Cash means a lot of baggage

With my feet up and a cup of tea, I was relaxing reading David R. Warwick’s “The Case Against Cash” in the July edition of “The Futurist” magazine. He notes that of the $829 billion in US currency “in circulation”, two-thirds is outside the US. According to the Boston Fed, the average US consumer has only $79 about their person, with another $157 at home or in the office. Say $200 each for 200 million consumers, that comes to only $40 billion. Even if you calculate it at $300 each for 300m consumers, that’s still only $90 billion, which would imply that about two-thirds of the cash in the US in unaccounted for, a figure that tallies well with more detailed calculations made for some European countries. That means that if the US is as law-abiding as, say, Norway, then there’s about $200 billion of cash in the US that is only used for tax evasion, crime, money laundering and so on.

Mr. Warwick says that the biggest single benefit of the abolition of cash in the US will be the elimination of cash robberies, which costs the country about $140 billion per annum. This may be so, but personally, I think that the greatest benefit will be what he puts second on the list: financial inclusion. People trapped in a cash economy are not only discriminated against (because they pay the highest transactions costs) but they are cannot get on the financial services ladder. They have to take payday loans instead of bank loans, use cheque-cashing services and so on. Helping these people on to that ladder is a very positive outcome for the electronic payments industry (assuming that it can deliver the low-cost products that are needed to do this).

Naturally I sympathise with Mr. Warwick, but I don’t hold out much short term hope for the US getting rid of cash, although I can see that there are some interesting ways to make progress. A correspondent wrote, kindly, in response to a recent post I made about the role of e-payments in reducing cash evasion.

In addition to strict regulations that require POS technology to retain sales records (and criminal liability if they are found to be tampered), the Brazilian state of Sao Paulo created a program called “Nota Fiscal Paulista” which works by consumer demand. It encourages consumers to ask for their receipts, which pressures the business into declaring their sales taxes to the state tax collector. At year’s end the consumer gets a share of their taxes paid returned to them, as well as an entry in a larger lottery. I’ve had family members win sizeable pots simply for opting in to this receipt at check out.

Many merchants really dislike this scheme, presumably because it works, but they are obliged to offer it because of consumer pressure. There’s another similar scheme in Korea, whereby merchants who take more than some threshold (75%?) volume of their transactions electronically rather than in cash get a tax break. The government has presumably calculated that reducing tax evasion from cash sales more than makes up for the revenue reduction from the tax break. Perhaps in these straightened times the US tax authorities might begin to make similar calculations.

However, while the US may not be able to get rid of cash domestically — more’s the pity — it could at least start trying to get rid of cash in some other theatres. Perhaps a good place to start might be somewhere where, unlike America, there is a viable mobile phone-based alternative to cash: Afghanistan, where the M-PAISA scheme is up and running.

Electronic payments, if implemented properly, can bring transparency as well as efficiency. And transparency can have some unexpected consequences. Look what happened when the M-PESA service was launched in Afghanistan (as M-PAISA) and used to introduce efficiency into the process of salary payments for civil servants…

[From Digital Money: Cash does have some unique properties]

Another factor pointing to Afghanistan as the nexus for such an experiment is that the campaign against cash there may be able to co-opt a pretty powerful ally: the US military.

For the past few years the military has been striving to replace its cash transactions with electronic fund transfers and debit card payments in the hopes of achieving a “cashless battlefield,” in the words of Peter Kunkel, a former assistant secretary of the Army.

[From Turn In Your Bin Ladens – NYTimes.com]

Right now, the battlefield is only cashless because all of the cash is being spirited away as soon as it arrives and (I’m sure) to no good purpose — as I heard our (former) man in Kabul Sherard Cowper-Coles pointing out on the BBC’s Start the Week programme recently — and there doesn’t seem to be any way to keep it in place.

Last month, a well-dressed Afghan man en route to Dubai was found carrying three briefcases stuffed with $3 million in U.S. currency and $2 million in Saudi currency, according to an American official who was present when the notes were counted. A few days later, the same man was back at the Kabul airport, en route to Dubai again, with about $5 million in U.S. and Saudi bank notes.

[From Officials puzzle over millions of dollars leaving Afghanistan by plane for Dubai]

I love the title of the article, don’t you? It doesn’t seem that much of a “puzzle” to me.

Cash declaration forms filed at Kabul International Airport and reviewed by The Washington Post show that Afghan passengers took more than $180 million to Dubai during a two-month period starting in July. If that rate held for the entire year, the amount of cash that left Afghanistan in 2009 would have far exceeded the country’s annual tax and other domestic revenue of about $875 million.

[From Officials puzzle over millions of dollars leaving Afghanistan by plane for Dubai]

There really ought to be more upset about the havoc that these billions of US dollars cause but not merely facilitating but actively encouraging corruption on such an enormous scale, yet even at the very highest levels there’s no sense (that I can find) of outrage. In fact, everyone (except taxpayers, presumably) seems quite happy with the seigniorage-powered status quo.

Karzai said cash transactions are quite normal and then-President George W. Bush was aware of the Iranian donations. The United States supposedly gives him bags of cash as well.

[From BlogPost – Karzai’s bags of cash a conundrum for the U.S.]

Interestingly, when he says “bags of cash” he isn’t speaking metaphorically: they actually do give him bags of cash, as do the Iranians apparently. I don’t think any of them are going to get behind my campaign to reduce the use of cash to the great benefit of society as a whole.

Suspicions of corruption in the Afghan government, with one cable alleging that vice president Zia Massoud was carrying $52m in cash when he was stopped during a visit to the United Arab Emirates.

[From US embassy cables leak sparks global diplomatic crisis | World news | The Guardian]

Not mobile phone top-up vouchers or open-loop prepaid cards or high-street vouchers, but FIFTY TWO MILLION GREENBACKS. That made me wonder about his baggage allowance. How much would $52m in weigh? Could you fit it in cabin luggage or would you have to check it? After all 520,000 $100 bills take up a fair bit of space. I seem to remember from a previous discussion, that a cereal box can hold $500,000 so we’re talking about 100 cereal boxes at least.

In reality, restricting ourselves to $100 bills, the maximum is only $450,000 (the New Jersey ne’erdowells didn’t pack optimally!).

[From Digital Money: Has cash jumped the shark?]

I don’t think you could fit 100 cereal boxes in the two checked bags that you’re allowed on British Airways, but I suppose vice presidents are allowed a couple more. But back to the point, which is…

Why does the world need 1 billion $100 bills? Indeed, why does the U.S. continue to print C-notes at all?

[From Hundred-dollar bills are for criminals and sociopaths. Why do we still print them? – By Timothy Noah – Slate Magazine]

Look, I’m not making any sort of political point about Afghanistan, I’m arguing this general point. The US should cease printing $50 and $100 bills immediately. They have no function in supporting commerce.

And it’s not just that carrying around cash is inconvenient and time consuming. These days, one of its main functions is to finance the black economy: drug deals, counterfeiting, under-the-table employment and other nefarious activities. Because cash is anonymous, people can easily opt out of the taxable economy – leaving the rest of us to pick up the tab for their use of public services. Remove cash entirely, and you make it far more difficult to avoid tax, not to mention discouraging criminal activity.

[From I’m dreaming of a cashless Christmas – Telegraph]

I written before about a current example of large amounts of cash making a problem (that no-one would claim is caused by cash) significantly worse.

Ransoms are paid in cash, partly because Somalia has no functioning banking system, and partly to hamper American anti-money-laundering investigators

[From Piracy: No stopping them | The Economist]

I have to say that this piracy is looking more and more like a viable career option to me. It is very well remunerated and there appears to be much less chance of going to jail than in, say, investment banking or management consultancy.

Of the 650 Somali pirates caught since late 2008, 460 have already been released, according to Lloyd’s Market Association

[From Prime Numbers: The Pirate Den – By Bridget Coggins | Foreign Policy]

The English have a proud history of piracy, so I think I’d fit right in. Avast ye landlubbers!

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

Join us at the International Payments Summit on 21st March in London

I really enjoyed the annual International Payments Summit last year, so this year we decided to work with them on a small experiment. On 21st March we’ve helped to put together a 1-day summit on the future of e-transactions, called (somewhat provocatively, I must confess) “cash is dead”.

The idea is to discuss the world of digital transactions (which, of course, in our world means digital money and digital identity) to help organisations who are putting together strategies make some realistic decisions about where future competitive advantage may lay. Naturally, reflecting my own prejudices, there will be plenty of discussion about opportunities for financial services organisations to either provide or exploit the coming range of digital identity services.

As organisers, Consult Hyperion have a couple of complimentary delegate places to give away, so if you plan to be in London on 21st March 2011 and you’d like to come along to the Lancaster London and join in the discussion, please e-mail me ASAP and I will arrange. Don’t pass up this offer as we have a great bunch of people coming along for panels, discussions and networking, see you there.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

How d’ya like them Apples?

WIth Apple’s domination of media mindshare almost total, the fact that you can already buy other handsets with NFC in them (eg, the Google Nexus S and the Nokia C7, although both are currently software-limited) and that the first Blackberry handsets are imminent has been overlooked. All press comment (I know, because I contributed to some of it) has been about the iPhone. One of the questions that I was asked, repeatedly, was about iTunes morphing into a new payment scheme.

“They have 160 million users with digital wallets in iTunes accounts. They don’t have to do anything other than to NFC-enable their phones,” Litan said.

[From Analysts: Apple could disrupt mobile payment industry | BappProducts | iOS Central | Macworld]

They do have numbers on their side, that’s true. But as we all know, payments is a two-sided market, so there has to be a reason for the merchants to get on board too.

For merchants, an Apple payment system could prove attractive. Many merchants are raring for alternative payment systems, to avoid having to pay the hefty fees that credit card companies charge for every transaction.

[From Analysts: Apple could disrupt mobile payment industry | BappProducts | iOS Central | Macworld]

Yes, but how will Apple avoid them? Everything I buy on iTunes goes to my MasterCard. Sure, Apple aggregates the payments, but the banks don’t provide this service for free, even for Steve Jobs. In order to avoid having to pay credit card fees, Apple would have to do what PayPal does and start persuading people to sign up with their bank account details, which would in turn mean building the kind of anti-fraud platform that PayPal have been building for a decade. And why would they do that? It seems like a lot of non-core investment to commit to.

This investment is needed because the biggest problem will be security. So long as my iTunes password only allows you to buy music tracks for my iPod or games for my iPad or note-taking applications for my Macintosh, to risk is manageable. But if my iTunes password allows you to walk out of a store with a pair of shoes or a telly, then my iTunes password will become valuable. Microseconds after extending iTunes payments to retail stores, Apple would be dealing with millions of customers calling up because their passwords had been phished, copied, guessed.

Japanese police have arrested two people suspected of stealing virtual goods from players of online game Lineage II. The pair tricked victims via a booby-trapped program that claimed to help people play the game. Instead of boosting a character’s abilities the program stole account names and passwords.

[From BBC News – Lineage II pair arrested for stealing virtual goods]

I’m sure Apple are perfectly well aware of this kind of crime and know that were iTunes to become a general payment paltform, then it would become widespread. This is hardly wild projection, since the phishing of iTunes accounts is already widespread.

It least one group of scammers has found a way to charge thousands of dollars to iTunes accounts through PayPal. One targeted customer told us, “My account was charged over $4700. I called security at PayPal and was told a large number of iTunes store accounts were compromised.”

[From Fraudsters Drain PayPal Accounts Through iTunes]

I’m sure Apple already has lots of people working on this problem but ultimately it’s very difficult to stop people from giving away their passwords and I’m sure the phishers will soon learn to send out the right kind of e-mail messages.

Roughly 50,000 Apple iTunes accounts stolen by hackers are said to be for sale on China’s largest auction site.

[From 50,000 Stolen iTunes Accounts On China Auction Site — Apple iTunes — InformationWeek]

The underlying problem is, of course, that passwords are not security and no-one should be allowed to use the phrase “password security” in any serious context. So long as the cost of phishing, guessing or actually breaking passwords is fantastically less than the value of the account that they give access to, there is no solution.

Thomas Roth of Cologne, Germany told Reuters he used custom software running on Amazon’s Elastic Compute Cloud service to break into a WPA-PSK protected network in about 20 minutes. With refinements to his program, he said he could shave the time to about six minutes. With EC2 computers available for 28 cents per minute, the cost of the crack came to just $1.68.

[From Researcher cracks Wi-Fi passwords with Amazon cloud • The Register]

Ah, you might say, but suppose Apple implements a Secure Element (SE) for NFC and that SE uses standard PKI applications on industry-standard Global Platform in an industry-standard JavaCard. Then a thief would have to steal the iPhone as well as the password, and this indeed true. Apple could implement an identity-based payment mechanism and persuade merchants to install the contactless terminals, implement the new scheme and pay Apple instead of paying the banks (whose fees have just been capped by the Durbin amendment.

Again, why bother. You may as well do a deal with a bank to put a contactless EMV application in the SE. But suppose you are not going to care about anything at retail POS — except in your own stores — but instead want to improve security and convenience for customers in general? Imagine this scenario a year from now: I log in to iTunes and it gives me the option of switching to two-factor authentication. (Apple wouldn’t call it that, they have better marketing people – suppose they call it Apple Passport or something like that, maybe iMe or whatever.) I accept. From then on, when I log in to iTunes on my iPhone, I don’t noticed anything different, but under the hood iTunes is sending a digitally-signed challenge to a digital signature application in the SE. It’s decoded using Apple’s public key, and signed using my public key (which, of course, Apple know) and sent back. Sorted. Now with this strong authentication, Apple can have higher-priced items for sale via iTunes. When I log in on my PC, a message pops up on my iPhone and I have to enter my passcode. Under the hood, the same process. Now you have to steal my passcode and my iPhone.

A little later, I’ll be given the option of making my OSX login “iMe only” and so on.

If anyone can bring PKI to the masses, Apple can. Soon, other companies will negotiate with Apple to join “iMe Connect” and because it is more secure than a password, they will pay to use it. There are payments applications for this (it means that mobile payments can be lifted beyond ringtones and music tracks, and at a lower margin than operators) but I don’t see them as being central to the business proposition, because people will be using their iPhone to log in to everything (internet banking, shopping, government) and then, because of the NFC interface, they will begin to use it to “log in” in Apple retail stores and then, soon, enough, other places. Meanwhile, credit cards and Bling, Amex and PIN debit will all be loaded into the SE anyway, so customers will find themselves using their iPhones to get on BART and pay in CVS. This will save the issuers money, because they don’t need to issue the plastic, so they can offer a good deal. Andrew Johnson was surely right to point this out in American Banker.

In the end, banks have a lot to gain by being willing to give pricing concessions to Apple in exchange for getting their payment card information directly located in Apple’s mobile wallet service. Doing so could give those banks a first-mover advantage.

[From In Apple Mobile Pay Plans, a Possible Opening for Banks – American Banker Article]

Apple doing the identification and micropayments, leaving larger payments to the finance sector who will in turn pay Apple. Now we can see the real play, and a first-rate strategy for the next phase of online evolution: own identity and authentication. ITunes as a payment scheme to rival cards, PayPal, iDeal? No. iTunes as a payment scheme to get people used to logging into things with their iPhones? Plausible. iTunes as something that delivers a variety of customer communication and management option of real value to merchants (a cross between Barclaycard Freedom, Bling and Taggo)? Yes. Why? Because knowing who someone is is so much more valuable than a small slice of their payments, a fact that informed industry observers have pointed to since the Apple/NFC rumourmongering began.

the real revenue streams to Apple will not be from “interchange” but from advertising as iAD provides the “Yang” to the NFC’s “Ying”. Creating a new payment ecosystem means having incented partners. The timing on Apple’s iAD and NFC developments are not accidental, my belief is that they are part of a very solid mCommerce expansion strategy.

[From Apple’s NEW NFC Patent « New Ventures in Financial Services]

Look, I don’t know what Apple’s strategy is any more than you do, but from the perspective of helping clients to formulate their own broad strategies for NFC, payments, value-added payment services and identity, this is a reasonable strawman, which is why we’ve been using it.

The nuclear options

Nuclear power is scary, because of the fear of radiation (radiation itself doesn’t seem to be as bad for you as you might think) escaping and contaminating all around. But is it as scary as banking? There was an absolutely fascinating piece by Tim Harford in the Financial Times last weekend. It was called “What a nuclear reactor can teach us about the economy“, and it draws parallels between the way engineers build safety systems for nuclear reactors (broadly speaking, by applying science and learning from mistakes) and the way that regulators build safety systems for the banking system (broadly speaking, by making things up and not learning from mistakes). The key observation is that the banking system is complex:

It might seem obvious that the way to make a complex system safer is to install some safety measures. Engineers have long known that life is not so simple.

[From What a nuclear reactor can teach us about the economy]

What Tim is saying is that financial products such as Collateralised Debt Obligations (CDOs) and Credit Default Swaps (CDSs) appeared as safety systems (for spreading risk) and then, just like the coolant filter that got dislodged and jammed the coolant flow thus causing a partial meltdown of the Fermi reactor in Detroit, they blew up the system they were supposed to stabilise.

So what can the financial sector learn from the nuclear reactor sector, given this analogy? Well, using the example of Three Mile Island, Tim explains that one of the key reasons that the reactor came close to meltdown was that the operators couldn’t understand all of the dials, lights, warnings and other signals. As a consequence

since Three Mile Island, much attention has been lavished on the problem of telling the operators what they need to know in a format they can understand.

When the financial system started to melt down, regulators were faced with the same problem: given all of the warning lights flashing, given all of the alarms sounding, what was actually going on?

Andrew Haldane, director for financial stability at the Bank of England… argues that the same technologies now used to check the health of an electricity grid could be applied to a financial net- work map, highlighting critical connections, over-stressed nodes and unexpected interactions.

This analogy is imperfect in a couple of ways, of course, because banks can create money from nothing whereas electricity costs money to create and because electricity substations don’t lie to the national grid in order to get a bigger bonus, but you can see his point.

There’s one aspect of this that Tim didn’t explain though. Engineers don’t forget things, but financiers do. Once engineers have learned, for example, how not to build a bridge, then they stop building bad bridges. But bankers don’t work that way. They would stop building bridges that way for a short time, and then simply go back round and starting building collapsing bridges again a few years later.

What does this have to do with payment systems? I’d like to highlight two points: complexity and decoupling. We need to beware of complexity, to treat it as an enemy (the current case study of EMV illustrates this perfectly), and we need to decouple so that parts of complex systems can fail without bringing down to whole of the system. It seems to me that this prescription provides a pretty clear manifesto for payments: separate the payments systems from the banking system and have a lots of simple payment systems instead of a small number of complicated ones.

Smart art

As one of the legions of fans of the brilliant BBC / British Museum radio series on “A History of the World in 100 Objects“, I was absolutely fascinated by the episode on 14th-century Chinese paper money: follow the link and have a look at the beautiful picture of the Chinese banknote from 1375.

The Chinese writing along the top of this note reads (from right to left): ‘Da Ming tong xing bao chao’ and translates as Great Ming Circulating Treasure Note’

[From Chinese Ming bank note › The British Museum]

I love that name: Bank of England notes really should be inscribed “Circulating Lack of Treasure Note”. These notes had pictures of the “cash” (copper coins with holes in the middle, threaded on to a string) that they represented: ours should have a picture of… what? What do they represent?

Things have moved on a little since mulberry bark. Some of you may remember Paul Makin’s super presentation about “E-ink and smart banknotes” at the 13th Digital Money Forum in London back in March 2010. The presentation was based on some work that Consult Hyperion had been doing with the Bill & Melinda Gates Foundation. Less than a year on, it’s fascinating to see how the smart banknote technologies have evolved. Display technology, in particular, is advancing apace.

Quantum dot light emitting diodes (QLEDs) are an advanced technology currently in development that will deliver the ultimate solution for displays and lighting applications… QLEDs are only a couple hundred nanometers thick making them virtually transparent and flexible, and highly suitable for integration onto plastic or metal foil substrates as well as other surfaces[From QLED Technology]

Displays aren’t the only technology of interest here. I think we can focus down and think of a smart banknote as comprising four main technological components:

  • The note itself, made out of a plastic polymer rather than paper. This makes it durable and waterproof, important if it is to contain electronics. Some countries (eg, Australia) have already switched from paper to plastic for their banknotes and others (eg, Canada) are planning to follow. Plastic banknotes last much longer than paper ones, so the additional cost of production doesn’t stop them from being cost-effective.
  • The electronic ink display on the note. Electronic ink, as you’ll recall, only uses power when it is changing, so once the banknote display has been written then it will stay displaying the same thing until it changed.
  • The chip inside the banknote. Why do we need a chip inside the banknote? Well, we want the banknote to be secure: we don’t want it to be counterfeited or altered. And we need the banknote to be able to communicate intelligently with terminals.
  • The antenna connected to the chip. We want our smart banknote to work like an Oyster card, so that you only need to tap it to some form of terminal for it to work.

How would such a note be used? Well, imagine that you have a banknote that says “£10” on it. You to the coffee shop and spend £1.50 on a coffee. You tap the note on the till to pay, and the display now changes to say “£8.50”. When you get to work, your friend reminds you that you owe him £8 from the pub. You give him the note and he gives you a 50p coin in change. Your friend can absolutely trust that the value represented by the note is indeed £8.50 because the tamper-resistant chip and the cryptography it deploys make it impossible to counterfeit.

It’s hard to imagine the implications so a technology combination so radical in everyday use. Take just one aspect: the expense and complexity of engraving plates, adding holograms, printing fine detail and everything else that is needed to make notes hard to counterfeit

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.

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

A smart banknote needs none of these, because its security depends on cryptography and the chip tamper-resistance. The state-of-the-art here is already more than adequate for purpose. There are other differences too: since the smart banknote works using contactless communications, there’s no reason for it to be a rectangle. The best smart banknote might be a ball, or a strip or a disc.

What would a banknote look like without security printing, freed from the tyranny of form factor and with a display that changes? That’s an interesting question. Since it’s about technology, it’s easy for people like me to imagine how a smart banknote might work. It’s much harder to imagine what it might look like, and that’s why Consult Hyperion have a launched a competition for artists to design a smart banknote. It’s going to work like this: the competition will run for a month from 21st January 2011 to 21st February 2011. During that time, artists are invited to submit a picture, sketch, diagram, draft, model or any other means of communicating their vision to art (at) chyp.com for consideration. All of the entries will be displayed at the Digital Money Forum website.

The artist Austin Houldsworth, who presented at the 12th Digital Money Forum in 2009, has been commissioned to review the entries and create a shortlist. The shortlisted candidates will be informed by 25th February 2011 and invited to come along to the Digital Money Forum on Thursday 3rd March to present their concept to our judging panel and you, the delegates. The panel will then select the winning entry and present them with a prize: in this case, an Apple iPad (although naturally the prestige associated with award outweighs the value of this base material prize).

As an aside, the Curator of Modern Money at the British Museum, Catherine Eagleton, will be speaking at the 14th annual Digital Money Forum in London in March, so if you would like to ask anything about the money objects featured in the radio series, don’t miss the opportunity to come along and meet a genuine expert.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

Benjamin 3D

[Dave Birch] The US is soon to release a new $100 bill. But why? What do they do with $100 bills? They’re not, as you might imagine, needed to support commerce and trade.

In 2001 the Federal Reserve estimated that 90 percent of the $100 bills ordered by the Federal Reserve (which accounts for the overwhelming majority of C-notes ordered nationwide) were paid out to foreign banks

[From Hundred-dollar bills are for criminals and sociopaths. Why do we still print them? – By Timothy Noah – Slate Magazine]

Around two-thirds of all of the US dollars in “circulation” are not in the US at all and are unlikely to be repatriated. This represents a tremendous interest-free loan from the rest of the world to Uncle Sam. But is this income sufficient to outweigh the negative effects of cash?

So why do we keep printing $100 bills? As with any valuable export, we worry that if the C-note ceased to be available to foreign criminals and dictators, another paper currency would take its place. The leading candidate would be the 500 euro note,

[From Hundred-dollar bills are for criminals and sociopaths. Why do we still print them? – By Timothy Noah – Slate Magazine]

Well, that’s true, and the conspiracy theory that the European Central Bank (ECB) only had the 500 euro note printed in order to replace the $100 bill in the stashes of drug dealers and tax evaders is widely recirculated. But that’s a reason to scrap 500 euro notes, not to print more $100 bills, especially when the $100 bills have to be completely re-designed anyway.

But the biggest upgrade is a blue “3D Security Ribbon”… The strip contains a series of images of bells and digits; tip the note, and the images come into 3D relief. “It only takes a few seconds to check the new $100 note and know it’s real,” says Larry R. Felix, Director of the Treasury’s Bureau of Engraving and Printing.

[From US Treasury: New 100 dollar bill needs 3D tech – CSMonitor.com]

Sounds exciting. But why bother? Why not just forget about the $100 (and, for that matter, the $50 bill)? After all, high-denomination notes have been withdrawn before, and for much the same reason. We have to weigh up the overall impact on society and try to make the right decision, and sometimes that decision might mean a radical change.

In 1969, the Treasury stopped issuing $500, $1,000, $5,000 and $10,000 bills specifically to impede crime syndicates — the only entities that were still using such large bills after the introduction of electronic money transfers.

[From Turn In Your Bin Ladens – NYTimes.com]

And before I get deluged with e-mails calling me a New World Order stooge intent on introducing the Mark of the Beast across the USA, let me merely point out that if the public were to desire anonymity for payments (they don’t, by the way) then it’s possible to create anonymous electronic money: this is an implementation choice, not any sort of technological constraint. Of course, the fact that the US government stops producing high-denomination notes doesn’t necessarily mean that they will disappear…

Malaysian police have arrested a Lebanese man allegedly carrying fake currency with a face value of $66 million after he tipped a hotel staff with a $500 note, an official said Friday.

The largest U.S. note currently in wide circulation is a $100 bill. But police found bundles of $1 million, $100,000 and $500 notes in the man’s hotel room in Kuala Lumpur on Sunday, said Izany Abdul Ghany, head of the city’s commercial crime unit.

[From $500 Tip Leads Police to $66 Million in Fake Bills – ABC News]

If only all counterfeiters were that good!

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]


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