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Maria Carlsen and Johanne Dinesen Riishøj, Secretariat
Counterfeit danish banknotes found in circulation
The lifetime of most counterfeit banknotes in circulation is considerably shorter than that of genuine banknotes. Since counterfeit banknotes do not circulate to the same extent as genuine banknotes, the ratio of counterfeit banknotes is not constant. Thus, it is not possible to assess accurately the risk of receiving a counterfeit banknote. An overrated, but often used estimate of the risk is achieved by relating the number of counterfeit banknotes per year to the number of banknotes in circulation. Such an estimate for Denmark shows that in 2003 9 counterfeit banknotes were found for each million genuine banknotes. This estimate often forms the basis of cross-country comparisons of the level of counterfeit banknotes.
The 100- and 500-krone banknotes are the banknotes in circulation showing the highest incidence of counterfeiting, cf. Chart 1. A counterfeiter's choice of banknote denomination may be motivated by considerations of risk versus gain. For many years, the 500-krone banknote has been the most copied Danish banknote because of its frequent use and relatively high purchasing power. 2003 also saw quite a few counterfeit 100-krone banknotes. The 100-krone banknote is probably an attractive counterfeiting target as it is widely used and is rarely examined closely on receipt.
|Counterfeit danish banknotes found in cirkulation||
|Source: The police.|
The individuals and enterprises that inadvertently receive counterfeit money suffer a direct financial loss, which in 2003 totalled kr. 456,500, equivalent to kr. 0.08 per capita in Denmark.
Confiscated counterfeit Danish banknotes
Besides the withdrawal of counterfeit banknotes from circulation the police, in connection with their investigations, confiscate counterfeit banknotes that have not circulated. Such confiscated counterfeit banknotes do not entail an outright financial loss to society, but they are a potential threat before confiscation. The level of confiscated counterfeit Danish banknotes varies strongly from year to year, depending on when major cases are solved, cf. Chart 2.
|Confiscated counterfeit danish banknotes||
|Note: The figure for 2004 is up to and including April 2004.|
|Source: Danmarks Nationalbank and the police.|
The large number of confiscated banknotes in 2004 is attributable to, inter alia, a case from Vordingborg, involving confiscation of 3,500 counterfeit 1,000-krone banknotes at the beginning of the year. For many years the 1,000-krone banknote has been the denomination most frequently identified as counterfeit without being put into circulation. The banknote is an attractive counterfeiting target because of its high value, but it is harder to put into circulation as many people examine closely the 1,000-krone banknotes they receive.
The security features of banknotes
Danmarks Nationalbank constantly seeks to prevent counterfeiting. In this respect, it has chosen to comply with the European banknote standard. The Danish banknotes are thus printed on cotton paper and incorporate classic security features, i.e. a watermark, a window thread with colour change, a thick layer of ink and a hidden security thread, as well as new features, i.e. a hologram and fluorescent colours. The new security features make counterfeiting more difficult. The security features appear when the banknote is tilted, held to the light and felt.
In Denmark banknotes without the new security features are still legal tender, but will be exchanged for upgraded banknotes when worn. Danmarks Nationalbank has chosen to let non-upgraded banknotes remain in circulation, in view of the expenses of exchanging banknotes that are not worn, and because the incidence of counterfeiting is still limited in Denmark. If counterfeiting of non-upgraded banknotes becomes a serious problem, it will be possible to withdraw banknotes without the new security features faster than today and if required render them invalid at a notice. However, Denmark has no tradition of rendering banknote series invalid. All banknote series issued after 1945 are exchanged at face value by Danmarks Nationalbank. Old banknote series, i.e. banknotes issued before 1997, are no longer generally well-known and are thus more difficult to use. Therefore, they are not counterfeited.
Other countries, notably Australia, have introduced polymer banknotes. One advantage of polymer banknotes is that it is more difficult and more expensive for laymen to produce good copies. The security features of polymer banknotes differ from the security features of paper banknotes in some respects. A frequently used security feature is a see-through window, often with a motif that may vary with the denomination. Like paper banknotes, polymer banknotes may have copper print, microprinted text and fluorescent colours whereas well-known security features such as a watermark and a hidden security thread are more difficult to incorporate in polymer banknotes than in paper banknotes. Instead, the polymer banknotes have a so-called shadow image, resembling a watermark, which is made by giving the banknote different degrees of transparency. The number of counterfeit Australian banknotes in circulation dropped after the introduction of polymer banknotes. Thus, the incidence of counterfeiting in Australia was at the same level as in Denmark in 2003.
A combination of several different security features makes counterfeiting difficult since not all security features are reproduced well in counterfeit banknotes. Polymer banknotes, like in Australia, may also hamper laymen's attempts at producing counterfeits. Irrespective of material, ongoing improvement of security is necessary to make it as difficult as possible to copy banknotes. Danmarks Nationalbank follows the development closely and constantly seeks to make counterfeiting of Danish banknotes difficult.
Investigations are handled by the police. On receipt of a counterfeit banknote it must be submitted to the local police together with information on when and how it was received. Internationally, efforts to combat counterfeiting are carried out in cooperation with Interpol and Europol.
The security level and quality of banknotes, the public's familiarity with the look and security features of the banknotes, the maximum penalty, the size of the criminal network and police efforts are all factors affecting the incidence of counterfeiting. In other words, the level of counterfeit banknotes in a country is determined by a combination of several factors.
The number of counterfeit Danish banknotes in circulation has increased in recent years, but counterfeiting is still a limited problem in Denmark. In 2003 1,239 counterfeit banknotes were found in circulation.
With the technological development, counterfeiting has, over the last 10 years, gone from being a highly specialised crime to being a crime that anyone can commit. The ongoing technological development makes it very difficult to combat counterfeiting. Investigators of counterfeiting must be up to date on the latest technology, and the public must be familiar with the banknotes and their security features. A continued effort to combat counterfeiting is necessary in order to preserve confidence in banknotes.
 Information is provided e.g. at Danmarks Nationalbank's website, www.nationalbanken.dk Notes and coins, in leaflets distributed to all households and free postcards available at cafés, in cinemas, etc.
 A detailed description of counterfeiting technology and the efforts to prevent counterfeiting can be found in Ulrik Bie and Sebastian Gabel, Counterfeit Banknotes, Danmarks Nationalbank, Monetary Review, 1st Quarter 2002.
 The 50- and the 1,000-krone banknotes will be upgraded in the coming year.
 New Zealand, Thailand and Romania, among others, have introduced polymer banknotes wholly or partly.