THE Reserve Bank of Australia has been working on creating new, "youthful"-looking bank notes for the past five years, it's been reported.

The project, called Next Generation Bank Note, is more than two years behind schedule and has so far cost $9.3 million, The Australian reports.

Designers have been supplied with new portraits of the notes' subjects and asked to capture Australian characteristics with "youthful" and "energetic design qualities", it says.

The RBA had toyed with the notion of removing Queen Elizabeth II from the $5 note in favour of subjects including Henry Parkes - known as the father of federation - but scrapped the idea last year.

A bank spokesman has confirmed the project, saying it was taking place to ensure Australia maintained its "relatively low levels of counterfeiting".

The notes would include new security features but retain most of the existing design elements including colour, size and their current portraits, the spokesman said.

The bank also said it will take several years before the first upgraded notes are issued.

The initiative followed research by the bank that found most Australians couldn't name the faces on their national currency.

Melbourne designer Garry Emery, who worked on the existing note design, has confirmed he is working with the bank on the new polymer note project.

The bank approved new designs by Emery for further development in 2010, the report says.