The Pixel Watermark not only produces different shades, it also makes the images - like this angel's wing on a commemorative Mexican 200-peso not - appear 3D

This article is part of a continuing series that looks at security features in development for the security paper industry.

One of the most familiar – and recognizable – banknote security features is the watermark. First introduced in the 13th century in Italy, a watermark is an image or pattern on the security paper that appears as various shades of lightness/darkness when held against the light.

A watermark can take many forms, but some of the more identifiable marks are usually found elsewhere on the bill. The Canadian $20 bill, for example, features a watermark which is a smaller version of the note’s portrait of Queen Elizabeth II, while the new American $100 bill’s watermark is a smaller portrait of Benjamin Franklin.

Despite the fact that watermarks are one of the most common security features for banknotes, and one of the most effective anti-counterfeit devices, some countries have taken watermark technology a step further to prevent currency forgery.

In 2009, the Bank of Mexico was the first to introduce the world to a new watermark called the Pixel Watermark. Consisting of patterns of dark dots of varying sizes on light backgrounds, the Pixel Watermark sets itself apart from regular watermarks in that the colouring of the pixels in the image creates an almost 3D effect.

Though the first bill to feature the Pixel Watermark was a commemorative 200-peso note, countries in Asia and Latin America have since adopted the security feature.

And the Pixel Watermark is picking up steam elsewhere. Recently, the security device won the award for the Best New Currency Feature at the 2010 Excellence in Currency Awards held in Buenos Aires. The watermark beat out other high-tech, new-to-the-industry security features like the Depth Image, a 3D hologram with strong colour switching and contrast.

SOURCES:
Currency News: “2010 Excellency in Currency Award Winners”
“Watermark”
Banknote News: “Pixel Watermark Debuts on Mexico 200-Peso Commemorative”
Bank of Canada: “Security Features”
Personal Money Store: “New 100 Dollar Bill Debuts To Help Fight Counterfeit Rings”
“Depth Image Hologram”

Analyst Brian Pow predicted continued growth in Fortress Paper

Last week, Patt Bolland – host of BNN’s Trading Day – talked to Brian Pow, vice president of research and equity analyst for Acumen Capital, about Fortress Paper’s new PM1 upgrade and discussed how this change will have a positive effect on the company’s future.

Watch the clip HERE (the Fortress Paper segment begins around 3:10).

SOURCE:
BNN: Trading Day

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”

Debit cards have placed banks, like this one in Tashkent, between the people and their money. Courtesy Radio Free Europe Radio Liberty.

A move to reduce the amount of banknotes used in everyday transactions in Uzbekistan has hit some rather large setbacks, at times leaving people with no cash in hand at all.

The central-Asian country recently launched a campaign to push the use of debit cards as a more convenient way of conducting transactions, with the government saying the move would help bring everyday transactions into the digital age.

Under the program – which is only a month old – citizens were to be paid via electronic deposits, and encouraged to use debit cards for transactions for any/all methods of payment. The program would also allow citizens to conduct traditional bank transactions like withdrawals should they need to.

But some citizens say getting their hands on cold hard cash isn’t easy at all and are feeling the pangs of the banknote experiment.

“When we go to banks, they won’t give us any money because they say they don’t have cash,” says Gulbahor, a teacher from the eastern town of Syrdarya “And many shops don’t accept cards and tell us, ‘We trade only with cash.’”

This Catch 22 – not having access to banknotes, but having to use only banknotes in some markets – is causing a major problem for Uzbek middle-class citizens.

Debit cards were introduced in Uzbekistan in the 1990s, and were mainly adopted by the wealthy classes. Recently, Uzbek authorities have promoted the cards by ordering supermarkets, restaurants, hotels and gas stations to install electronic terminals. The terminals, however, are absent from bazaars and markets where most citizens would conduct their daily business.

Gulbahor says that the only way she can get her hands on banknotes is through money-changers who have equipped themselves with debit-card terminals, but the cost of such a transaction is high.

The belief that banknotes are a thing of the past is a common misconception. Though consumers are moving forward into a more digital age, the demand for banknotes worldwide is actually increasing (read: Worldwide Banknote Demand Is Increasing)

Last year, for example, British business leaders, urged the Bank of England to producer more ten pound banknotes (read: British Business Leaders Demand More Ten Pound Banknotes).

A recent report by Research and Markets, the world’s largest market research resource, also highlighted the continual demand for paper banknotes around the globe.

SOURCES:
Radio Free Europe, Radio Liberty: “Debit Cards Costly, At Least For Some Uzbeks”
Research and Markets: “Worldwide Banknote Industry Research Report”

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”

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”

Experts believe 95 per cent of the security features were accurately reproduced in a recent seizure of counterfeit rupees.

India will put together a ‘financial terror dossier’ this week in an attempt to garner international support in pressuring Pakistan to immobilize a booming counterfeit currency ring that exports bogus Indian banknotes into the country.

Since the attacks in Mumbai last November, India has been aggressively building a number of cases against the neighboring Pakistan, including a case against counterfeiting.

“There is enough evidence with us of Pakistan’s incriminating role in printing fake Indian currency notes and pumping it into India,” a senior intelligence official told DNA, an Indian news outlet.

Indian intelligence agencies such as the Central Bureau of Investigation believe there are multiple fake printing units throughout Pakistan, and reports indicate that the country has been importing currency paper and ink in massive quantities from European countries for diversion into counterfeit notes.

Authorities, bank officials, and experts have been shocked by the amazing accuracy in the reproduced rupees. Recently seized notes could not be detected as counterfeit by the naked eye.

Currency specialists say the security features on these counterfeit notes have been copied with over 95 per cent accuracy, including – among others – the light and shade effect and multi-directional lines in the watermark of the Mahatma Gandhi series.

Earlier this month, the Reserve Bank of India announced it would begin a trial period of introducing low-denomination polymer banknotes in an attempt to combat counterfeiting (Read: India To Begin Trial Period for Polymer Banknotes).

SOURCES:
DNA: “India gears up to tackle ‘financial terror’”
Reserve Bank of India: Security Features

A watermark in a Durasafe bill helps prevent counterfeiting. (Courtesy FOXNews.com)

Counterfeiting has never been easier. All it takes these days is a fairly inexpensive color printer, some graphic design software and a willingness to spend a few decades in jail if you get caught.

But desperate times call for desperate measures, so criminals struggling in a tough economy and savvy with advanced printing equipment have figured out how to replicate bank notes. Some bleach $1 bills and print $100 bills; others use holographic wrapping paper available at any dollar store. And it’s not just the little guy. The big guys — the major crime syndicates — have set up complex printing operations to print illegal tender in large quantities.

Fake bills look remarkably similar to the real McCoy, with intaglio (textured printing) and holographic markings.

“Internationally, we have seen a marked increase in counterfeiting in the last five years,” says Bonnie Schwab, a consultant who worked for the Bank of Canada and has advised the Central Bank Counterfeit Deterrence Group. “Causes are improvement in technology available to the general public and to the traditional counterfeiters. More and more people with little skill in design and printing are able to download images and print to desktop printers.”

Because your basic inkjet printer is constantly improving in output quality, the best way to combat counterfeiting is not to create increasingly intricate designs, but rather to improve the paper it’s printed on.

Security fibers like these are embedded in bills from Fortress Paper.

One approach is to make the printing process and substrate — the layer beneath the surface of the paper — more complex and difficult to replicate, even for the pros.

Polymer-based currency, first developed in Australia, has become common and is harder to counterfeit. In 2008, Crane Currency started using a “nano thread” for $100 bills that allows the Bureau of Engraving and Priting to embed new security features, including a strip that becomes visible only when you hold the C-note up to the light.

The U.S. Treasury has taken other measures, including the new $5 bill with its color-shifting ink, an embedded watermark, and a different color that glows for each bill when you hold it up to an ultraviolet light source. Yet according to Schwab, because U.S. bills are so popular all over the world, they are a prime target for counterfeiters, and given enough time and the right technology, criminals tend to learn even the most advanced techniques.

A new option — announced at the Bank Note 2009 Conference in Washington last week — is a hybrid paper called Durasafe, which uses a three-layer substrate made with a polymer core and a 100-percent cotton outer layer.

Made by from Fortress Paper, Durasafe’s major advancement is a transparent window that can be any shape and size. Criminals have a hard time replicating these windows because of the complex printing process involved.

“Durasafe uses two substrates with a window in between, so that rules out printers and advanced color copier machines,” says Russell Stanley, a financial analyst with Jennings Capital.

Chad Wasilenkoff, the CEO of Fortress Paper, says Durasafe is also designed to last twice as long as traditional banknote paper, which is an attractive option for national banks — especially in the U.S. where, he says, there are as many as 1 million fake bills in circulation. Durasafe-based currency will stay in circulation longer and, Wasilenkoff says, the printing costs will be similar to traditional banknotes.

“Durasafe acts like a sponge for the polymer and improves the tactility of the bank note,” says Wasilenkoff, who explained why the touch and feel of a banknote are important for the “level one” security concern, meaning the first point of contact that criminals make. In most cases, counterfeiters pass fake bills off at nightclubs and McDonald’s or Starbucks in a chaotic or low-light environment. When a bill just doesn’t feel right, the cashier might take the time to inspect the currency.

Vancouver-based Fortress would not comment on which countries may end up using the bills, due to security concerns. But the company says the first mass-produced banknotes that use Durasafe will appear in late 2010.

–By John Brandon, FOXNews.com

SOURCE:
FOXNews.com: “The Dollar Bill Goes High-Tech”

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.