Product Owner: De La Rue
Description of innovation
DLR Analytics first launched at the Currency Conference in May 2017 and provided all central banks with free access to standard cash cycle analytics, commonly used forecasting algorithms and a platform to exchange best practice about cash cycle management and analysis (e.g. via webinars and the Cash Cycle Partnership Seminar). Provided as a securely hosted cloud service, central banks simply need to type in the URL for their service and log in to upload their data and see the latest analysis and graphs.
Advanced DLR Analytics was launched in July 2018 and took the available analysis up another level. Forecasting now extends beyond the value and volume of cash in circulation through to forecasting the number of new banknotes needed per month (new issues) and forecasting of future stock levels. Intelligent algorithms build in suitable replacement rates for the forecasts but slider bars allow for monthly adjustments going out years, thus allowing central banks to easily model scenarios.
The data entered into DLR Analytics is anonymised and aggregated to enable global trends to be seen. Whereas in the last version of DLR Analytics data was carried out offline by the DLR Analytics team, the anonymisation and aggregation is now ran in the tool itself, allowing users to view data in map form and compare box plots of various metrics (e.g. banknote lifetime) by metrics (such as whether the note is an ATM note or not)
Date the innovation was first launched.
Fiji, Solomon Islands, Maldives, England, the Gambia, Barbados, Paraguay, Angola
Dutch National Bank – collaborates on the topic of cash cycle analytics but Euro zone cash cycle data does not lend itself to the tool.
There are tens of others from all parts of the world but De La Rue has not yet sought permission to share their names
Other cash cycle analytics services are higher cost and complexity, typically requiring sorter machines or special sensors. Advanced DLR Analytics is available to all central banks with an internet connection. And yet it answers the majority of questions that central banks typically need answering.
The supporting seminars and webinars provide a route for central banks to learn from each other DLR Analytics users. With Advanced DLR Analytics they can explore scenarios by comparing the metrics related to their cash cycle (e.g. replacement rates) to others in their region or around the world. Publicly available data is incorproated into the tool, providing an easy route for central banks to see how they rank and compare to others. So for a central bank considering the introduction of a new high value note or a move to polymer Advanced DLR Analytics can help by indicating how this has impacted others.
Advanced DLR Analytics for the first time enables central banks to run banknote demand forecasts, through to stock run out projections at the click of the button. Instead of spending time thinking about whether e.g. ARIMA or X-13 is a better forecasting model they can instead consider the likelihood of the various scenarios that the tool allows them to model. It’s easy to apply different banknote forecasting tools to different denominational values, it’s easy to see when stock will run out and it is easy to model scenarios with different replacement rates from normal (e.g. during an election or introduction of a new series).
Advanced DLR Analytics is also the only tool in the world that enables central banks to compare their own cash cycle analytics data to other anonymised regional and global data. The DLR Analytics team facilitates introductions and connections for relevant information exchange.
Increased Efficiency, Safety or Environmental Protection
For central banks with small departments this tool offers an easy way to manage cash cycle analytics via standard approaches, graphs and analysis. As long as the data is uploaded each month the analysis can continue, irrespective of staff turnover.
Understanding the rate at which cash moves around the cash cycle and returns to the central bank for sorting or destruction also enables efficiencies. As an example, if denominations are returning to the central bank more than 3 or 4 times a year but have typical banknote lifetimes of 3 years then there are strategies that the central bank can employ to reduce unnecesary sorting.
Having the optimal mix of denominations and optimal denominational structure in place for a series of banknotes also increases the efficiency of the cash cycle. Advanced DLR Analytics can help with the decision to introduce a new high value banknote or not. If your highest note was previously a £50 and it makes sense to introduce an £100 then there are instances where one note can be used (or one note has to be sorted) instead of two.
Feedback from Stakeholders, Including the General Public
“For a small country like us, the skills and technological support that is provided by DLR is unrivalled” Daniel Haridi, chief manager of currency and the banking operations at Central Bank of Solomon Islands.
“The model comes in handy to assess the life expectancy and managing the stocks. It is very useful to plan and reorder quantities,” says Ravi Kamoda (Reserve Bank of Fiji at the time of quote).
“Their tool only works for economies with closed cash cycles. However, it is a really powerful tool, and we were surprised by how much could be learned from the aggregated data we supplied.” Peter Balke, senior policy adviser at the Netherlands Bank at the time of the quote.
Central Banking “The Dutch central bank has not adopted De La Rue’s tool but it has altered its own in-house practice following a consultation with the banknote firm.”