Fortress Paper President & CEO Chad Wasilenkoff appeared live on Bloomberg Television this week to talk about the future of money.

From the technological advances in security features, to the composition of a new banknote series, to the continual need for bills around the world, Wasilenkoff highlights the importance of turning paper into cash in this interview.

Watch the video:

North Korea's won has rapidly depreciated to Chinese traders

Nearly a month after North Korea redenominated its currency at a rate of 100 to 1 (read North Korea changes currency and rates 100 to 1), North Korea changes currency and rates 100 to 1), its international value has also begun to plunge.

Reports from South Korea’s Yonhap news agency this week stated the new North Korean currency was trading in neighboring China at a rate of 1,000 won for 1 yuan (the Chinese currency).

Shortly after the currency shift in early December, Chinese trade rates were steady around 50 to 1. Since then, the value of North Korean won has been rapidly depreciating.

The government of North Korea cited the country’s decade-plus run of economic hardship and increasing evidence of runaway inflation as their reason for redenomination, though many critics agree it was a direct attack on emerging private markets.

Citizens were only given one week to exchange their old currency for new currency in December, and were only permitted to exchange 150,000 won regardless of how much won they owned or had saved.

On New Year’s Day, North Korea banned the use of any international currency within its borders.

SOURCES:
AFP: “North Korea banknotes plunge in value: report”
Argentina Star: “North Korean banknotes find no favour with locals”

The zero banknote looks identical to Indian banknotes, though it has no worth.

Fifth Pillar, an Indian charity that confronts corrupt officials, has issued a zero banknote as a way to protest ongoing bribery and extortion in the country.

The notes have no value, but look identical to Indian banknotes and carry the slogans “Eliminate corruption at all levels” and the pledge “I promise to neither accept nor give bribe.”

“The note is a way for any human being to say no to corruption without the fear of facing an encounter with persons in authority,” the charity said in a statement.

Indian citizens are often faced with corruption when they are forced to pay cash bribes for everyday tasks like registering cars or homes, and getting Internet connections hooked up.

Fifth Pillar claims £3 billion is paid each year in bribes in India, but insiders believe the figure is considerably higher, and that several leading politicians have become billionaires through corruption.

The idea for the zero banknote came from an Indian physics professor at the University of Maryland in the US who says he “was sickened by the corruption he witnessed in India and wanted to give people the means to protest against the bribes they were expected to pay. “

Fifth Pillar’s president Vijay Anand took up the professor’s idea of a banknote which had no value, producing 25,000 notes initially, their popularity leading to the production of one million more notes. And the simple protest is catching on.

The World Bank blog tells the story of an elderly woman who was being bribed to obtain documentation of a land title and instead handed the Revenue Department official one of Fifth Pillar’s zero banknotes. “Remarkably, the official stood up from his seat, offered her a chair, offered her tea and gave her the title she had been seeking for the last year and a half to obtain without success,” the blog reports.

Though commonplace, bribery is a crime that is punishable with jail time in India. The World Bank says these zero banknotes are effectively making a strong statement condemning bribery. By providing the support of an organization, Fifth Pillar has given citizens the courage to stand up and no longer be afraid of the criminal practices.

“For people to speak up against corruption that has become institutionalized within society, they must know that there are others who are just as fed up and frustrated with the system,” says the World Bank on their blog. Once they realize that they are not alone, they also realize that this battle is not unbeatable. Then, a path opens up—a path that can pave the way for relatively simple ideas like the zero rupee notes to turn into a powerful social statement against petty corruption.”

SOURCES:
Digital Journal: “Indian charity issues worthless banknote to highlight corruption”
Telegraph: “India ‘issues’ zero rupee banknotes”
The World Bank: “Paying zero for public services”

Benjamin Franklin wasn't only a founding father of the United States, he was also a founding father of anti-counterfeiting devices on banknotes

*This article is the second in a three-part series on counterfeiting.

In the world of currency, developing anti-counterfeiting measures have always followed the emergence of counterfeit banknotes and coins, and they have taken on many different forms.

As seen in the previous article in this series, (read: Part 1: A History of Counterfeiting), one of the earliest attempts to deter counterfeiters was blatant threats. When paper money debuted in China during the 13th century, the notes were emblazoned with a slogan reassuring prospective criminals that counterfeiting carried with it the threat of death.

Other strategies to prevent counterfeiting often included creating currency in a very unique way, with very unique tools.

In ancient Rome, for example, craftsmen struck coins, and did not cast them in molds therefore detail to the coins could only be provided by the talented smiths.

In the age of paper money, printers developed special typefaces and type ornaments, sometimes cut by hand, in the hopes that counterfeiters would find it too expensive to reproduce the banknotes.

But soon, with more and more people worldwide having access to a printing press, counterfeiting became not only easier, but also more professional.

By the eighteenth century, particularly in America, anti-counterfeiting measures were on the rise. In 1739, Benjamin Franklin devised a series of banknotes that included realistic images of three blackberry leaves and a willow leaf. The leaves, as historian Eric P. Newman wrote, “not only had exceedingly complex detail but also internal lines that graduated in thickness.”

However, a larger problem permeated the American currency system in its first 100 years. In its infancy, America had about 1600 state banks that designed and printed their own bills. Each bill carried its own design, but the country saw nearly 7000 varieties of bills circulating. In 1862, a national currency was adopted as an attempt to prevent the counterfeiting of these bills that were sometimes unrecognizable even between states.

Some three years later, the United States Secret Service was established with a primary purpose of suppressing wide-spread counterfeiting. Throughout the early 20th century, some security features were added to banknotes, including watermarks, seals, serial numbers, and colored inks.

Anti-counterfeiting technology has been developed more over the past 30 years than in the history of money.

From polymer, security threads, iridescent strips and see-through windows, today’s banknotes are not just used as currency; they are also becoming high-tech anti-counterfeiting devices.

In the final installment of this series, we will look at some of the latest developments in banknote security measures.

SOURCES:
“History of Counterfeit Money”
“A Short History of Money”
“History of Counterfeiting”
“History of Counterfeiting”
“The Golden Age of Counterfeiting”

New Jersey issued this six-pound note in 1761, during the French and Indian War. It warned "To counterfeit is Death," because counterfeiting was deemed a capital offense. Courtesy History.org

*This article is the first in a three-part series on counterfeiting.

The act of counterfeiting is as old as money itself. Plaguing ancient Rome, empirical China, newborn America, and many other nations over the past 2500 years, the illegal activity came hand in hand with the creation of money.

Even prior to the invention of coin and paper currency, counterfeiting was a popular form of trickery. In Prehispanic Mexico, for example, Cacao traders would extract the contents of the bean and substitute the valuable innards of the plant with soil.

In the ancient world, of course, currency was invented hundreds of years before these Mexican ruses. Real currency made its debut in the form of coins around 700 B.C. and counterfeiting soon followed. Coins had not yet been marked or etched with images or slogans, so reproducing coins out of less valuable metal was easy.

The problem became so severe in places like ancient Rome, that “it was considered treasonous and punishable by death if the perpetrator was caught. This was because many believed that anyone who disturbed the market with fake money was putting the nation’s economy and its general stability and strength in serious jeopardy.”

Those sentiments were echoed by the Chinese upon the invention of paper money, which appeared on the global currency scene during the Yuan Dynasty in the 13th Century. In order to prevent counterfeiting, “the Emperor ordered that the following be printed on all banknotes: ‘Counterfeiting shall be punished by death. Informers shall receive 250 taels of silver and the criminal’s property.’”

Throughout history, however, counterfeiting has not only come at the hands of criminals. The British government “produced large quantities of bogus assignats to undermine revolutionary France,” and helped the process of devaluating “Confederate paper money by printing it themselves and sending it to the South” in pre-revolution America to the point where Confederate banknotes were almost worthless.

By the end of the eighteenth century, counterfeiting was flourishing. During the Civil War, “one-third to one-half of the currency in circulation was counterfeit.”

Coin counterfeiting had become so advanced in the United States that “when the first federal coins were issued by the US government in the 1780s, they had the dies cut by an ex-counterfeiter in order to deter the practice.”

Paper money in the US was also being easily counterfeited because of merchants’ inexperience with the currency. One historian explains: “Rural colonists were not very familiar with paper money because their daily lives did not revolve around commercial transactions; furthermore, they had a deep prejudice against it because they did not regard it as ‘real’ money. Because merchants lacked familiarity with authentic paper money, they could be fooled by some surprisingly amateurish counterfeits.”

Though anti-counterfeiting measures were being developed throughout the world by the nineteenth century – particularly in America – counterfeiting continued.

One of the most professional cases of counterfeiting was carried out by the Germans in World War II who “had control of expert counterfeiters imprisoned in the Sachsenhausen concentration camp, and even manufactured very convincing paper, which can be more difficult to forge than a banknote’s appearance.”

The counterfeits produced by the Germans in the first half of the twentieth century were so good in fact that when The Bank of England managed to obtain some falsified British pounds, they said “the only way in which [the fake banknotes] differed from the real thing was that the real thing wasn’t as good.”

Today, thanks to modern advances in scanning and printing technology, counterfeiting paper banknotes is perhaps easier than ever. Because of this, security features are becoming an – if not the most – important part of banknote design.

In Part 2 of Counterfeiting: A Three-Part Series, we will take a look at the history of security features and identify how different security features have evolved over time to prevent counterfeiting.

SOURCES:
“History of Counterfeit Money”
“A Short History of Money”
“History of Counterfeiting”
“History of Counterfeiting”
“The History of Counterfeit in Russia”
“The Golden Age of Counterfeiting”
“History of Counterfeiting in Mexico”

Nearly 200,000 counterfeit euro20 banknotes were seized in the last six months says the European Central Bank

The European Central Bank (ECB) announced today that the number of fake euro banknotes seized in the last six months rose by eight per cent from the first half of the year.

“In the second half of 2009 a total of 447,000 counterfeit euro banknotes were withdrawn from circulation,” an ECB statement said.

Though the increase is significant, ECB officials say it is a step up from the first half of 2009, which saw a 17 per cent increase in seized counterfeit notes.

The most frequently forged bills were the euro20, which accounted for 47 per cent of the fakes, and the euro50, which accounted for 39 per cent.

The euro contains many security features that attempt to foil counterfeiters. Specific watermarks, security threads, hologram foil stripes & patches, iridescent stripes, and colour-shifting inks all play their part in deterring the reproduction of fake notes.

Though the ECB’s statement demonstrated concern at the growing ability to produce successful counterfeit euros, the Central Bank also remained steadfast in believing it was a manageable problem.

“When compared to the 12.8 billion genuine banknotes in circulation,” the ECB statement said, “the proportion of counterfeits is still very low.”

Nearly one million counterfeit euros were seized and withdrawn from circulation in 2009.

SOURCES:
Chicago Sun Times: “Amount of counterfeit euros up.”
“Fake euro seizures rise by 8%: ECB”

Four Arab states of the Persian Gulf have agreed to launch a new, singular currency in an effort to create an Arab monetary union.

Saudi Arabia, Kuwait, Bahrain and Qatar will begin the first phase of the new currency next year, creating a Gulf Monetary Council that will become a full-fledged central bank.

The United Arab Emirates and Oman were not included in the initial pact, but are expected to eventually join the union that is being modeled after the European monetary union in more ways than one; the tentative name for the new currency is the ‘Gulfo.’

The decision to launch a pan-Arab union comes from the both an admiration for the European model, and from a desire to break from a system dependent on the US dollar.

“The US dollar has failed,” said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank. “We need to delink.”

The anticipated union does not come without barriers, however. Unlike the European Union, freedom of trade and movement between the Arab countries is not as easy. Bahrain’s Foreign Minister, Sheikh Khalid Bin Ahmad Al Kalifa, singles out these problems as a major stumbling block.

“We need to co-ordinate our economic policies and build up common infrastructure as a first step,” Sheikh Khalid said. “The single currency should come last.”

ManagementToday.com reports that a unifying petro-currency could be a key factor in destabilizing the currency markets around the world:

“The rise of a strong petro-currency could severely reduce demand for dollars and other reserve currencies (including the pound) – which could accelerate the eastern-wards shift in the balance of economic power.”

It is believed that once in effect, the ‘Gulfo’ would become the base currency for all oil contracts stemming from the pan-Arab region.

SOURCES
The Sydney Morning Herald: “Gulf states to launch their own petrodollar, the ‘gulfo’”
Management Today: “Could the ‘Gulfo’ supplant the dollar?”

The new Bahamian $100 banknote is the final denomination in the Central Bank of the Bahama's CRISP series.

This week the Central Bank of the Bahamas (CBB) introduced a new purple, blue, green & mauve $100 banknote into circulation bearing a picture of Queen Elizabeth II on the front and a blue marlin on the back. But colour and images aren’t the only changes that have been made.

The new $100 banknote is the sixth and final denomination in the new CRISP (Counterfeit Resistance Integrated Security Product) family – a series of banknotes that have been created with elevated security features to deter counterfeiting.

All six denominations in the CRISP series – $1, $5, $10, $20, $50, $100 – feature new watermarks, highlighted electrotype images (images that can only been seen in specific light sources), latent images (images that are difficult to see with the naked eye), and phosphorous features (imprints that can only be seen beneath black fluorescent lamps).

The new banknotes are also coated with a new sizing agent to help prevent the chemical removal of inks from the paper and have been deemed more durable.

Replacing old Bahamian banknotes with the CRISP banknotes has been a four-year process for the CBB, beginning in 2005 with the $10 note.

Now that all denominations with the new anti-counterfeit are being circulated, the CBB is asking the public to pay closer attention to the new differences in order to further reduce active cases of bogus bills.

The new $100 notes will be in circulation with the $100 old notes, which will eventually be phased out of circulation.

SOURCES
The Nassau Guardian: “Printing Money”
Banknote News: “Bahamas new CRISP 100-dollar note reported”
The Central Bank of the Bahamas: “Look, Feel, Tell the Difference”
Wikipedia: “Bahamian Dollar”

Fortress Paper President & CEO, Chad Wasilenkoff, on BNN. Click to watch.

Fortress Paper’s President & CEO, Chad Wasilenkoff, talks to the Business News Network (BNN) about his company’s focus on non-woven wallpaper & security paper, and speaks about upcoming innovations at their Landqart Mill in Switzerland.

Watch the BNN clip HERE, or by clicking on the image to the right.

Banknote 2009: a four-day conference focusing on emerging trends in the banknote industry.

On December 6, global banknote industry leaders will head to Washington, DC for Banknote 2009 – a four-day conference that brings together the public and private sectors to focus on emerging trends in the banknote industry.

Though the Banknote conference began in 1998 as a specialty event focusing primarily on banknote substrates, it has become more focused in recent years on changing technologies and issues specific to the production, distribution, and security of banknotes.

Presentations at this year’s conference include a large number of security-related topics including presentations on Canadian and US counterfeiting situations and trends, a discussion of safety elements on the new Danish banknote series, and a lecture on improved overt and covert security features for banknotes, among many others.

The Banknote conferences are also a chance for banknote manufacturers, producers, suppliers, etc to discuss and introduce new products to the marketplace. One such company is Fortress Paper.

The international supplier of security and specialty papers is expected to introduce their new polymer banknote paper called Durasafe – a hybrid banknote that is not only highly durable, but also includes a transparent window as a security feature – in DC during the conference.

Banknote 2009 takes place in Washington, DC from Sunday, December 6 to Wednesday, December 9.
For more information visit their website.

SOURCES:
Banknote 2009