Central banks want to maintain a currency digital divide

Central banks want to maintain a currency digital divide

The Federal Reserve estimates that only about one out of 25,000 $50 notes is counterfeit, but the percentage of phony notes being produced digitally has grown from about 1 percent in 1995 to about 40 percent today.

The world's major banks are developing standards for currency design so that IT manufacturers can ensure their products are not used for counterfeiting.

'We have had very good cooperation from the industry,' said Thomas A. Ferguson, director of the Bureau of Printing and Engraving, which produces U.S. currency.

There are no laws requiring manufacturers to incorporate safeguards into their products, Ferguson said, and the technology is not trivial. 'You have to have technology that will make it more difficult to counterfeit and not interfere with the performance of the equipment,' he said. It also has to be cost effective.

But today, most off-the-shelf copiers, scanners and printers will not reproduce U.S. currency, and applications such as Photoshop will not open such images. The newly redesigned $50 bill, introduced last month, uses new layers of features that help defeat new digital technology, Ferguson said.

With the growth of electronic transfers, currency is playing a smaller role in financial transactions. "But as the number of transactions goes up, the number of currency notes in use continues to go up,' Ferguson said.

The face value of currency in circulation grows about 6 percent a year. Today there is about $700 billion in circulation, about $2,800 for every man, woman and child in the country.

'It still is used by most of us one way or another each day,' he said.

Concerns about electronic technology in counterfeiting date back to the late 1980s, when color copiers became sophisticated enough to pose a threat to treasuries. The bureau responded with features that could be recognized by copy machines so reproduction could be blocked.

'That feature has been in place for about 15 years,' Ferguson said. But by the mid-1990s the explosion in digital graphical equipment, driven largely by advances in digital photography and printing, began posing new threats. 'You can buy systems today for your home that are extremely good at reproducing these images.'

The Central Banks Counterfeit Deterrence Group, with representatives from 27 countries, has worked with IT manufacturers to develop currency designs that can foil reproduction. Subtle color variations and complex patterns that confuse digital equipment are well-publicized features. But there are other, less well known features such as digitally recognizable watermarks that tip off compliant equipment and prevent reproduction.

Since it has done all it can to prevent unauthorized copying of currency, the Bureau of Printing and Engraving also makes low-resolution digital images of its currency available for legitimate uses, Ferguson said.

'We have the systems that create the technology, so we have ways of turning it off, too,' he said. 'You can use the images in just about any venue as long as it meets the criteria.'

To meet the criteria, images must be reproduced at least 50 percent larger or 25 percent smaller than the actual note and can only show one side.

About the Author

William Jackson is a Maryland-based freelance writer.

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