What is the lifespan of a banknote?

What is the lifespan of a banknote?

Several factors affect the lifespan of a banknote, among which we single out the circulation method and the handling by users. The lifespan of a banknote is also related to its face value. In general, small cuttings have a lifespan of 2-3 years, medium cuttings 3-5 years, while large ones over 7 years. From the point of view of circulation, small denomination banknotes mostly remain in stores and circulate several times until they are deposited at bank counters. Their return to bank counters is mainly carried out when the banknotes fade or lose part of their qualities. Large-denomination banknotes are better managed by users, showing more care in use than small-denomination ones. So, the higher the face value, the longer the banknote will last.

During 2022, about 100.8 million pieces of banknotes were processed at the Bank of Albania, which were checked for authenticity and suitability for recirculation. The number of banknotes unfit for circulation against the total number of banknotes processed during a year was 20.7%, compared to 19% in 2021. Damaged banknotes were replaced on a case-by-case basis with new banknotes suitable for circulation.

The number of banknotes collected at the counters of the Bank of Albania compared to the average annual state of the number of banknotes in circulation for the year 2022 was 0.66. This means that a banknote is returned on average less than once a year at the counters of the Bank of Albania. This coefficient is higher for the denominations of 500 Lek, 1000 Lek (about 1.28 and about 0.98) and smaller for the denomination of 5000 Lek, about 0.16, which shows that the latter are less often returned to the counters of the Bank of Albania.

Source: Bank of Albania

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