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”

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”

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

The Turkish Lira will replace the New Turkish Lira on January 1, 2010.

On January 1, 2010, Turkey will begin the second phase of its planned currency reform that will see the country stop production of their current banknotes (the New Turkish Lira) and replace them with a new currency series, simply called the Turkish Lira.

This second phase comes five years after the country first redenominated its currency at a rate of 1,000,000 to 1; meaning 1,000,000 old Turkish Lira were equal to 1 New Turkish Lira.

This time around, however, there is no change to the denominations – only to the name (which is actually reverting to its original name) and to the banknotes and coins themselves. The Turkish Lira will feature different sizes, designs, colours and security properities that the New Turkish Lira.

Though old coins can only be exchanged until the end of 2010, banks in Turkey will exchange old banknotes for the next ten years concluding the country’s currency reform in the year 2020.

SOURCES
News.Az: “Turkey transfers to new currency”
PanArmenian.net: “Turkey to put new currency into circulation”
New Turkish Lira

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’”