Upon completion of this course, participants will be able to:

• Design and execute laboratory and field tests (e.g., fold, tear, soil) to objectively measure **banknote durability and performance**.
• Calculate the total **Life Cycle Cost (LCC)** of a banknote by denomination, incorporating production, processing, and destruction costs.
• Develop an optimal **banknote retirement strategy** based on performance degradation and the required fitness standard.
• Analyze the comparative **cost-benefit and durability performance** of different substrates (e.g., cotton, polymer, hybrid).
• Establish a data-driven framework for setting the official **currency fitness standards** that balance quality with issuance costs.
• Utilize statistical methods (e.g., Kaplan-Meier estimation) to model the expected life span of different banknotes in circulation.
• Evaluate the durability and long-term performance of new **security features** under heavy circulation.
• Formulate policy recommendations on substrate choice, issuance volume, and denomination mix based on LCC analysis.

• Currency Policy and Strategy Specialists.
• Economists and Quantitative Analysts focused on Cash Management.
• Banknote Production and Procurement Managers.
• Cash Center Operations Managers and Quality Assurance Staff.
• Internal Auditors focused on Cost Efficiency and Value for Money.
• Researchers in Currency Science and Durability Testing.

• Workshops on Calculating Life Cycle Cost (LCC) and Payback Period for Different Substrates
• Laboratory Simulation of Banknote Durability Testing (Fold, Tear, Soil Resistance)
• Group Activities on Modeling Note Life Span using Kaplan-Meier Survival Analysis
• Expert Lectures on Banknote Security Feature Durability and Authentication Technology
• Case Studies on Polymer Transition and its LCC Impact in Other Jurisdictions
• Individual Exercises on Developing a Data-Driven Banknote Retirement Strategy

Unit 1: Fundamentals of Banknote Performance Measurement

• Defining banknote durability and its key degradation factors (soil, mechanical wear, environmental).
• Standardized laboratory testing methods: fold tests, tear resistance, chemical exposure, and soil simulation.
• Establishing objective, measurable metrics for the central bank's **fitness standard** (the retirement point).
• Analyzing the impact of circulation environment (e.g., climate, public handling) on degradation rates.
• The role of the banknote's material composition (substrate, ink, coating) on its performance.

Unit 2: Modeling the Banknote Life Cycle

• Introduction to **Life Cycle Costing (LCC)** and its application to physical currency.
• Components of LCC: production, processing, storage, destruction, and interest forgone.
• Using **Kaplan-Meier survival analysis** and regression models to estimate note life span in circulation.
• Developing a predictive model for destruction volume based on issuance and average note life.
• Modeling the optimal frequency and volume for new note ordering based on LCC minimization.

Unit 3: Substrate and Material Selection

• Detailed comparison of cotton, polymer, and hybrid substrates on durability, security feature integration, and cost.
• Case studies on the transition to polymer notes and their impact on LCC and fitness levels.
• Evaluating the long-term performance of security features (e.g., holograms, windows) under stress.
• Analyzing the environmental impact and sustainability of different banknote materials.
• The role of technical specifications and quality control in the procurement of substrates and ink.

Unit 4: Operational Data and Fitness Auditing

• Utilizing data from high-speed sorting machines to track the actual performance and destruction rate of notes by series.
• Conducting **in-circulation fitness audits** (random sampling) to verify the actual quality of cash in the economy.
• Protocols for feeding real-world performance data back into the LCC and retirement models.
• Troubleshooting discrepancies between laboratory performance and field degradation rates.
• The role of technology (e.g., advanced sensors) in improving field data collection.

Unit 5: Strategic Planning and Policy Recommendations

• Translating LCC and performance analysis into strategic policy recommendations for banknote issuance.
• Determining the most cost-effective mix of denominations based on their LCC and public use patterns.
• Developing a policy framework for the phased introduction and retirement of new security features.
• Managing the policy communication regarding note quality and substrate changes to the public.
• Future considerations: the impact of Central Bank Digital Currency (CBDC) on LCC and note life.