The new color of money: safer, smarter, more secure

Abstract

Approximately 60% of U.S. currency notes circulate abroad. As the most widely used currency in the world, U.S. notes are the most likely to be counterfeited. Since 1996, the United States has been issuing currency with new security features. These features make U.S. currency easier to recognize as genuine and more secure against advancing computer technology that could be used for counterfeiting. Currency counterfeiters are increasingly turning to digital methods, as advances in technology make digital counterfeiting of currency easier and cheaper. In 1995, for example, less than one percent of counterfeit notes detected in the U.S. were digitally produced. By 2002, that number had grown to nearly 40 percent, according to the Secret Service. Yet despite the efforts of counterfeiters, U.S. currency counterfeiting has been kept at low levels. According to current estimates, between 0.01 and 0.02 percent of notes in circulation are counterfeit, or about 1-2 notes in every 10,000 genuine notes. The strategy for maintaining the security of Federal Reserve notes is to enhance the design of U.S. currency every seven to ten years. One objective of introducing the new currency is to emphasize the number of features available to the public for authenticating bills. The most-talked-about aspect of the redesigned currency is the subtle introduction of background colors to the bills. While color itself is not a security feature, the use of color provides the opportunity to add features that could assist in deterring counterfeiting. Color will also help people to better distinguish their notes. Security features for the newly designed currency include a security thread, a watermark, and a more distinct color-shifting ink. The new $20 note was issued in fall 2003, with the $50 and $100 notes scheduled to follow 12 to 18 months later. Plans to redesign the $10 and $5 are still under consideration, but there are no plans to redesign the $2 and $1 notes. As was the case with the redesigned $20 note issued in 1998, the new design will co-circulate with the current design. As notes return to the Federal Reserve from depository institutions, the Federal Reserve will only destroy the unfit notes introduced since 1998. Designs older than the Series 1996 are destroyed when returned to the Federal Reserve regardless of condition. To ensure a smooth introduction of the new currency, a five-year international public education effort was launched in 2002 to inform the public and target audiences, including financial institutions, law enforcement, and the vending industry of the transition to the new design. The public is the first line of defense against counterfeiting. So, it's important the public has the tools to recognize the new and modified security features in the redesigned notes.