MANILA— The new polymer or plastic P1,000 bills will start circulation in mid-2022 after the Bangko Sentral ng Pilipinas signed a production deal with the Reserve Bank of Australia, BSP Governor Benjamin Diokno said Thursday.

The Reserve Bank of Australia's subsidiary Note Printing Australia was tapped for the production of the new polymer banknote, Diokno said in his weekly virtual briefing.

Australia is the first country to issue a full series polymer banknotes. It has also produced and supplied the bills for several countries, Diokno said.

"The P1,000 note will begin circulating in mid-2022," Diokno said

"As the sole issuer of Philippine money, the BSP ensures that our coins and notes serve the need of the Filipino people," he added.

Diokno said shifting to polymer bills is more environment-friendly, cost-effective, hygienic and will increase protection from counterfeits.

"Crime syndicates have been improving their techniques in counterfeiting the new generation banknotes that are currently in circulation," Diokno said.

"Given the increasing scarcity of water, energy and others, our banknotes should be made to last longer," he added.

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The test banknotes will have the same look as the current P1,000 bill but will carry new security features, BSP Deputy Governor Mamerto Tangonan earlier said.

The Philippine Fiber Industry Development Authority (PhilFIDA) however, said using polymer has "many drawbacks."

The group is raising the side of the abaca industry. Current paper banknotes are made up of 20 percent abaca fiber, with cotton making up the remaining 80 percent.

But the BSP said the impact would be minimal and that they're pushing for the use of abaca paper for passports, land titles and birth certificates and other civil registry documents.

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— with a report from Art Fuentes, ABS-CBN News