HISTORICAL OVERVIEW: 1834 - 2012
Since the beginning of the circulation of gold and silver coins had been in circulation 1834, there was no specified monetary unit represent the basis of the monetary system in Egypt. Only few coins were minted locally. In 1834, it was decreed to issue an Egyptian currency relied gold & silver metals base. By virtue of that decree minting coins in the form of gold and silver riyals had become a governmental monopoly. In 1836 the Egyptian pound was minted and issued for circulation.
As the Egyptian mint was insufficient to satisfy the requirements of large transactions as well as foreign trade, and because of the use of foreign coins for that purpose, legal exchange rates were fixed by the force of law for important foreign currencies which became acceptable in the settlement of internal transactions. Fluctuations in the value of silver in addition to the adoption of the gold standard by most of the countries trading with Egypt, particularly the United Kingdom, led to the application of the gold standard, on the basis of de facto, after nearly thirty years from the application of the system of metals.
Following the financial crisis resulting from the accumulation of Egypt’s external debt, the monetary reform law was issued in 1885. By virtue of that law, the gold standard became the basis for the Egyptian monetary system, and the country had a unified currency, the gold Egyptian pound. , thus the two metals criterion was officially abandoned.
Owing to insufficiency of minting new gold pounds, it was permitted to use some foreign gold coins, particularly the Sterling pound, at fixed legal rates. While the gold Egyptian pound was still deemed a legal tender, the gold Sterling pound, which was valued at more than its gold content compared to other foreign gold coins, remained the main medium of exchange, and the monetary system was no longer based on the ordinary gold standard but on the sterling gold standard.
Gold coins remained the medium of exchange until 1898 when the National Bank of Egypt was established and granted, by the government, the privilege to issue Egyptian banknotes, payable in gold for a period of 50 years. The National Bank of Egypt started issuing banknotes for the first time on the 3rd of April 1899.
Thus, the currency circulated in Egypt included the gold Sterling pounds and Egyptian banknotes convertible into gold. That situation continued up to 2/8/1914 when a special Decree was issued making the Egyptian banknotes a legal tender and suspending their Convertibility into gold. Consequently, the Egyptian pound banknote became the basic currency unit, and the base of the Egyptian monetary system was changed to fiduciary paper money standard.
Accordingly, gold coins were no longer used in circulation, with the result that the volume of issued note increased from LE 11.6 million at the end of 1915 to LE 3557.0 million at the end of 1980, and further to LE 38320.0 million at the end of 1999. In 1930, for the first time in the history of Egyptian banknotes, a watermark was used in issued banknotes. That was followed, towards the end of 1968, by using a metallic thread (in notes issued by the Central Bank of Egypt) as a guarantee against counterfeit instead of depending on complexity of colors. Other features against counterfeit are found in the detailed specifications of each currency. Hologram thread are currently added to the notes. On the 19th of July 1960, Law No. 250 was promulgated. & amended on 2nd of November of the same year by Law No. 377 concerning the Central Bank of Egypt and the National Bank of Egypt. The Law provided for the establishment and conferring on the Central Bank of Egypt the right of issuing the Egyptian banknotes. Several changes were introduced to the watermark, the designs of the notes as well as the colors. The efforts of the Central Bank of Egypt in the field of note issuing were crowned by the establishment of a printing house for banknote works instead of printing them abroad. Production of banknotes, in different denominations, started in December 1968. The Bank also served some Arab Central Bank in printing their banknotes.
In view of the increasing need of banknotes to facilitate transactions resulting from the growth of economic activity, following the introduction of the global economy policy, the Central Bank of Egypt issued notes of large denominations (20, 50,100). It launched the denomination of 20 pounds in May 1979, the LE 100 in May 1979 and the LE 50 in March 1993.
Excerpt from the Egyptian Printing House
- The Printing House of the Central Bank of Egypt is considered as one of the oldest printing houses in the Middle East & Africa, it was established in the Sixties of the last century and was opened for production in 1967, to print the Egyptian Banknote inside the Arab Republic of Egypt not abroad, depending on the professional technical cadres whom had been trained on the new printing system (Offset, Intaglio) at that time.
- The Printing House location was chosen beside the Giza Pyramids to express the Egyptian Civilization, and it was also built to be an Architectural Masterpiece where it was designed in sphinx shape (its body the production building & its face the management building).
- The Printing House started with just one production line consisting of:
- One simultan machine for printing the back ground design of banknote.
- Two Intaglio machines for printing the front elements of the design with special texture (relief texture).
- One Numbering machine.
- The finishing stage was achieved manually.
- As a beginning, steel mould were designed for all denominations abroad, and then reproduction of printing plates at the printing house.
- The LE 50 & 100 denominations, are considered to be the first two denominations entirely designed from steel templates, nyloprint and copper plates-which were then modified to be nickel in 1992 for LE 50 and in 1993 for LE 100 , after that new design was made for LE 10.
- New security elements have been adopted for all denominations to fight the counterfeiting & forgery.
- A new design was made for big size of LE 200 den. (8 X17, 5 cm) and modified in 2009 for the current size (7,2X16,5 cm ).
- Now there are two lines for the production of big size sheets and one line for small size sheet in addition to an automatic and manual finishing.
- Printing House also prints secured documents such as Passport, Education Certificates and banks’ Checks which given the importance of its national role to protect them from counterfeiting and forgery.
- Due to the importance of Printing House products, the cadres are periodically trained in both printing banknotes and security paper to refine & increase the efficiency of these individuals to cope up with the recent up-dates that enhance the counterfeiting & forgery barriers of those products.
Development of Security Features from 1968 till 2012:
- One water-mark for all denominations.
- Addition of security threads.
- Addition of optically variable inks.
- Addition of Anti-colour-photo copiers
- Specified water-marks per each denomination.
Currently a study is being achieved to develop more sophisticated security elements.
Notes Issuing and Cover: 1990 - 2004
- The period 1990 - 2004 witnessed large and continuous increases in note issue compared with previous periods. The average rate of increase during that period stood at 11.7% as an average.
- Note issue cover is currently composed of gold and Egyptian treasury Notes.
The relative importance of such components as at end of June 2004 was as follows; 7.4% gold, and 92.6% treasury notes.
- The proportional distribution of note issue by denomination as at end of June 2004 was as follow: 30.9% of one hundred pounds, 38.0% of fifty pounds, 18.4% of twenty pounds, 9.2% of ten pounds, 2.1% of five pounds, 0.9% of one pound, 0.3% of fifty piaster and 0.2% of twenty five piaster , LE 1, PT. 25 and PT. 50 are no longer printed; they are only minted as coins.