Counterfeiting of modern banknotes in the world. The scale, determinants and prevention methods

• In Event: Policy Panel: International Justice Issues

Abstract

Counterfeiting of banknotes violates the certainty of financial turnover and may affect the economic security of the country. It may be limited by issuer of banknotes, law enforcement and end-users. Within the study PPM index and the security level of banknotes were analyzed for 28 countries and Euro zone, taking into account the structure of counterfeit banknotes. Research shows that the counterfeiting of notes is a dynamic process and introduction of new versions of banknotes correlates with a reduction in the number of their counterfeits. The level of security features and the method of eliminating earlier versions of banknotes from circulation were revealed as main drivers for prevention of counterfeiting. Socio-economic issues and the activities of law enforcement agencies in revealing forgery centers were also recognized as crucial for limiting notes counterfeiting. Results indicate that counterfeiters adopt various strategies with taking into consideration the costs of counterfeiting, the planned profits and the risk of detecting a faked notes. High-denomination notes are usually counterfeited when the issuer applied similar level of security features in series of note. However, banknotes with an average face value are the most frequently counterfeited, when different level of security were applied within series of banknotes.

Author

• Dariusz Wilk, Jagiellonian University in Kraków, Poland