Damaged Banknotes Policy
The Reserve Bank of Australia aims to have only good quality banknotes in circulation. This helps to maintain confidence in Australia's currency by making it easier for people to check the security features on banknotes and make it more difficult for counterfeits to be passed or remain in circulation.
The Reserve Bank works with authorised deposit taking institutions (ADIs) and cash centre operators to remove damaged banknotes from circulation as soon as practicable. The Reserve Bank provides a Banknote Sorting Guide to assist with this process.
The Reserve Bank provides a Damaged Banknotes Facility to ensure that holders of Australian banknotes do not face financial hardship in the event that their banknotes are accidentally damaged. Given the nature of the Damaged Banknotes Facility, it is important that the Reserve Bank establishes procedures to balance the competing priorities of providing an efficient claims handling process while reducing the risk that the Facility could be used for criminal purposes. This policy describes the types of damaged banknotes and sets out the objectives of the Damaged Banknotes Facility and the Reserve Bank's requirements for processing damaged banknote claims.
A banknote that has become worn or sustained minor damage is classified as unfit. Even though these banknotes can continue to be used, to maintain the high quality of banknotes in circulation, the Reserve Bank has asked ADIs to remove any unfit banknotes from circulation.
Unfit banknotes may have some of the damage illustrated below:
A banknote with a significant piece missing is classified as incomplete. These banknotes may not be worth full value because the Reserve Bank needs to take into account the possibility that pieces of the banknote may be presented for value separately. The Reserve Bank's policy is for the value of each piece of a banknote to be proportional to the part of the banknote remaining. In this way, the combined value paid for all the pieces presented should be the face value of the original banknote.
Subject to the Reserve Bank's claim requirements, the value of incomplete banknotes is determined as follows:
|If less than 20 per cent of the banknote is missing:||Full face value is paid.|
|If between 20 and 80 per cent of the banknote is missing:||Value is paid in proportion with the percentage remaining, e.g. $5 value for half of a $10 banknote.|
|If more than 80 per cent of the banknote is missing:||No value is paid.|
For incomplete banknotes where between 20 per cent and 80 per cent of the banknote is missing, the assessed value is rounded to the nearest dollar based on the surface area remaining. The assessed value is calculated using Reserve Bank Assessment Grids (84KB).
The presence or absence of specific features such as a serial number does not affect the assessed value. Because full face value is not paid on incomplete banknotes, care should be taken when accepting incomplete banknotes. There is no obligation to accept an incomplete banknote in payment or change.
Badly Damaged/Contaminated Banknotes
A banknote that has significant or unusual damage, such as:
- heat damage that prevents the verification of security features or affects 20 per cent or more of the banknote;
- damage that casts doubt on its value or genuineness; or
- contamination from substances that prevent handling (e.g. chemicals, blood, etc.)
is classified as badly damaged/contaminated.
Subject to the Reserve Bank's claim requirements, the Reserve Bank pays value for badly damaged/contaminated banknotes based on the visual assessment of a banknote. If part of a banknote remains, the value is determined on the same basis as for incomplete banknotes.