Should the $500 banknote be revived
Poll
 | 81 votes (77.88%) | ||
| | 7 votes (6.73%) | ||
| | 12 votes (11.53%) | ||
| | 4 votes (3.84%) |
104 members have voted
Over the four decades from 1928 to 1969 a total of 231.7 million $100 banknotes were printed. Some of them went to replace old banknotes although most notes were held close and not circulated routinely. In 1969, the government decided to destroy any banknote higher than $100 that was returned to the federal reserve. Only collectors items remain in circulation.
Since the big headed notes were introduced in 1996, more than 13 billion banknotes have been printed, of which 7.8 billion are still in circulation at the end of 2011 (most of them overseas). The European Central Bank and Swiss National Bank both print much larger banknotes, with the 1000 Swiss Franc not being worth over $1000 and the 500 Euro note worth about $660.
One argument is that large banknotes lubricate criminal activity and allow too much personal freedom for anonymous transactions. They also aid in moving large amounts of money. Counterfeiting has less impact on individuals.
The counter-argument is that $100 in 1969 may be worth nearly $1000 today. Criminal activity occurs regardless of the size of banknotes. The expense of replacing billions of $100 notes is astronomical. People should be given the freedom to do what they want. The IRS requirements about travelling with $10K or more will still remain in effect. Gamblers will enjoy the big notes, just as their is some fascination with high value chips or plaques today. Because the notes are so valuable, the BEP can afford to put in elaborate anti-counterfeiting methods, so that accepting cash will be even safer.
The most extreme counter-argument is that all large notes should be phased out altogether in favor of electronic exchanges of money. The United Kingdom and New Zealand function just fine with limited numbers of high value notes. Many people never deal in large value notes as they consider them inconvenient or they are afraid of losing significant money in a mugging. Some people believe that banknotes invite fiscal irresponsibility on a national level, as goods and services are paid for in paper.
I am interested in the results of this poll.
| 2011 | Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Denomination | $1 | $2 | $5 | $10 | $20 | $50 | $100 | |||
| Value (millions) | $10,000 | $1,800 | $12,000 | $17,000 | $142,000 | $70,000 | $780,000 | $1,032,800 | ||
| Number (millions) | 10,000 | 900 | 2,400 | 1,700 | 7,100 | 1,400 | 7,800 | 31,300 | ||
| Denomination | 1 coin | 2 coin | 5 | 10 | 20 | 50 | 100 | 200 | 500 | |
| Value (millions) | 6,458 | 9,484 | 7,730 | 20,730 | 57,060 | 302,250 | 165,000 | 36,200 | 299,500 | 904,412 |
| Number (millions) | 6,458 | 4,742 | 1,546 | 2,073 | 2,853 | 6,045 | 1,650 | 181 | 599 | 26,147 |
Should a $500 note be introduced, does the tradition dictate you still blow candy through $100 notes, or does it call for using the $500 note as the new top denomination?
A $500 banknote is very profitable.
Quote: Bank of CanadaSeigniorage
Seigniorage is the difference between the interest the Bank of Canada earns on a portfolio of Government of Canada securities which is roughly equal in value to the total value of all bank notes in circulation and the cost of issuing, distributing, and replacing those notes.
Example
Here is a simplified example of how this works, using a $20 note, which is the most commonly used denomination. If the Bank of Canada invests the proceeds from issuing the $20 note in a government security generating 5 per cent interest, this note will indirectly yield $1 per year of interest revenue. The overall production cost for the note is 9 cents. Given an average life of three years for a $20 note, the annual production cost of the note averages out to 3 cents.
If average distribution expenses of about 2 cents per year are added to this, the total average annual cost of putting this note into circulation and replacing it when it is worn is approximately 5 cents. Thus, the Bank of Canada clears an annual net revenue of about 95 cents for each $20 note in circulation.
Collection of seigniorage
Unlike the seigniorage for coins, which is generated at the time of their sale by the Royal Canadian Mint, seigniorage on bank notes is collected over a period of years, as the Bank's portfolio of government securities matures.
Use
In recent years, just over $50 billion in notes has been in circulation at any given time, although the amount can fluctuate, depending on demand. The Bank's net interest revenue has varied around $2.0 billion ($1.7 billion in 2009) per year. A portion of this revenue $366 million in 2009 is used to finance the Bank's general operating expenses (of which spending for the currency function represented 37 per cent, or $137 million, in 2009). The remainder is paid to the Receiver General for Canada.
Guesss I don't understand what is going on.
Quote: odiousgambitThe whole business symbolizes the incompetence of Congress. One reason we can't take this step, but especially the step of eliminating the $1 bill, is due to lobbying by the Massachusetts company that provides the paper!
The Bank of England did not issue the £50 note (worth about $100 at the time) until 20 March 1981. Before that the highest denomination was £20. Only two years later in April 1983 they issued the £1 coin. But they immediately stopped printing the £1 banknote. After five years the £1 note was demonetized.
USA minted the Susan B Anthony dollar from 1979 to 1981 and we all know where that went.
Counterfeiting is a bigger concern in the UK than in the USA. Many shops outside of London will not accept the £50 banknote. Almost 3% of the 1.5 billion coins are counterfeit. There is also a violent distrust of large banknotes. It is illegal to buy and sell the 500 Euro note in the UK.
Quote: pacomartinThe Bank of England did not issue the £50 note (worth about $100 at the time) until 20 March 1981. Before that the highest denomination was £20. Only two years later in April 1983 they issued the £1 coin. But they immediately stopped printing the £1 banknote. After five years the £1 note was demonetized.
USA minted the Susan B Anthony dollar from 1979 to 1981 and we all know where that went.
Counterfeiting is a bigger concern in the UK than in the USA. Many shops outside of London will not accept the £50 banknote. Almost 3% of the 1.5 billion coins are counterfeit. There is also a violent distrust of large banknotes. It is illegal to buy and sell the 500 Euro note in the UK.
Other than for collecting purposes, did the presidential series of $1 coins fare any better?
I've developed a habit of using the vending machine at the airport at the start of a gambling trip. It pays change in $1 coins, which I then use as tips for cocktail staff when I play.
What am I missing on the one pound coin? Is counterfeiting something with a stated value that low really a winning proposition?
Quote: rdw4potusWhat am I missing on the one pound coin? Is counterfeiting something with a stated value that low really a winning proposition?
It's easiest to pass.
Until they switched to a polymer note, the most counterfeited bill in Mexico was the 50 peso one. Not it's the 100 peso.
Wait a sec....Quote: pacomartinUSA minted the Susan B Anthony dollar from 1979 to 1981 and we all know where that went.
The SBA dollar failed because they were too easily confused with quarters.
They also fail for the same reason the current $1 coin is failing: The $1 bill is still being produced.
Quote: pacomartin
Oh god, the SBA dollar. It makes me shudder to remember
it. I had the bar in the early 80's and I had to accept the
damn things but I couldn't give them as change because
nobody wanted them. So I had to wait till I had enough
to roll up and take to the bank. What a pain.
Quote: thecesspitThey feel "funny", which is odd as they aren't a huge step different from the Canadian $1 looney. I much prefer the British Pound coin.
The "loonie" was actually designed to be a very close match to the "Susan B. Anthony dollar" (SBA) possibly anticipating a day when vending machines would accept either coin. They both had an 11 sided polygon, and they are both exactly 26.5 mm . Only the "loonie" thickness of 1.95 mm differs from the SBA 2.00 mm.
The "loonie" was only 7.00 grams (changing to 6.27 in 2012) while the SBA dollar was 8.10 grams (the coin is 2.5% thicker, and Copper being slightly denser than Nickel). A loonie is 91.5% Ni, 8.5% bronze plating (88% Cu, 12% Sn) while a SBA is Cupronickel (91.66% Cu, 8.33% Ni).
I think the British pound feels good as well, the thickness seems more commensurate with it's value. The two pound coin is similar in size to the American half-dollar.
If there is £45,000,000 of fake coins circulating, today, who is to say how many are removed every year from the system. While it does seem like a small value to counterfeit, it is probably much easier than counterfeiting a banknote. As you could sell bags of fake coins to people at a discount via some system that preserved your identity, you don't have to be involved in the actual transactions. I can imagine that there are some £ millionaires who are counterfeiters.
There are actually as many US dollar coins produced as British pound coins. Of course a lot more would eventually be needed given the difference in population size. But the majority of US dollar coins are sitting in vaults controlled by the Mint.
In America if you went to your bank and asked for fifty $100 banknotes, the teller wouldn't even blink. What is the reaction in the UK if you ask for fifty £50 banknotes?
Everytime I had a Susan B anthony, I promised myself to be careful. and everytime it went who knows where ?
" In 1969, the government decided to destroy any banknote higher than $100 that was returned to the federal reserve. "
And in 1969 you could hardly get change for a $100 bill. Last place of all was a gas station as gasoline was 35 cents a gallon. Looks like I will need a $100 to fill up my gas tank this summer.
I currently have a couple of the Canadian $100 polymer notes, and they are awesome. I hope the US switches soon, but who knows...
I fear the same thing will happen if we go to some new denomination bill.
Quote: AcesAndEightsI currently have a couple of the Canadian $100 polymer notes, and they are awesome. I hope the US switches soon, but who knows...
This massive debacle with new $100 note may mean that the Treasury does something radical. With Canada having a successful roll out of the polymer note, and their use in many countries (notably Mexico and Australia) polymer may be considered a solution to the US problem.
The $500 note is another solution, because it will dramatically reduce the requirements. Although this poll is heavily in favor of the $500 banknote, there is widespread distrust of the idea. In addition to the criminal activity, there is also the fear of counterfeiting. One problem with a $500 banknote is that it makes distributing counterfeit $100 banknotes easier (since they can now be given in change).
Of course, these problems pale in comparison to China trying to circulate half a trillion dollars in Yuan where there largest banknote is 100 Yuan = $15.80 (and many banknotes are worth far less).
The author makes some very striking claims. He not only flatly argues that North Korea is completely capable of producing near perfect counterfeit notes:
As an anti-counterfeiting investigator with Europol once put it: Superdollars are just U.S. dollars not made by the U.S. government. With few exceptions, only Federal Reserve banks equipped with the fanciest detection gear can identify these fakes.
But the author then goes on to argue that America should do away with hundred dollar bills entirely and move rapidly to a post cash society. The familiar argument is that it will hurt drug lords.
--------------------
Repeating myself again, the USA is at massive risk because of their complete inability to come out with a next generation $100 banknote. With 8 billion $100 notes circulating, and no replacement in the near horizon, if the world loses faith in the validity of the banknote, we have nothing to replace them. A high profile article in a major new magazine like Time could start the panic. As always, the 25% of the $100 banknotes circulating in the USA are not at high risk. It's the 75% of them that are circulating overseas.
The Euro or the Swiss 1000 Franc note (worth over $1100) could become the bill of choice. Even the Japanese 10,000 Yen note (worth $125) could start circulating outside of Japan.
Yes it's time or
No it helps criminals?
WTF?
Can't I just vote no?
Quote: WongBoI love this poll...
Yes it's time or
No it helps criminals?
WTF?
Can't I just vote no?
Well the $500 banknote circulated for 41 years, and has been out of circulation for 43 years. At the time it was taken out of circulation there was fewer than one $100 banknote per person in this country, and nearly all $100 banknotes circulated domestically.
The only reason it was discontinued is that it was perceived to help criminals (including counterfeiters). Today a $100 is worth less than $20 43 years ago. The only valid reason not to restore the $500 banknote is that it helps criminals.
There is no other valid reason. It would help the Treasury logistically if they could go back to the larger notes. They could afford more security features. It would be much easier to replace the current supply of 8 billion Benjamins with 3 billion new $100 Benjamins, and 1 billion new $500 notes (Reagans?).
Quote: EvenBobThis is the more interesting 1918 version.
The 1914 and 1918 issue were physically larger. Starting with 1928, they assumed their current physical size.
Right now Uncle Sam's BEP has a boondoggle over the new $100 bills that can't be released because of a wide scale printing error. I've been following the case, and the new bills are at least 6 months away and every day without an announcement means an additional six months as they are supposed to give 6 months notice of the release.
In the meantime, Ive checked with some casino companies and the machines have already been adjusted for the new bills. But few casino personnel have actually seen one.
My article: http://alanbestbuys.com/id239.html
Quote: AlanMendelsonRight now Uncle Sam's BEP has a boondoggle over the new $100 bills that can't be released because of a wide scale printing error. I've been following the case, and the new bills are at least 6 months away and every day without an announcement means an additional six months as they are supposed to give 6 months notice of the release.
Interesting article. The appropriate word is "debacle", not "boondoggle". Many vending machine and ATM machines were equipped for the new $100 banknote.
While the BEP has promised a minimum of 6 months, the actual time must be much longer. They simply can't convert both printing presses full time to producing the $100 banknote. They began printing the color $100 note in February 2010 and shut down the presses (except for limited test runs) in September 2010. In February 2011, they began printing the old 2006 series again (actually called 2006A) with the signatures of Bush's Treasurer and Secretary of the Treasurer. All production notices ceased in July 2011 with the cryptic note: please pardon our delay in posting monthly production reports while we transition to a new data management system.
Personally, I believe that the 1.4 billion new color $100 notes printed so far are worthless. The BEP has stated that they are looking to build a machine to sort through the notes and separate out the good from the bad. But it sounds either impossible or so expensive that it isn't worth the trouble. If Secretary Geithner resigns this year, then they will use his resignation as an excuse to destroy the current supply of notes and start over with a new signature.
There are 8 billion $100 notes out there. At most the BEP have printed 1/4 billion of the new notes in one month. While they don't need the full 8 billion new notes to begin circulation, they would be crazy to start without at least 3 billion notes. If there is a mass counterfeiting scare, then people will be eager to trade in the old notes, since they won't be widely accepted.
The US government has never demonetized anything. Most of the old stuff is worth more to collectors. They prefer to require banks to turn them banknotes in and destroy them. As far as I know, we are the only government in the world that does not demonetize currency. Most governments believe that old currency provides con artists with a way to cheat people. After a given amount of time, old money is demonetized. As always you are free to keep banknotes as collectors items.
Quote: David Wolman in Time MagazineDavid Wolman is a contributing editor at Wired and the author of The End of Money: Counterfeiters, Preachers, Techies, Dreamersand the Coming Cashless Society, out this month from Da Capo Press. Follow him on Twitter: @davidwolman
If killing all cash strikes you as a little too radical, consider for a moment what it would mean to get rid of high-denomination banknotes. Who would be most inconvenienced if Washington were to outlaw $100 and $50 bills tomorrow? Cartel bosses in Juarez, Mexico jump to mind. So do human traffickers in China and Africa, aspiring terrorists in Afghanistan, wildlife poachers, arms dealers, tax evaders, and everyday crooks who hold up mom and pop groceries. And, or course, North Korean government officials.
So then. At the risk of infuriating cash-hoarding militia members, anonymity-obsessed ACLUers, the U.S. Treasury, Russian mob, Laundromat owners, and just about every person who has ever hid a purchase from a spouse or income from the government, I would say this to Kim Jong Un and his posse of counterfeiters: Bring it.
Interestingly it's the £20 that is usually forged the most as the £50 ones aren't really used in normal circulation so any are more closely inspected. Obviously you see them, and receive them, in casinos. Also recently some game shows on TV (Bank Job, Million Pound Drop) use actual wads of notes, rather like game pieces, to show the value of potential prizes on offer or being won.
We now have £1 and £2 coins, the latter being bi-metal similar to Eur1 and Eur2. As has been stated there are lots of fake £1 coins, but as any vending machine takes them, they're easy to get rid of.
It doesn't happen often but whenever I've taken large amounts out, the bank usually doesn't have any £50s, so you get £20s instead. Some London casinos use date stamped plastic bags of full of £50s with "£1000".
Scotland
There are three banks that issue notes. One bank still issues £1 and all three issue £100 notes; they have had them for quite a while. I have seen them used in casinos, but not very often. Also, in case you go there, Scottish notes aren't technically legal tender in England - indeed in Prague once I saw different rates for Scottish and English pounds - so sometimes ask for English notes if heading home.
Isle of Man
I haven't been there for a while but they do have a £50 and £1, however when I brought £50 back my local bank didn't know what they looked like, so treated it as an uncleared cheque!
Europe
I have only really seen the Eur100 and Eur200 notes in casinos and that's probably why the Eur500 cannot be used in Britain. It's, I'm told, much easier to fill a briefcase with 500s.
US
I still had a couple of the old $100 bills the last time I went to Vegas a few years back, and casinos seemed quite happy. Also I have had a few $2 - I think the racetrack liked them as that was once their nominal tote bet - but no-one else did.
Personally I think a US500 is unnecessary in the same way as the Eur500 shouldn't have been made.
and 90's, you'll see a suitcase filled with
$1000 bills. They don't seem to know they
aren't in circulation anymore.
Quote: charliepatrickEngland Interestingly it's the £20 that is usually forged the most as the £50 ones aren't really used in normal circulation so any are more closely inspected. It doesn't happen often but whenever I've taken large amounts out, the bank usually doesn't have any £50s, so you get £20s instead. Some London casinos use date stamped plastic bags of full of £50s with "£1000".
Europe I have only really seen the Eur100 and Eur200 notes in casinos and that's probably why the Eur500 cannot be used in Britain. It's, I'm told, much easier to fill a briefcase with 500s.
US Personally I think a US500 is unnecessary in the same way as the Eur500 shouldn't have been made.
The Bank of England reports some 185 million £50 banknotes in circulation at the end of 2010, up for 122 million in 2005. That's a very small amount for a nation of 62 million people. I should think passing on forgeries would be nearly impossible. Of course UK has always been leery of counterfeiters since Operation Bernhard in WWII.
In contrast Canada circulated 289.6 million $100 notes for a nation of 34 million people. Both nations have released new versions of those banknotes in November 2011. Canada had a severe counterfeiting problem a few years ago. Australia was circulating 207 million $100 notes for a nation of 22 million (more than the UK with about 1/3 population). Australia is unique among Canada, US, NZ, and Aus in that the bill of choice is the $50 instead of the $20.
Most of Europe always had large banknotes. Pre-conversion the largest banknote in each country was worth:
Germany 511
Netherlands 454
Austria 363
Italy 258
Belgium 248
Finland 168
Ireland 127
Luxembourg 124
France 76
Spain 60
Portugal 50
Greece 29
The decision to print large numbers of 500 banknotes was a way for the bank to move into a very profitable market in underground currency that was previously only dominated by the USA. The US government briefly considered printing the $500 banknote when the Euro was introduced, they decided against it at the time. US is circulating over 75% of the 8 billion Benjamins overseas.
Repeating the table at the beginning of the thread.
| 2011 | Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Denomination | $1 | $2 | $5 | $10 | $20 | $50 | $100 | |||
| Value (millions) | $10,000 | $1,800 | $12,000 | $17,000 | $142,000 | $70,000 | $780,000 | $1,032,800 | ||
| Number (millions) | 10,000 | 900 | 2,400 | 1,700 | 7,100 | 1,400 | 7,800 | 31,300 | ||
| Denomination | 1 coin | 2 coin | 5 | 10 | 20 | 50 | 100 | 200 | 500 | |
| Value (millions) | 6,458 | 9,484 | 7,730 | 20,730 | 57,060 | 302,250 | 165,000 | 36,200 | 299,500 | 904,412 |
| Number (millions) | 6,458 | 4,742 | 1,546 | 2,073 | 2,853 | 6,045 | 1,650 | 181 | 599 | 26,147 |
Quote: charliepatrick
US
I still had a couple of the old $100 bills the last time I went to Vegas a few years back, and casinos seemed quite happy. Also I have had a few $2 - I think the racetrack liked them as that was once their nominal tote bet - but no-one else did.
Back in the mid-90's as the USA issued the redesigned $50, Mary Ellen Witherow, the US Treasurer at the time, was making a public appearance introducing the new bill at Navy Pier in Chicago. I managed to obtain some new $2 bills and took our grade school aged kids to the event. After the ceremony, many of the schoolkids pulled out old ratty singles from their pockets for Ms Withrow to sign. When my kids presented their $2 bills to her, she studied the bills and smiled at me; she knew those autographs would be saved and not spent. The autographs on those bills look exactly like the signature that was printed as part of the bill.
Quote: EvenBobAnd I keep reading that $500 and $1000 and even $5000 bills are likely coming. Counterfeit proof, of course.
You should give a reference to what you read.
There is no such thing as counterfeit proof. There is only tolerable levels of counterfeiting, and new issues of currency that stay ahead of the counterfeiters.
Quote: pacomartinDavid Wolman thinks we would be better off if North Korea begins producing enough superdollars so that America must demonetize the $50 and $100 banknote.
Yet it's modern design bills that are being counterfeited, not "WILL PAY TO THE BEARER ON DEMAND" notes. And it will remain so, should there be a big currency replacement drive, new bills will be the ones copied.
Counterfeiters don't want to bring in a case of 1929 $500 bill copies and explain they are still valid and totally real; they want to clandestinely inject fake twenties into the money flow. Fake bills get sold (as far as I know of this business) to criminal and semi-criminal enterprises, who pass them on among real bills outside of organized crime, the bills get mixed up further, spent in the shops, and lost in the economy without a trace.
Quote: ewjones080What about getting rid of the penny? Doesn't it cost like 1.8c to produce one of them?
There is a whole separate issue of the stupidity of using tokens for accounting purposes when much of the country is carrying more computing power than the first moon landing had at their disposal. Pennies, nickels, and dollar banknotes are particularly dumb. Counting change is inefficient and protecting cash from thievery is very expensive given that accounts can easily be settled by waving a magnetic strip in front of a sensor.
Large banknotes are about moving value anonymously. You don't need to leave a trace of who you are, and you need no authorization. If you are cheating on your spouse, there is no record of your transaction. Large banknotes involve different issues than the mechanics off small notes.
A big part of large banknotes is how extremely profitable they are to the US government.
Quote: WILL JUMBO EURO NOTES THREATEN THE GREENBACK?
THURSDAY, OCTOBER 8, 1998
U.S. House of Representatives,
Subcommittee on Domestic and International Monetary Policy,
Committee on Banking and Financial Services,
Washington, DC.
This morning we will examine a single element of the euro strategy, the intention to issue a high value note equal to more than $500, and the implications this might have for the circulation of dollars outside the United States and more broadly American currency management in the face of this challenge.
Regarding the United States $500 and $1,000 bills already in existence, current estimates of outstanding $500 bills in circulation are about 286,000 notes, or $143,889,500 worth. For $1,000 bills, there are 167,101 notes, or obviously $167,101,000. ... They also had a function in exchanges between banks and in large cash transactions through the 1930's, 1940's, and 1950's. Since the 1960's, Federal Reserve Banks routinely remove these notes from circulation and destroy them so they have acquired a scarcity value as a collectible that adds a premium to their face value.
The bulk of the United States currency that is held outside the United States is composed of $100 notes. There are about $298 billion worth of them outstanding and in circulation as of June 30, 1998; and about two-thirds of these are held abroad. (Over $800 billion as of 2012 of which 75% is now held abroad.) Those are statistics, by the way, which are not largely known by the public, either the $298 billion or the fact that two-thirds are held abroad. The grand total of U.S. currency held abroad appears to be $250 billion. I will look to our witnesses to refine these estimates, but this should equate to a rough interest savings to the Treasury of almost $10 billion per year. At least this figure and in addition some percentage of the $28 billion or so annual earnings booked by the Treasury from currency and coinage may be placed in jeopardy by the European action.
Quote: pacomartinThere is no such thing as counterfeit proof. There is only tolerable levels of counterfeiting, and new issues of currency that stay ahead of the counterfeiters.
Modern notes are very hard to counterfeit.
I've run across some fakes. One was great, a very recent 100 peso note. The paper was wrong, naturally, but the more inexperienced might not notice. It had the hologram strip down, too, and the microprinting was convincing if you didn't look at it too closely. Where it failed miserably was with the color-shifting ink. It just didn't shift.
I wanted to keep it as a curio. But the boss insisted we make sure it was a fake. Hmpf!
I'm sure the 500 would be wildly popular...
Quote: EvenBobWhy does EU get a $500 Euro note and we can't have one.
A lot of it was just tradition. Germany had their first 1000 Mark note in 1960 (In 1960 it was worth US$250 and was worth US$600 by the time the European rates were fixed to each other on 31 Dec 1998).
Germany did not want to give up the privacy of the large banknote, so they resisted any attempts to restrict the largest Euro banknote to 200. Many countries tried to convince them otherwise, but it was perceived as one way that the Euro would have an advantage over the dollar.
Representatives of Britain in particular strongly cautioned Europe from adopting such a large banknote, saying that it was irresponsible.
As I said earlier the Swiss have an even more valuable banknote (the 1000 Swiss Franc) which is now worth $1100, but there are 30 million of them. That is a lot for domestic use of such a small country, but there are 300 million 500 Euro notes which allows them to circulate all over the world.
Quote: Class A Fake NotesBY P.PRZYCZYNA ⋅ FEBRUARY 24, 2012
Increasingly sophisticated techniques with counterfeiters are throwing up a huge challenge to authorities and money exchange houses with to forge notes with most of the security features used in real currencies, said forensic experts in Dubai. The Indian rupee has emerged as the currency of choice, overtaking the US dollar in 2011 by currency forgers, accounting for 10,700 pieces of the top five fake bank notes (24,000) of different countries seized by Dubai Police last year.
Aqil Al Najjar, head of the Questioned Documents Section, Department of Forensic Science and Criminology of the Dubai Police said These fakes look so real, The counterfeiters have increased [so much] in sophistication that they have copied up to 85 per cent of the security features on currency notes, especially on the Indian rupee It is difficult for a common man to detect them. Al Najjar said that the police nabbed an Eastern European woman last week, who presented phoney Rs35,000 worth of new Rs1,000 denomination notes to a Dubai money exchange.
The US dollar is second in counterfeiting to the Indian rupee with 9,000 pieces of fake $100 notes seized in Dubai in 2011. In 2010, the US dollar accounted for an overwhelming majority with 90,000 fake notes seized in Dubai. Al Najjar said that The US dollar remains the favourite of international counterfeiting gangs, but Indian rupee counterfeiters are also posing a big challenge to authorities.
Third for counterfeiting since 2010 was UAE dirham with 7,500 pieces in 183 cases; followed closely in fourth place by Saudi riyal with nearly 6,900 notes in 21 cases. In the top five list of forging included the euro with more than 3,000 pieces of fake 50, 100, 200 and 500 notes in 16 cases over the last two years.
There are a lot of Class A fake Indian rupees going around, said Al Najjar, using forensic terminology to describe high quality counterfeit money.
Dubai is rising as a global trading crossroad for fake bills and a magnet for counterfeiters due to the sheer volume of cases reported. We do find ourselves under tremendous pressure when a huge volume of suspect items need to be checked one by one, said Al Najjar.
The older US dollar notes are the weakest in security features, with the latest edition of the US dollar being much harder to copy said Al Najjar.
Fayez Abdul Monem, a forensic document expert, believes counterfeit currencies come from a few sources. The pattern on the end product suggests there are a few criminal gangs outside the UAE printing these fake notes.
One advantage of the larger note, is that as the task of replacing all of these $100 bills around the world gets harder and harder, you can replace them with fewer $500 notes. The extra value of the note increases the relative cost effectiveness of more security features,
I see more and more of the cash business drifting to the Euro.
The above chart is for Iceland (pop 317K). As a small country growing in wealth, the people began to adopt to electronic payments as the norm. Unlike the USA, the amount of cash in circulation, relative to GDP, dropped from 1960 to 1985 from 5% to 1%. In contrast, the amount of currency in circulation for the USA in 1985 was 5%, and has been increasing since then.
In Iceland for over 20 years, the banknotes and coin remained at about 1% of GDP. Presumably the last 1% remained at the parts of the economy which are the hardest to avoid using banknotes, that of children, the impoverished, person to person exchanges, and those transactions where some secrecy is deemed appropriate (illegal, spousal cheating, and tax avoidance).
While it seemed as if banknotes were almost obsolete, the banks began crashing in 2008. The government did not respond with a larger banknote, but began issuing enough of the largest existing denomination to cover the panic. The amount of currency doubled in 2 years (relative to GDP), and now 87.5 of the value of the banknotes are composed of the largest denomination (worth US $43.57 today).
Forcing the population to switch mostly to electronic payments again would be helpful if Iceland were to adopt another currency to get some return to financial stability. They could join the European Monetary Union, or they could unilaterally adopt the currency of another country. The Iceland currency was developed from the Danish Crown in 1920. Other currencies suggest include the Euro, the dollar, and the Canadian currency.
Should the government stop printing the large banknote and force the country to go primarily electronic?
Canada releases it's polymer $50 today, which should be distributed in ATM's. My personal belief is that Canada is waiting 8 months to introduce the polymer $20 because they are hoping Canadians will adopt the larger bill (like Australia) and reduce the quantity of $20's that they need to produce.
Coincidentally, Fox News (and others) are recommending investing in either Canadian or Mexican currency.
BTW I know polymer notes are supposed to last longer. However, I get to see more of those notes ripped or torn than "paper" notes. Any idea why?
No it wouldn't.Quote: BozGold & Silver Pawn Store is selling $500 notes for $1150. I would like to see them back just to end this type madness.
Printing new notes, with a current date and new design, does not change the scarcity or value of the old notes.
Quote: NareedHow come Canada, America and Mexico still produce handsome banknotes, while the EU and GB make notes that look less realistic than play money?
BTW I know polymer notes are supposed to last longer. However, I get to see more of those notes ripped or torn than "paper" notes. Any idea why?
The EU was under a lot of pressure to make the notes look as generic as possible. The original design was eventually changed because the bridges and arches cornices weren't generic enough, and some people claimed they favored one nation over another.
The British banknotes don't have a lot of flexibility on their design, as they must have the Queen. The new 50 pound note has been in circulation since November, but they are relatively rare in the UK (little more than 3 per capita).
All countries have a problem keeping the small banknotes looking clean and new. Nobody needs very many of them because they are only for small purchases or change and not for store of value. Normally they are not put in an ATM (although some places in Mexico distribute small banknotes in ATMs), and people don't deposit them back into the bank. You may be seeing more of the problem with small banknotes than of polymer.
The BankofEngland just launched a program to try and clean up the £5 notes. Banks have agreed to dedicate some ATMs to distributing new £5 notes. I don't think there will be much variation in the USA away from the $20. Casinos have machines that can make change, but those are very expensive.
BTW, in Britain an ATM is called a "cash point". In the USA about 80% of people when asked what the acronym ATM stands for will give the wrong answer. Guess first, and then google it.
