Operation Mervyn

Hitler hoped the £134million of counterfeit notes he produced in ‘Operation Bernhard’ would force a huge hike in inflation and spark a cash crisis

[From Adolf Hitler’s fake British bank notes expected to fetch £2k at auction | Mail Online]

I’m hoping to buy one of these fake notes – I’ve seen a couple for sale near Charing Cross already – but that wasn’t why I was thinking about this story again. It was because, as I mentioned on Twitter, I happened to ask someone who works at McDonalds how the use of contactless payments is going, since they are one of the retailers that has gone for a national roll out.

Fast-food restaurant chain, McDonald’s, will roll out contactless payments in all of its 1,200 UK stores by the end of October.

[From McDonald’s to roll out contactless payments in 1,200 UK stores – 1/24/2011 – Computer Weekly]

My source told me that they saw more people trying to buy their burgers with counterfeit £50 notes than with contactless cards. Are there a lot of counterfeit £50s or not very many contactless cards? Perhaps it’s the former!

In addition, the Bank revealed, some 300,000 counterfeit notes with a face value of £5.9m were taken out of circulation – a 48pc improvement on the previous year.

[From Bank of England pays 82 people more than £100,000 – Telegraph]

Of course, these are a very tiny fraction of the increasingly worthless banknotes being printed round-the-clock by the Bank of England anyway. According to the Bank of England’s statistical release for June 2011, the narrow money supply (M0) comprising the notes and coins in circulation is currently 2.74% of the broad money supply (M4). This is actually up slightly on this time last year, which I believe is a reflection of the number of £50 notes going into “circulation”. Since a great many of these are apparently fake, the Bank is today launching a new version.

One of these features, called Motion Thread, includes semi-translucent windows woven into the note that show the £ symbol and the number 50 when held up to the light.

[From New £50 note released with increased security features – Telegraph]

There’s always been, and will always be, an arms race between the Bank and the counterfeiters and its hardly likely to end here. In fact, as has been discussed for many years, the next step will almost certainly involved chips and printed electronics rather than conventional printing and paper manufacture.

Modern banknotes contain up to 50 anti-counterfeiting features, but adding electronic circuits programmed to confirm the note’s authenticity is perhaps the ultimate deterrent, and would also help to simplify banknote tracking.  Silicon-based electronic circuits are clearly too thick to be incorporated into thin and fragile banknotes, but semiconducting organic molecules might be a viable alternative… A team of German and Japanese researchers created arrays of thin-film transistors (TFTs) by carefully depositing gold, aluminium oxide and organic molecules directly onto the notes through a patterned mask, building up the TFTs layer by layer.

[From Banknotes go electric to outwit counterfeiters – tech – 21 December 2010 – New Scientist]

Whether they are desirable or not is another matter. Personally, I would have thought that a better security feature would be stop printing the damn things altogether. What is the point of them?

When was the last time you had a £50 note in your pocket? Can’t remember? You may be surprised to learn that, according to the Bank of England, there are 212 million £50 notes in circulation valued at £10.6bn. That is 84% higher than seven years ago.

[From Launch of the new £50 – a history of banknotes – Personal Finance Newsroom | HSBC Bank UK]

I simply couldn’t tell you when I last had a £50 note. Thinking about it, I’m not sure I’ve ever had one. But since I don’t sell drugs, dodgy scrap metal or improper influence, I’ve never had the need for one. I can’t help but wonder if the new £50 note isn’t another nail in the coffin of cash, but if you see anybody with one then you will automatically assume that they are tax evader or engaged in a criminal conspiracy of some kind.

The integrity of the banknote industry is at stake; if central banks and the wider public lose confidence in their banknotes and suppliers, cashless payments will undoubtedly gain further momentum.

[From Industry in Crisis? — Counting On Currency]

So it’s not all bad news then.