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”

Funny money: The wacky world of Asian currencies
by La Carmina @ CNNGo.com

#1- India: Thumbs-up and peace sign rupees

India’s one-rupee coin has an image of a hand giving the thumbs up. On the two rupee, the fingers form a peace sign. These coins were designed with the blind in mind, but they’re also useful for the numerically illiterate (just count the fingers.)

#2 – Hong Kong: Plastic dollars
Plastic money is no longer a nickname just for credit cards. In July 2008, Hong Kong issued bright, high-detail HK$10 bills made from polymer, potentially making dirty money a thing of the past: these notes can be washed with water and even soap.

#3 – China: Fake and real Chairman Mao yuan

In China, counterfeit bills sometimes slip into circulation, like the topmost 100-yuan bill. How to tell? Rub Mao Zedong’s jacket. The genuine note has ridges while the fake one is smooth. The black line is also more pronounced on the real deal.

#4 – Indonesia: Big money rupiahs

Quite a few visitors to Indonesia will have spread out their freshly-exchanged currency and rolled around in it, squealing “I’m rich!” It’s not unusual for locals to carry around millions of rupiah. Too bad a 50,000 bill is worth a paltry US$5.

#5 – North Korea: “The Eternal President” on three denominations

North Korean money lives up to the country’s topsy-turvy reputation. Visitors are issued a separate currency: Red banknotes for socialists and green ones for capitalists. The national system is just as confusing. The 100, 1,000 and 5,000 won bills have the exact same Kim Il-Sung design, only in different colors.

#6 – South Korea: Controversy over a historical armillary clock

In 2007, the Bank of Korea released 10,000 banknotes with a Joseon dynasty astronomical clock on the back. Historians went up in arms because the image depicted a similar invention, the Chinese honchonui, and not the 17th century Korean honchonsigye. The bank dismissed their demands for a re-design as nitpicking.

#7 – Macau: The Motherland stakes its claim

Macau was a Portuguese territory until it was handed back to China in 1999. Although Banco Nacional Ultramarino currency is still legal tender, China flexed its muscle by issuing four million 20-pataca banknotes that commemorate the 2008 Beijing Olympics. The press release explains: “In this way, citizens of the MSAR are able to share the joys of hosting such a magnificent international event by the Motherland.”

SOURCE:
CNNGo.com: “Funny money: The wacky world of Asian currencies”

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”

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”

Iran plans to remove zeros from the rial to make its value "real" and combat inflation.

A little over a month after the turmoil caused in North Korea by the redenomination of their currency (read: North Korea Changes Currency and Rates 100 to 1), Iran has also announced a similar plan.

Iranian president Mahmoud Ahmadinejad said the country would “remove zeros from its national currency, the rial, in order to make its value ‘real,’” Reuters reported Wednesday.

“We are supposed to remove zeros (from the rial) to make its value real,” Ahmadinejad said. “We have to return its value to the one existing in the law,” he said, without elaborating.

Ahmadinejad has been criticized during his presidential terms for being unable to control soaring inflation rates that have plagues the country for decades. Thirty years ago, one rial was worth about $1US while today, it takes 10 thousand rials to be worth $1US.

In December, North Korea redenominated its currency at a rate of 100:1 and limited the amount of banknotes its citizens could exchange in state banks. Markets were shut down for a week while the exchange took place, and several South Korean reports say that protest and violence were rampant.

Prior to this announcement, Iran has also been struggling with its attempts to remove anti-regime graffitied currency from circulation (read: Iran Deems “Green” Banknotes Invalid).

The redenomination of the Iranian currency is expected to begin in April.

SOURCES:
Reuters: “Iran plans to lop off zeros from currency: Ahmedinejad”
Trend Capital: “Iranian president hopes to denominate currency”
Islamic News: “Iran is going to denominate the national money”

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”

The world's first ATM was unveiled in London, England in 1967.

It’s been over 40 years since the world was first introduced to the convenience of an automatic teller machine (ATM).

Invented by inventor John Shepherd-Barron, the ATM first made its appearance in London in 1967. Though the machine used PIN (personal identification number) codes it was dependent on checks impregnated with the (slightly) radioactive isotope carbon 14 to initiate a withdrawal, as the magnetic coding for ATM cards had not yet been developed.

ATM technology certainly has come a long way in the past 40 years, but there are still some pitfalls to using automated tellers and machine over human tellers and banks – one of which is the fact that a majority of ATMs only accept and dish out one kind of currency.

Some companies are aiming to change that.

Last week OKI, a company based in Tokyo, Japan, announced it had developed ATM-Recycler G7, a cash recycling ATM for the worldwide market that enables banknotes from multiple currencies to be handled by a single ATM.

This isn’t the first machine OKI has developed to meet the challenge of multiple currency deposits/withdraws. In the past few years, the Japanese company has launched similar ATMs – ATM 215 and ATM21SX – for markets in Japan, China, Korea and other parts of Asia.

OKI says the new model will be targeting larger markets such as Europe and North America.

The company expects to roll out the ATM-Recycler G7 by March 2010.

SOURCES:
Time Magazine: The World’s First ATM
OKI Unveils ATM-Recycler G7, a Cash Recycling ATM for the Worldwide Market

The new North Korean won banknotes. The new bills are worth 1/100th of what the old bills were.

Though the currency will keep the same name (the won) one hundred old won is now only worth one won – 1/100th of their previous worth.

The government made the announcement on Monday, and has informed citizens and foreign embassies they have until this coming Sunday to exchange old bills for new ones:

“Bills that were not exchanged during the period and our currency that has been illegally taken outside the country will become entirely invalid,” said an official from the country’s Central Bank.

But there is a stringent limit on the amount of currency people can exchange – only 150,000 won to be precise. The rest must be deposited into government-run banks or else it will be rendered useless in the coming weeks, said South Korean media outlets.

Businesses throughout the country have been shut down for the week while the transition takes place and Pyongyang residents are rushing to the black market to convert their cash savings into foreign currencies.
Under current black market rates, 150,000 won is worth about $60 US.

The government said the reason for the change in currency and its rates is because of the countries decade-plus run of economic hardship and the increasing evidence of runaway inflation.

While critics agree that tough economic times have been no stranger to North Korea, some, as the American Press reports, believe this change is more complex:

“The government is retaking control of the economy from the hands of merchants, analysts said.
‘This is aimed at rooting out the budding private sector and strengthening the government’s control of the economy,’ said Jeong Kwang-min, a research fellow at the Institute for National Security Strategy in Seoul.

He said the move has a broader goal in mind: to pave the way for Kim Jong Il to turn over power to his youngest son, Kim Jong Un, and to ensure he inherits a stable economy.”

Good Friends, a Seoul-based civic group has said the main goals of the conversion are to target the struggling middle class and to crack down on private markets that have stoked capitalism.

The group also reported this week that authorities have threatened “merciless punishment” for anyone violating the rules of the currency exchange.

SOURCES:
Morrison World News: “North Korea switched currency, 100 to 1 rate”
Yonhap News Agency: “N. Korea confirms currency reform, vows to normalize economy”
Yonhap News Agency: “New N. Korean banknotes feature Kim Il-sung, his birth home”
Penny Stock and OTCBB News: “Activists: Despair in N. Korea over currency exchange (AP)”
The Morning Star: “DPRK devalues currency to ‘fight inequality’”