Hungarian National Bank turns old banknotes to fuel
- 8 March 2012
- From the section Business
They're burning money again in the Hungarian town of Veszto.
A young lad pushes square briquettes of the stuff in a wheelbarrow across the yard from the shed where they are stored to the furnace, and tosses them in, one by one.
The flames take a little while to catch, but when they do, the furnace roars contentedly.
He gets in about 20 before the furnace is full. Each contains Hungarian forints worth about $20,000 (£13,000).
How long does it take to burn $400,000? I ask. "About an hour!" he laughs.
The banknotes, however, are carefully shredded and compressed into blocks before they arrive at the Handicapped Children's Centre in Veszto.
The briquettes of shredded notes are given free, with no transportation costs, to charities which compete for them in an open tender procedure.
The only conditions the Hungarian National Bank makes is that the charity has sufficient storage facilities to keep the briquettes dry (they disintegrate rapidly in the rain), and that it is not in debt to the state.
The air is thick with jokes about how much nicer it would be to get the money - even just a single briquette's worth - but institutions like the one in Veszto are grateful for any aid they can get.
"The contribution from the national bank was... priceless," says Erika Berke, the manager of the children's centre, "especially during the last month when winter really arrived."
Cheaper fuel bills
For several weeks, temperatures hovered close to -10C during the day, and below -20C at night.
There are still grey folds of snow under the horse chestnut tree in the yard, and a bitter northerly wind despite the late winter sunshine.
The centre runs four buildings - two day centres, a dormitory, and a small farm - catering for about 50 children.
Mrs Berke estimates that their fuel bills would be $4,000 higher each year, if it were not for the generosity of the national bank.
In the maximum security cash centre of the Hungarian National Bank, close to the River Danube in a far-flung suburb of Budapest, Barnabas Ferenczi, director of cash logistics, is proud of the scheme.
"The calorific content of the briquettes is similar to that of brown coal," he says.
"It is not the cleanest type of energy, but many charities in the poorest regions of Hungary cannot afford to heat with gas."
As we speak, a laser-guided orange robot rolls towards us across the floor, stops abruptly, then turns away, carrying the latest shipment of banknotes.
Almost everything here is automated, making it Europe's most modern cash processing facility, according to officials.
There's a map on the wall showing the countries from which they have entertained visitors from the banking community. Only Africa is poorly represented.
"Every country has a problem disposing of unwanted money," explains Mr Ferenczi, challenging a rather popular assumption, "so they come to Hungary to find out how to do it."
The replacement of worn or torn banknotes is a spring cleaning exercise carried out by most central banks, but as far as Hungarian officials know, theirs is the only scheme to turn them into fuel and donate them to a good cause.
At a table in the centre of the room, four employees load a machine for processing the notes - the only time a human comes into physical contact with them.
Almost all the banknotes in circulation in Hungary, with a combined value of about $7.5bn, pass through this centre each year, for quality control.
About one in four are declared unfit, and pass through a shredder at a rate of 30 to 40 per second. The rest are returned to the High Street.
In the next room, the shredded notes are blown through a compressor in a steady tide, the pieces now only one millimetre wide. You can watch them through a little porthole.
The colours are mostly pinks and purples, blues and browns, with the occasional silver streaks from the aluminium strips in the notes.
Then they are crushed at high pressure into briquettes, and carried up a conveyor belt for storage, before being loaded into open-topped lorries for transport to the charities.
They were more brightly coloured before the red 100 forint and green 200 forint notes were withdrawn from circulation.
"It would be basically impossible to reconstitute banknotes out of them," says Mr Ferenczi, confidently.
They can confirm that in Veszto. "One of our staff tried," confesses Mrs Berke, "but they were happy when they managed a single square centimetre."
The lad loading the briquettes into the boiler pauses to warm his hands in front of the fire, before reloading his barrow.
"Wouldn't you seriously rather have the money?" I ask. "Not really," he replies, surprisingly. "I don't really need it, but the state does."