What is Counterfeit Money?

Published by Thomas Herold in Banking, Laws & Regulations, Trading

'Counterfeit Money' is explained in detail and with examples in the Trading edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

Counterfeit money refers to fake currency which criminals create in an effort to imitate real currency produced and backed by a sovereign government. Such currency will always be designed in an effort to pass for real money so that it convinces people of its legitimacy. There are rare cases when such counterfeits are not produced to buy services and goods, but instead to try to create inflation in an economy.

In theory, counterfeiters can produce either coins or paper money in their operations. In practice though, the overwhelming majority of counterfeit money today proves to be the paper variety. In the golden age of real intrinsically valuable money, coins were frequently counterfeited through mixing cheaper metals with valuable metals. The criminals would then develop molds or casts in order to imitate the striking of a real valuable coin.

Modern counterfeit money imitates the bank notes of various major currencies such as dollars, euros, pound sterling, and Swiss francs. Thanks to the evolution of technology, money has been made increasingly easy to imitate today with advances in digital graphics. It is still difficult to effectively do since the majority of money and bills are printed out on material which is not for sale to the general public. Yet the advance and dispersion of commercial printer technology has permitted forgers to imitate well the real currency bills’ textures.

Today’s governments fight counterfeiting with widespread anti counterfeit measures. They produce their bills using specialized and difficult to imitate holograms, raised images, and even embedded features in a wide-ranging effort to dissuade would-be counterfeiters from their trade. They sometimes re-design money completely in an effort to keep making it harder for the forgers to be current with their counterfeiting designs.

It remains a critical element in the war on counterfeit money that the bank note material is impossible to come by. It is this unique blend of fabrics and paper which limited companies are allowed to produce for the government. Cutting-edged nations even employ plastic polymer currency these days. Such bills will commonly include a clear window. Replicating such a window is nearly impossible for counterfeiters.

The act of counterfeiting bills or coins is a serious fraud that represents a major criminal offence in the overwhelming majority of nations around the globe. Nations are so serious about this that they will even cooperate and share their information on various major counterfeiters amongst each other. It is not uncommon for counterfeiters to try to pass off their forged currency in foreign nations that are not as familiar with the security devices and protocols as the home country banking agents would be. This information sharing permits the various government officials to recognize the subtle difference between the counterfeits and the real currencies from other nations.

Counterfeiting is a lucrative trade as the produce can be immediately utilized to buy services and goods. These counterfeit money bills are commonplace within illegal and under-regulated industries which are many times cash-based. This includes black markets, weapons trades, casinos and gambling, and drug businesses. The majority of legal industries pay careful attention to potential counterfeits. They will use anti-counterfeit technologies in their efforts to reduce and eliminate it.

An interesting twist on counterfeiting money occurs in times of war. Enemy nations might try to flood an enemy economy with fake money in an effort to bring it to its proverbial knees. As economies suddenly discover that there is too much cash circulating in the economy, runaway inflation can happen. This would be an effective means of weakening an enemy combatant’s national economy through flushing through huge amounts of false currency into their nation.

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The term 'Counterfeit Money' is included in the Trading edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.