SNB Rescues Company It Needs for `World's Best' Banknotes
Swiss National Bank Rescues Company It Needs to Make Banknotes
(Bloomberg) -- The Swiss National Bank bought a 90 percent stake in Landqart AG, bailing out the sole producer of the material needed for producing its “state of the art” banknotes.
The acquisition is aimed at saving the company based in eastern Switzerland, which the SNB said faced a liquidity shortage and a “direct and existential threat” that could have jeopardized the central bank’s ability to supply the country with cash.
The SNB “always had the ambition to produce the world’s best banknotes,” President Thomas Jordan said at a press conference in Zurich on Thursday. “And part of that is the development of new banknote paper,” using Landqart’s enhanced-security Durasafe substrate.
Durasafe, made of paper and polymer, features in the new banknote series the SNB kicked off last year. Still awaiting their debut are the 100, 200 and -- controversially -- 1,000 franc notes. Despite the advent of electronic payment systems, notes remain very popular in Switzerland.
The SNB also owns a 33 percent stake in banknote printer Orell Fuessli Holding AG, which acquired the other 10 percent in Landqart from Fortress Paper Ltd. The two companies are paying a total 21.5 million francs ($21.8 million) for Landqart and another firm that holds the relevant patents for Landqart’s activities. The central bank said it does not intend to own the company indefinitely, but provided no detail on how or when it plans to exit.
Citing the popularity of cash in Switzerland, the SNB has decided to continue issuing a 1,000 franc bill, a pledge Jordan repeated on Thursday. That stance has raised eyebrows among some such as former U.S. Treasury Secretary Lawrence Summers, who has called on the SNB to scrap them in a bid to thwart crime.
“We have the obligation to provide Switzerland with banknotes, this is part part of our mandate,” Jordan said. “And as long as the public wants banknotes, we’ll provide them with the banknotes.”
To contact the reporters on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net, Jan Dahinten in Zurich at jdahinten@bloomberg.net.
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Zoe Schneeweiss
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