«Banknotes have been pronounced dead before, but that hasn't proven true to date,» says Daniel Link, CEO of Orell Fuessli, the manufacturer of Swiss banknotes. In an interview with finews.com, he talks about the fundamental importance of cash and how the company intends to benefit from the digitalization push.

Mr. Link, what makes a banknote unique?

Indeed, the product's beauty is that it's a work of art. Swiss banknotes are also a piece of Switzerland, a part of our country, culture, and history. On the other hand, banknotes as a means of cash still generally stand for security today. As a trustworthy, highly liquid, and reliable means of payment, they always function in everyday life, even without technology.

Is there a series of notes that you particularly like?

The latest series of notes from Costa Rica, which we helped to design in part, is colorful, fits in well with the country, and has beautiful motifs and good features; I like it. Often, it's not the big countries but the small ones that issue lovely notes. Technically, the Swiss banknote is undoubtedly the most sophisticated.

«Indonesia produces as many banknotes as all of Europe»

Digital payments are steadily increasing. Are banknotes still in keeping with the times?

In Central Europe, there's a big trend toward cashless transactions. But globally, the demand for banknotes remains high, and cash is still the most important means of payment in everyday life. Indonesia, for example, produces as many banknotes as Europe. We have seen banknote circulation grow in Switzerland for more than 50 years. Back in the sixties, when credit cards were introduced, it was said that physical money would disappear. This has not proved to be accurate, on the contrary. A well-functioning payment system needs both forms. Banknotes will, therefore, continue to exist in the future.

What would the disappearance of cash mean for society and the economy?

Above all, it would mean a significant loss of privacy. Cash is still the only means of payment that leaves no traces. You can take Bitcoin, but it doesn't offer complete anonymity. That's why cash is still the only payment method that allows self-determination and privacy. The security aspect is also essential. It shows up particularly strongly in times of crisis.

«Without physical money, societies would probably be more unstable»

During the Corona pandemic, cash was hoarded worldwide. In Ukraine, much cash is needed because the infrastructure is no longer functioning. Without physical money, societies would probably be more unstable.

Isn't this also a generational issue? The younger generation, in particular, has dramatically changed how it handles bills and coins. Since the recent Corona crisis, mobile and digital payments have become the norm.

The younger generation is indeed digitally on the move. But panic sets in if the cell phone is forgotten at home, broken, or lost. Sometimes, there's still a lack of life experience regarding the advantages of cash. Moreover, I'm not sure they want to do without it altogether. With cash, you're simply independent of a cell phone, a service, a server, or even flexible when traveling abroad.

What will be the impact of the introduction of digital central bank currencies (CBDC)?

I doubt that digital central bank money will come soon, possibly in a decade or so in some countries. At the moment, it seems like a far-off vision to me. Will it come as a wholesale or retail model? In general, there are still some open points there.

«Central banks will not want to compete with commercial banks and take away their customer business»

As a consumer, I also ask myself: what do I get out of this as a user, and what problem is being solved? I can already send money around digitally today. Central banks, I think, will also not want to compete with commercial banks and take away their customer business. CBDC won't displace physical cash anytime soon.

Your British competitor, banknote manufacturer De La Rue, has said this year that global demand for banknotes is at its lowest level in 20 years. Are you feeling the same?

The market environment is affecting the two companies differently. We have a capacity of about 600 million banknotes and one production line, De La Rue, four to six. A market downturn hits our competitor harder because it has more trouble keeping the lines busy and is perhaps not up to date with the latest technology. We can utilize our production well as a quality supplier with a precise market positioning.

What challenges does Orell Fuessli have to face in note printing?

Since the award of contracts often involves invitations to tender, the pressure is mainly on us to keep up in price. Like many other Swiss companies, we have trimmed our business for efficiency in the wake of the strong Swiss franc. We are also not pursuing a volume strategy but want lucrative orders with as many process steps as possible that suit us to deliver high-quality banknotes with high added value.

What growth areas do you see?

Money printing remains essential because this business won't disappear in the next ten years. Of course, we are concerned about what the money of the future will look like. That's why we are watching developments like CBDC very closely. But digital certificates will likely come much faster in the form of digital passports, ID cards, identity cards, or driver's licenses.

«Verifiable digital credentials are a new business area with great potential»

Our thrust is in this area. We want to exploit the growth potential for digital proofs. When the government-issued electronic identification proof (E-ID) arrives in Switzerland, it should provide a real boost.

This message doesn't seem to be getting through on the stock market. The share price has fallen in recent years.

I think investors need more time. This business is not yet reflected so much in our figures, especially since it is still being built up. But verifiable digital evidence is a new business with great potential. Sooner or later, this will be reflected in the share price.

Daniel Link has headed the business operations of Orell Fuessli Holding since November 2019. He was previously CEO at Gebr. Loepfe AG in Wetzikon since 2018, and before that, CEO of Braecker AG for eight years. Link holds a degree in microtechnology engineering from the Swiss Federal Institute of Technology in Lausanne and an executive MBA in general management from the University of St. Gallen. He is married, has two children, and lives in the Zurich region.