Modern polymer banknotes were first developed by the Reserve Bank of Australia (RBA), Commonwealth Scientific and Industrial Research Organisation (CSIRO), and The University of Melbourne in 1988. Prior to the development of polymer banknotes, all Australian banknotes were printed on a rag-based paper substrate.

Unlike paper notes, polymer banknotes are produced using rolls of clear plastic film, which are first opacified by two layers of ink (mostly but not necessarily white) on both sides of the film, except for an area or areas which are deliberately left clear. The opacified substrate is then cut into sheets and is printed on in the same way as paper. All traditional printing processes can be used with paper currency, with the additional security protection of the optically variable device or "OVD". In addition, the clear area of the note can be permanently embossed to create a further security feature. The final stage of the process is the application of protective varnish to the notes.

Polymer notes were finally released for circulation in Australia with the issue of the $5.00 note on 7 July 1992. Australian currency consists of $5, $10, $20, $50, and $100 notes.

While the primary reason for developing polymer banknotes was to combat the risk of counterfeiting, the notes stay cleaner and are more durable, lasting over 4 times longer than paper. There are now at least twenty-two countries, including New Zealand, China, and Indonesia using polymer banknotes.

More Info: en.wikipedia.org