Counterfeit Corner

Let’s talk statistics, even though it is not my favourite subject!

There are many different ways to obtain counterfeiting rates, but the recognised standard is parts-per-million (ppm). However, this number is dependent on the number of genuine banknotes in circulation remaining relatively constant.

PPM also only includes the number of counterfeit banknotes that were removed from circulation, not the ones seized before they entered into the economic market. For example – removing £10 million before it has been accepted by a business is still an important factor in determining the counterfeit threat.

Central banks can easily record the number of counterfeits that are processed through the banking system, but what about all the counterfeits that go to law enforcement? This may be a significant number that may not be included in the counterfeit statistics. There may also be a very different type of counterfeit (a really good one) that is being handled by the police compared to the ones in the banking system.

Monitoring not only the number of counterfeits, but also the value may lead to insights about the type of counterfeiter that threatens a country. Let’s say a country has 10,000 counterfeits of denomination 500 in 2010. Then in 2011, they receive 10,000 counterfeits of the 200 denomination after a redesign of the 500. It could indicate that the 500 has become too difficult to counterfeit and has now moved to the 200.

So, what data should be captured? Number of counterfeits captured through the banking system as well as the ones in police custody, denominations, counterfeits seized by police in raids and what series the note is copied from (if multiple series co-circulate). Recording the counterfeiting rates is a great starting place in monitoring the counterfeiting threat, but examining the counterfeits and recording detailed data can help in observing trends.

Let’s leave that topic for another month!

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