves?

Basically, printing money is very expensive and hard to do.

Companies involved in printing money have existed for several hundred years. They have technology experts and a reputation for high security.

De La Ru began producing banknotes in 1860, first for Mauritius and then elsewhere. This company produces new British polymer money.

For smaller countries, outsourcing money production can mean a lot. For example, it may not be worth buying expensive presses if they only need a small amount of foil. Printing money also requires keeping up with rapid technological advances to prevent counterfeiting.

A banknote printer produces about 1 to 1.4 billion bills each year. So if a central bank produces less than that then it is not really financially valuable. The United States prints about seven billion bills each year.

The tiny Solomon Islands nation of the Pacific, with a population of 600,000, uses a currency designed and printed by De La Ru. Other publicly available information indicates that Macedonia and Botswana also outsource the British company.

Is outsourcing money printing risky?

Many fears in India are related to national security issues , especially when it is in dispute with China.

But are concerns about money production grounded?

An outstanding example is Libya in 2011. The British government withheld around 1.86 billion dinars (£ 929 million), of which about 140 million pounds were printed by De La Ru, causing a shortage of paper money in Libya for The final moments of the reign of Colonel Muammar Gaddafi.

So in some cases, the foreign government may retain cash, but that's very rare. The Libyan incident shocked industry experts but did not affect the outsourcing of paper money.

Theoretically, a country could be ruined by producing money if the manufacturer printed more than required without permission from the central bank, injecting the economy with too much cash. to undesirable effects on the economy, such as inflation.

There is also a risk that printing money abroad will leave outsiders with knowledge of the security features of a specific banknote to create fraudulent banknotes.

However, there is no clear evidence that any of these examples is happening.

On the other hand, since most currencies are still printed by the countries themselves, the threat is probably not significant. Guillaume Lepecq, director of the International Monetary Association, said: "Most countries print their own banknotes and a small amount is printed in a commercial way."

There is no international agency to regulate money production.

Do we need cash in the future?

A lot of people are using cash less often. Mobile applications and contactless payment methods make transactions easier than ever.

The People's Bank of China said only 10% of retail payments were made in cash in 2016 due to the rise of mobile payments.

Despite this, according to industry experts, the demand for paper money worldwide continues to increase. Estimated annual growth at 3.2% for the global market, currently valued at just under $ 10 billion.

Asia and Africa are the fastest growing regions.