The Monetary Authority of Singapore MAS is concerned with the message that it is part of its efforts to promote environmental sustainability.
Fit notes are used currency notes that are generally clean and of suitable quality for recirculation, including for festive gifting, said MAS.
The condition of these notes has been verified by banknote processing machines and are similar in quality to notes from automated teller machines ATMs. To encourage the use of fit notes, MAS will stop issuing good-as new S $2 notes this coming Chinese New Year.
As good-as new S $2 notes generate additional carbon emissions, the additional processing needed is a more sustainable option, said MAS.
The authority said that good-as new notes are retrieved from notes issued only once during Chinese New Year and deposited by the banks back to MAS shortly after.
These notes are processed twice by MAS to ensure that only good quality new notes are harvested and reissued for the next Chinese New Year, said MAS, adding that good-as new notes only come in S $2 denomination.
About 100 million new notes are issued every year for Chinese New Year and other festive periods, MAS noted, adding that a large majority of these notes are only used once for gifting before being returned to the authority.
The volume of returned notes far exceeds replacement needs, as most of the returned notes are recirculated to meet public demand, such as replacing unfit notes in circulation. The excess notes are subsequently destroyed before the end of their useful life, said MAS.
New notes issued purely to meet the demand for festive purposes generate unnecessary carbon emissions and are a waste of resources, said MAS.
It said that 10,000 new trees would be planted to offset emissions from the issuance of excess new notes annually, and that the emissions from the issuance of excess new notes are comparable to powering 430 four-room HDB flats.
The practice of printing new notes is not in line with the goal of net-zero carbon emissions by Singapore by the year 2050, according to MAS.
MAS will work closely with banks to make fit notes more accessible to the public, adding that it will provide more details on the reservation and exchange of new and fit notes towards the end of the year.