Malaysia practices a dual substrate method, with polymer substrate used for lower denominations, and cotton paper substrate used for medium and high denominations. Currently, Malaysia uses Waste-to-Energy disposal methods for disposing of banknote waste. In 2024, disposal of banknotes through WTE generated about 448,179 kWh of energy, which could power 60 Malaysian households for an entire year. With that in place, BNM has been keen to deliver on the ultimate goal of a circular economy, where shredded banknotes may be repurposed through material reuse and recycling.  
Recycling gives the material a new lease on life prior to energy extraction from incineration. Recycled polymer and paper banknotes can be used to create products in lieu of using virgin polymer and virgin wood pulp/other virgin paper source respectively. Unlike regular plastic and wood pulp paper, recycling banknotes is complex due to the presence of other elements, such as ink, varnish, and security features in the banknotes.

BNM performed trials for:

i)    Transforming polymer waste into small polymer products suitable as gift i.e. coasters;
ii)    Transforming polymer waste into polymer boards fit for making furniture;
iii)    Transforming polymer waste into plastic pellets, to be used as raw material to make bigger plastic products, or as additives; and
iv)    Transforming paper waste into recycled paper, to be made into new paper products.

BNM has successfully concluded trials on all the above. Through annual recycling of polymer and paper waste in Malaysia, we can expect to save around 1561 tonnes Co2-eq of carbon emissions from reducing the need for 257 tonnes of virgin polymer and 544 tonnes of virgin wood pulp.