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Counterfeit money

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See also: Coin counterfeiting and Slug (coin)

Counterfeit money is currency that is produced without the legal sanction of the state or
government to resemble some official form of currency closely enough that it may be confused
for genuine currency. Producing or using counterfeit money is a form of fraud.

Roman coins were struck using a minting process, not cast, so these coin molds were created for
forgery.

Counterfeiting is probably as old as money itself. Before the introduction of paper money, the
most prevalent method of counterfeiting involved mixing base metals with pure gold or silver. A
form of counterfeiting is the production of documents by legitimate printers in response to
fraudulent instructions. During World War II, the Nazis forged British pounds and American
dollars. Today some of the finest counterfeit banknotes are called Superdollars because of their
high quality, and likeness to the real US dollar. There has been a considerable amount of
counterfeiting of Euro banknotes and coins since the launch of the currency in 2002.

Some of the ill-effects that counterfeit money has on society are:[1][2] a reduction in the value of
real money; and increase in prices (inflation) due to more money getting circulated in the
economy - an unauthorized artificial increase in the money supply; a decrease in the acceptability
of paper money; and losses, because companies are not reimbursed for counterfeits.
Traditionally, anti-counterfeiting measures involved including fine detail with raised intaglio
printing on bills which allows non-experts to easily spot forgeries. On coins, milled or reeded
(marked with parallel grooves) edges are used to show that none of the valuable metal has been
scraped off.

Contents
[hide]

• 1 History
• 2 Instances
• 3 Effect on society
• 4 Anti-counterfeiting measures
• 5 Famous counterfeiters (Celebrity Counterfeiters)
• 6 Money art
• 7 See also

• 8 References

[edit] History

Example of counterfeited 50000 cruzeiros banknote.

Counterfeiting is as old as money itself. Coinage of money began in the Greek city of Lydia
around 600 B.C. Before the introduction of paper money, the most prevalent method of
counterfeiting involved mixing base metals with pure gold or silver. Also, individuals would
"shave" the edges of a coin. This was known as "clipping." While not itself counterfeiting, the
exponents were able to use these precious metal shavings to create counterfeits. A fourrée is an
ancient type of counterfeit coin, in which a base metal core has been plated with a precious metal
to resemble its solid metal counterpart. Rulers often dealt very harshly with the perpetrators of
such deeds. In 1162, Emperor Gaozong of Song had promulgated a decree to punish the
counterfeiter of Huizi to death and to reward the informant.[3] The English couple Thomas and
Anne Rogers were convicted on 15 October 1690 for "Clipping 40 pieces of Silver." Thomas
Rogers was hanged, drawn and quartered while Anne Rogers was burnt alive. The extreme forms
of punishment were due to the pair's acts being construed as treason, rather than simple crime.

In the United States, counterfeiting was once punishable by death. Paper currency printed by
Benjamin Franklin often bore the phrase "to counterfeit is death."[4] The theory behind such harsh
punishments was that one who had the skills to counterfeit currency was considered a threat to
the safety of the state, and had to be eliminated - another explanation is the fact that issuing
money that people could trust was both an economic imperative, as well as a (where applicable)
royal prerogative - therefore counterfeiting was a crime against the state or ruler itself, rather
than against the person who received the fake money. Far more fortunate was an earlier
practitioner of the same art, active in the time of the Emperor Justinian. Rather than being
executed, when Alexander the Barber was apprehended, the Emperor chose to employ his talents
in the government's own service.[citation needed]

Modern counterfeiting begins with paper money. Nations have used counterfeiting as a means of
warfare. The idea is to overflow the enemy's economy with fake bank notes, so that the real
value of the money plummets. Great Britain did this during the Revolutionary War to reduce the
value of the Continental Dollar. Although this tactic was also employed by the United States
during the American Civil War, the fake Confederate currency it produced was of superior
quality to the real thing.[citation needed]

[edit] Instances

An 18th century Pennsylvania Four Pound Note warns of the death penalty for counterfeiting

A form of counterfeiting is the production of documents by legitimate printers in response to


fraudulent instructions. An example of this is the Portuguese Bank Note Crisis of 1925, when the
British banknote printers Waterlow and Sons produced Banco de Portugal notes equivalent in
value to 0.88% of the Portuguese nominal Gross Domestic Product, with identical serial numbers
to existing banknotes, in response to a fraud perpetrated by Alves dos Reis. Similarly, in 1929
the issue of postage stamps celebrating the Millennium of Iceland's parliament, the Althing, was
compromised by the insertion of "1" on the print order, before the authorised value of stamps to
be produced (see Postage stamps and postal history of Iceland.)[citation needed]

In 1926 a high-profile counterfeit scandal came to light in Hungary, when several people were
arrested in the Netherlands while attempting to procure 10 million francs worth of fake French
1000-franc bills which had been produced in Hungary; after 3 years, the state-sponsored
industrial scale counterfeit operation had finally collapsed. The League of Nations' investigation
found Hungary's motives were to avenge its post-WWI territorial losses (blamed on Georges
Clemenceau) and to use profits from the counterfeiting business to boost a militarist, border-
revisionist ideology. Germany and Austria had an active role in the conspiracy, which required
special machinery. The quality of fake bills was still substandard however, due to France's use of
exotic raw paper material imported from its colonies.[citation needed]
During World War II, the Nazis attempted to implement a similar plan (Operation Bernhard)
against the Allies. The Nazis took Jewish artists in the Sachsenhausen concentration camp and
forced them to forge British pounds and American dollars. The quality of the counterfeiting was
very good, and it was almost impossible to distinguish between the real and fake bills. The
Germans could not put their plan into action, and were forced to dump the counterfeit bills into a
lake. Most of the bills were not recovered until the 1950s.[5]

Today the some of the finest counterfeit banknotes are called Superdollars because of their high
quality, and likeness to the real US dollar. The source of the supernotes is disputed, with North
Korea being vocally accused by US authorities. Recently, on May 23, 2007, the Swiss
government has raised some doubt as to the ability of North Korea to produce the "Superdollars".
Bulgaria and Colombia are also significant sources of counterfeit currency.[citation needed] The
amount of counterfeit United States currency is estimated to be less than $3 per $10,000, with
less than $3 per $100,000 difficult to detect.[6]

There has been a rapid growth in the counterfeiting of Euro banknotes and coins since the launch
of the currency in 2002. In 2003, 551,287 fake euro notes and 26,191 bogus euro coins were
removed from EU circulation. In 2004, French police seized fake 10 euro and 20 euro notes
worth a total of around €1.8 million from two laboratories and estimated that 145,000 notes had
already entered circulation.[citation needed]

In the early years of the 21st century, the United States Secret Service has noted a substantial
reduction in the quantity of forged U.S. currency, as counterfeiters turn their attention towards
the Euro.[citation needed]

In 2006, a Pakistani government printing press in the city of Quetta was accused of churning out
large quantities of counterfeit Indian currency, The Times of India reported based on Central
Bureau of Intelligence investigation. The rupee notes are then smuggled into India as 'part of
Pakistan's agenda of destabilising (the) Indian economy through fake currency,' the daily said.
The notes are 'supplied by the Pakistan government press (at Quetta) free of cost to Dubai-based
counterfeiters who, in turn, smuggle it into India using various means,' the report said.[7] This
money is allegedly used to fund terrorist activities inside India. The recent blasts in Mumbai
were allegedly funded using fake currency printed in Pakistan.[citation needed]

Further information: Counterfeit United States currency

[edit] Effect on society


Some of the ill-effects that counterfeit money has on society are:[1][2]

1. Reduction in the value of real money


2. Increase in prices (inflation) due to more money getting circulated in the economy - an
unauthorized artificial increase in the money supply
3. Decrease in the acceptability (satisfactoriness) of money - payees may demand electronic
transfers of real money or payment in another currency (or even payment in a precious
metal such as gold)
4. Companies are not reimbursed for counterfeits. This forces them to increase prices of
commodities

At the same time, in countries where paper money is a small fraction of the total money in
circulation, the macroeconomic effects of counterfeiting of currency may not be significant. The
microeconomic effects, such as confidence in currency, however, may be large.[8]

[edit] Anti-counterfeiting measures

The security strip of a US$20 bill glows under black light as a safeguard against counterfeiting

Anti-counterfeiting features on an old U.S. $20 bill


A fake pound coin and a badly worn real pound coin, the left coin shows poor surface clarity,
irregular reeding and no side lettering. The right coin demonstrates damage.

Traditionally, anti-counterfeiting measures involved including fine detail with raised intaglio
printing on bills which would allow non-experts to easily spot forgeries. On coins, milled or
reeded (marked with parallel grooves) edges are used to show that none of the valuable metal has
been scraped off. This detects the shaving or clipping (paring off) of the rim of the coin.
However, it does not detect sweating, or shaking coins in a bag and collecting the resulting dust.
Since this technique removes a smaller amount, it is primarily used on the most valuable coins,
such as gold. In early paper money in Colonial North America, one creative means of deterring
counterfeiters was to print the impression of a leaf in the bill. Since the patterns found in a leaf
were unique and complex, they were nearly impossible to reproduce.[4]

In the late twentieth century advances in computer and photocopy technology made it possible
for people without sophisticated training to copy currency easily. In response, national engraving
bureaus began to include new more sophisticated anti-counterfeiting systems such as holograms,
multi-colored bills, embedded devices such as strips, microprinting and inks whose colors
changed depending on the angle of the light, and the use of design features such as the "EURion
constellation" which disables modern photocopiers. Software programs such as Adobe
Photoshop have been modified by their manufacturers to obstruct manipulation of scanned
images of banknotes.[9] There also exist patches to counteract these measures.