Pioneering know-how shouldn’t be at all times instantly related to money. However there’s a large quantity of innovation taking place all alongside the cash chain. This was highlighted in August 2020, when the we The Federal Reserve has chosen the German banknote and safety firm Giesecke + Devrient to provide its “subsequent era” banknote processing machines.

G + D, who has labored with the Fed for over 40 years, gained the tender with a machine based mostly on his BPS Platform M. The corporate claims to have developed a prototype to fulfill Fed specs to course of “nicely in extra” of 100,000 payments per hour, with “distinctive” precision. It additionally responded to a vital side of the Fed’s specification: for brand new machines, it was mandatory CDI2-conform.

The Federal Reserve and the European Central Financial institution (BCE) collaborated on the redesign of the frequent detection interface (CDI) since early 2015. The brand new set of requirements, named CDI2, are designed so {that a} given sensor may be built-in right into a given banknote processing machine.

Up to now, sensors and the best way they connect and talk with forex processing machines had been personalized for every mannequin – every sensor labored successfully on a person foundation. Within the we, such a relationship was extra tolerable, because the Fed’s cash-handling machines had been by no means made besides by G + D. Nevertheless, at any time when the Fed desires to replace its sensors, it limits itself to at least one. small variety of sensor suppliers.

The scenario is amplified in Europe, the place the central banks of the Eurosystem are free to decide on totally different suppliers in 19 totally different nations. G + D machines, CPS and Toshiba are amongst these at the moment in use. Up to now, each time BCE created a brand new machine-readable safety characteristic for the euro, sensor producers needed to create a number of variations of the detector to be built-in into every sort of machine in several central banks within the euro space.

In January 2020, the Fed and BCE finalized on CDI2 requirements, with the help of members of the Netherlands Financial institution, the Nationwide Financial institution of Austria and the Austrian Institute of Expertise (AIT), pretty much as good as we-based Lawrence Livermore Nationwide Laboratories.

“An alliance between BCE and the Federal Reserve is one thing that empowers discussions with sensor and machine makers. So for us, a partnership with the Fed actually made sense for the creation of a common customary to be adopted by the sorting machine business, ”mentioned Jean-Michel Grimal, head of the forex growth division on the BCE.

Jean-Michel Grimal, BCE

The requirements are an extension of CDI, a purely Eurosystem initiative, offering a typical interface between banknote detectors and sorting machines for standardized information trade with the intention to authenticate banknotes in line with their traits. In different phrases, the sensors would supply a “sure / no” verdict indicating whether or not a banknote was reputable or not.

CDI2 extends these specs to permit the mixing of third-party digicam techniques – with non-obligatory health detectors – into sorting machines, offering central banks with a visible evaluation of the standard of a banknote.

“We consider we now have ticked all of the containers with this new customary, which we’re certain will swimsuit the subsequent generations of high-speed invoice sorters,” says Harald Deinhammer, senior workforce chief for ticket analysis and growth. from financial institution to BCE.

Whereas model 2.7B is finalized, CDI2 has not but been totally adopted: the Fed would be the first central financial institution to use the requirements.

“In the mean time there are as specs on the BCE web site and as a set of simulators, however it would not exist in the marketplace, ”says Mark Gould, head of the Federal Reserve’s money merchandise workplace.

The Fed acquired its first prototype of a next-generation machine from G + D in early 2020, however formal integration testing shouldn’t be anticipated to start till late 2021.

Transport simulator

The transport simulator is utilized by sensor suppliers as an alternative to the machine throughout sensor growth

“Within the subsequent step, seven extra prototype machines will probably be provided to the [Fed] greater than 4 years for acceptance testing, to make sure necessities are met, ”says Gould central financial institution.

“As soon as the [Fed] examined the totally different elements of the CDI2 the ecosystem and the machines can be found in the marketplace, the Eurosystem plans to CDI2 compliance with a requirement for future high-speed forex processing tools bought by the nationwide central banks of the Eurosystem. “

Nevertheless, it is a little more troublesome for the BCE to implement the brand new requirements.

“The principle distinction between the Fed and the BCE is that the Fed units up its personal sorting techniques. The BCE doesn’t have a single sorting machine, however helps nationwide central banks in setting requirements for his or her future tools used to course of euro banknotes, ”says Deinhammer.

Elevated competitors

One of many unintended advantages of the brand new requirements is that they are going to improve competitors available in the market for banknote companies. To this point, the sorting machine market has been dominated by a couple of giant corporations, from which central banks have additionally been pressured to buy sensors.

“This opens the door to new improvements and will definitely permit new suppliers to enter the at the moment very closed high-speed ticket processing market,” says Gould. “And we might see the emergence of revolutionary options and applied sciences that present much more necessary banknote safety features than what we at the moment have.”

Opposite to CDI, corporations wishing to be CDI2-compliant should begin from scratch.

“Gathering, transferring and storing your complete picture of the banknote implies that you want a a lot sooner community structure inside every machine, but additionally requirements for transferring this information to techniques. centralized storage – all of that is outlined in CDI2», Declares Deinhammer.

Harald Deinhammer

Harald Deinhammer, BCE

“A sensor that merely measures the magnetism of a banknote can normally be simply mounted on a sorting machine and doesn’t require the strict banknote transport tolerances of a high-resolution multi-channel digicam system. For such techniques, it is advisable specify very clearly the regularity of the transport of the banknote, and also you additionally must have rather more mechanical specs and acceptance and testing standards. “

Given the impression that CDI2 reportedly on the business, central banks labored extensively with present distributors to find out what was possible and what was not.

“We’ve got shared totally different variations of the CDI2 specs with the sensor and machine producers, and garnered market suggestions, which has been a really priceless expertise for us, ”says Deinhammer.

“When evaluating suggestions, we now have at all times saved in thoughts that the ultimate customary may be applied with cheap effort by all current distributors and doesn’t require particular license agreements, however is predicated on open supply applied sciences. “

Deinhammer says there was reluctance on the a part of corporations that had extra market energy. However in the long run, the Fed’s determination to amass new sorting machines solely from corporations that meet the brand new requirements prompted the market to cooperate, he explains.

Future advantages

Along with growing competitors within the banknote business, the brand new requirements may also present central banks with extra granular information on the suitability of banknotes.

Grimal says CDI2 will construct on the success of CDI1 and permit extra information to be extracted from totally different sensors in a standardized format.

“With CDI2, there may be an structure the place you get a judgment of all of the sensors plus the picture of the banknote in a standardized format, which you’ll be able to very simply hook up with a centralized database and use together to make a last judgment on the suitability and authenticity of the notes processed, ”says Grimal.

The Central Banking Awards had been written by Christopher Jeffery, Daniel Hinge, Dan Hardie, Rachael King, Victor Mendez-Barreira, William Towning and Alice Shen.

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