The Wall Street Journal - The Complex Tech Behind Counterfeit-Resistant Cash | WSJ Pro Perfected
Banknotes from around 30 countries incorporate secret patterns to prevent photocopying, a measure among many to combat counterfeiting. The US dollar, despite being the most traded currency, has some of the least secure notes, particularly the $1 bill, which hasn't been redesigned in over 60 years due to its low value and the logistical challenges of replacing it globally. Banknotes employ three tiers of security: the first targets casual counterfeiters with tactile features like the feel of the paper, the second uses magnetic inks to prevent machine spoofing, and the third involves molecular-level features known only to central banks to prevent state-sponsored counterfeiting. Despite these measures, counterfeit notes still circulate, often due to human error or lack of scrutiny. Advanced techniques like microlens printing are being developed but are costly. The US $1 bill remains unchanged due to its low counterfeiting risk and the complexity of redesigning and replacing it globally.
Key Points:
- Banknotes use tactile features and unique materials to deter casual counterfeiters.
- Polymer notes and microlens printing are advanced security measures but costly.
- Magnetic inks help prevent machine spoofing but can be tricked.
- Central banks use undisclosed molecular-level features as a fail-safe against sophisticated counterfeiting.
- The US $1 bill hasn't been redesigned due to low counterfeiting risk and logistical challenges.
Details:
1. 💰 Secret Patterns on Banknotes
1.1. Secret Patterns and Their Role in Preventing Counterfeiting
1.2. Technological Measures and Economic Impacts
2. 🔍 Layers of Protection Against Counterfeiting
- Central banks use a tiered approach to counter counterfeiting, addressing threats from casual counterfeiters to sophisticated state-sponsored actors.
- Expert Shaun Ferrari, with 16 years at the Federal Reserve, highlights the complexity of U.S. dollar security features designed to deter counterfeiting.
- The first defense layer involves the unique texture of currency, crafted from a proprietary blend of cotton, linen, and paper, presenting a replication challenge for counterfeiters.
- In response to the bleaching and reprinting of lower denomination notes, countries are increasingly adopting polymer banknotes, noted for their distinctive plasticky feel.
- Ink feathering, a characteristic of genuine banknotes, acts as a forensic tool to trace counterfeiters, illustrated by a 2024 case in Naples where €11 million in fake notes were seized.
- Advanced security features like transparent windows, color-shifting ink, and holograms, though not entirely foolproof, have been integral since the 1980s.
- Microlens printing, a cutting-edge and costly technique, enables the creation of 3D images on notes, enhancing security, as employed by producers like Crane.
- Swiss banknotes incorporate state-of-the-art security features and cost about 45 cents each to produce, reflecting significant production investments, illustrated by the issuance of 41.5 million new notes in 2024.
- Despite these advanced features, counterfeit deterrence heavily relies on vigilant human inspection, which is often lacking, contributing to the circulation of fake notes like movie props, which constituted 12% of the $100 million in counterfeit notes in circulation as reported by the US Secret Service in 2019.
3. 🛡️ Advanced Counterfeiting Measures
- Level two security measures are implemented to prevent advanced counterfeiters from spoofing vending machines. These include the use of magnetic and non-magnetic inks that create patterns readable by sensors.
- Central banks maintain security by withholding detailed information about security features from note scanner manufacturers, minimizing the risk of leaks.
- Despite these measures, counterfeiters sometimes succeed by focusing on single security features, such as magnetics, suggesting the need for more comprehensive multi-faceted security approaches.
- Updating magnetic patterns is relatively inexpensive, but significant costs arise from updating bill validators to recognize new features, suggesting a need for cost-effective updating solutions.
- Additional technologies that can be employed include holographic elements and advanced microprinting, which are harder to replicate and add layers of security.
- Countries vary in their implementation of these technologies, with some employing a combination of features to enhance overall security efficacy.
4. 🔒 Ultimate Security Levels
- Counterfeiting poses a critical threat when undetectable by humans, machines, or central banks, potentially destabilizing governments.
- Historical example: During World War II, Nazi Germany produced 350 million counterfeit pounds to undermine Britain's economy.
- In 2006, the US alleged North Korea circulated $45 million in counterfeit 'Supernotes', though North Korea denied this.
- Modern security measures include undisclosed molecular-level features in banknotes, involving unique chemical reactions to light or lasers, enhancing detection and authenticity verification.
5. 🇺🇸 The Untouched $1 Bill
- The $1 bill has not been redesigned in over 60 years despite there being 14.9 billion $1 notes in circulation.
- The US Bureau of Engraving and Printing states the $1 bill is rarely counterfeited due to its low value, making redesign costs unjustifiable.
- Recalling and replacing nearly 15 billion notes globally presents logistical challenges.
- Many countries use US currency as a store of value, complicating global recall efforts.
- Designing and distributing new banknotes is a lengthy process; the $100 bill redesign started in 2003 took a decade to circulate.
- Federal legislation exists that prevents the redesign of the $1 bill.
- Maintaining trust and faith in the US currency is a reason to avoid changes, ensuring it remains good and redeemable.