Hong Kong Monetary Authority (HKMA)
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Costly bankrolling of a New Year tradition

In Hong Kong, a new year usually requires new money.

As the Lunar New Year approaches, the Hong Kong Monetary Authority and the city's note-issuing banks are busy printing about 200 million new bills - mostly HK$20 notes - for a total of more than HK$4 billion in new currency to be used in lai see packets.

Most Hongkongers want newly printed banknotes for their lai see packets, traditionally given to unmarried people as a gift and blessing in the Lunar New Year.

In recent years the Monetary Authority and banks have been asking customers to accept 'almost new' banknotes instead for environmental reasons. But their advice has not taken hold and new lai see money is still a big production.

It takes roughly 266 tonnes of cotton to make 200 million banknotes, which occupy 333 cubic metres of storage space and could fill 13 20-foot containers, according to the authority. 'The three note-issuing banks need to arrange 500 trips with security escorts to transport these brand-new notes,' a spokesman said.

In 2006, the authority introduced the so-called 'ying-san note' or 'good-as-new' note, hoping to lower costs and support environmental protection, the spokesman said.

'Ying-san notes are perfectly suitable for use as lai see money. Using brand-new notes for lai see consumes a great deal of resources. Ying-san notes may help to reduce the resources and logistics involved.'

Authority statistics show that on average about 200 million new banknotes are printed to prepare for the New Year. If they were all HK$20 notes, the most common type for lai see, the amount would reach at least HK$4 billion.

But considering that some people use HK$50, HK$100 or HK$500 bills in lai see packets, and others use the ying-san notes, bankers believe total lai see money may well amount to about HK$10 billion a year.

Authority statistics seem to bear this out. Cash in the form of notes and coins circulating in the city during the Lunar New Year in January last year increased to HK$203.45 billion.

This was up HK$17.66 billion on the HK$185.79 billion in circulation a month earlier. Then in February, after people opened their lai see packets and put the money back in the bank, the cash circulating in the city dropped back to HK$190.78 billion, or HK$13 billion less.

During the two to three weeks leading up to the Lunar New Year, banks start letting customers queue up to exchange old bills for new lai see notes. Many banks refused to disclose figures, but Bank of East Asia said it needs about HK$400 million in lai see money, with the most popular bills HK$20 and HK$50.

Banks also encourage customers to use ying-san notes. HSBC imposes a quota on new notes but not on ying-san bills.

'Many customers are environmentally aware and choose to opt for the ying-san note over the new notes,' a spokesman for HSBC said.

But not everyone. 'Some customers are not willing to accept non-newly printed notes,' a spokesman for BEA said. 'It is difficult to change tradition overnight. For environmental protection, we hope our customers can gradually change the habit of using only new notes for lai see.'

Derek Yung Kai-ming, chief executive of Prudential Assurance Hong Kong, said he would not mind using good-as-new ying-san notes.

'The lai see packets are to send out your blessing to the others in the Lunar New Year and I do not think it needs to be brand-new money,' Yung said.

Most Chinese companies will also give a 'start working lai see' to all employees on the first day back at work after the Lunar New Year.

Prudential, for example, gives lai see to all its 4,000 agents. 'I do not think the staff or agents will mind if the banknotes are brand new or not,' Yung said. 'For environmental protection reasons, maybe we should use the ying-san notes more.'

Max Chan, an executive of a listed company, said he would usually like to use newly printed bills for lai see packets but he would accept the ying-san notes provided they were in good condition.

'However I would not accept the very old and dirty HK$20 notes because it is not good to send out very shabby banknotes in the Lunar New Year,' Chan said. On the other hand, 'if I send out lai see packets with HK$100, I would not care if they are new notes or not. The value is high enough to make sure the one who receives the lai see will be happy'.