Counterfeit bills are a big problem for governments, so they periodically update their bills to add several security features aimed at preventing counterfeit bills.

But I imagine that for this to work, the old bills need to be removed from circulation, for example by setting an expiry date after which they can't be converted to newer bills and lose validity.

How do countries whose bills don't have an expiry date handle counterfeit? What prevents an expert counterfeit from printing money from the 1950's (which the government themselves believe to be insecure now) and making a profit? I believe that this is the case of the U.S., since the U.S. dollar bills do not have an expiry date.

Edit

Just to clarify, I am not talking about the viability of counterfeit in general. Since governments have deemed necessary updating bills with new security features, you should work with the assumption that counterfeit without those new security features is (or will become in about 10 years) feasible and profitable. So any explanation that applies to counterfeit in general (like matching serial bills, say) is automatically invalid.

closed as off-topic by Dilip Sarwate, Dheer, RonJohn, Pete B., Chris W. Rea Jan 22 at 12:26

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    I feel like if I saw a bunch of new $100 bills from the 50's I would have an eyebrow or two raised? Unless you're assuming they have a mechanism to print new ones and then wear them down? – Mehrdad Jan 21 at 21:01
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    This question has nothing to do with Personal Finance and Money. – Dilip Sarwate Jan 21 at 21:14
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    @SpehroPefhany I know it's probably a joke but comparing counterfeting money to Quantitative easing is simply ridicolous :-) – Ant Jan 21 at 21:50
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    I'm voting to close this question as off-topic because counterfeiting is a legal problem, not a PF issue. – RonJohn Jan 21 at 23:39
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    @schizoid04: How could you possibly do that? You would have to equip every person or business that might receive cash with a device to scan serial numbers, and look them up in a database. Meanwhile, the intelligent counterfeiter also has one of these databases, and prints bills with valid serial numbers. The people who hold those bills are probably SOL after the counterfeit is presented. – jamesqf Jan 22 at 4:22

Interesting thought. I think (at least) two things would help to foil a counterfeiters. 1. He'd have to not only duplicate the bills, but then make them look old. So there's an extra challenge. If you tried to give someone a bill dated 1950 and it looked new, that would be likely to arouse some suspicion. And 2. If someone went to the bank or wherever with a stack of bills all dated 100 years ago, that would surely attract attention.

In general I think the goal of counterfeiters is to pass their bills unnoticed. If you can hand someone your fake bill and they don't think about it but just accept it, you win. If they get suspicious or cautious for any reason and start looking carefully, they're liable to see the flaws.

And of course the flip side is that if bills did have an expiration, what happens to someone who tries to tuck some money away for emergencies? He may find that that money he stuffed in the shoe box 20 years ago has now expired. Someone who wasn't aware of the law or didn't think about it could accidentally lose a fortune overnight. Even if the expiration period is long, it's not like everyone who handles the bill has that amount of time. Suppose the expiration was 20 years, like in Switzerland (sort of). For the first person to get the bill, fine, he has 20 years to spend it. But what happens to the poor guy who gets the bill when it's 19 1/2 years old? If he doesn't notice and let's it sit in his wallet or whatever for six months, suddenly he's out the money. Indeed, depending on how the system worked, it might mean that every time you received cash, you would have to go through every bill and check that it wasn't expired, or about to expire very soon. You couldn't just stuff change in your pocket: you'd have to carefully check each bill. Plus you'd have to have a mechanism for people to trade in old bills and get them replaced with new bills, which would surely be at least a nuisance.

So it seems to me that the question is whether the risk of counterfeits outweighs the unfairness of destroying the value of people's cash, or at the very least imposing inconvenience on handling money. I suppose if a country had major problems with counterfeiters, they might be forced to do this.

  • Uhm I am not completely convinced. For the first thing, I imagine it's not that hard for an expert to make a bill look old. For the second, you can go a bank and say "Look! I found in my grandaparent's attic 20k dollars! Can you put it in my account please?". The bank would check the bills, but they would pass inspection. Now rinse and repeat to other, far away branches. (Also, by the time the bill is 19 1/2 years old, you would notice it. I live in switzereland, and last year they introduced new 50 CHF bills. I hardly see any of the old ones anywhere now) – Ant Jan 21 at 22:07
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    My point about taking a stack of old bills to the bank was, they would likely be inspected. If a counterfeiter tried to make a batch of 100-year-old-looking bills and take them to the bank, it's likely someone would notice and they would get inspected. – Jay Jan 21 at 22:30
  • It seems to me that it is unlikely that you could look at a bill and instantly see that it is 19 years old rather than 17 or 21. The amount of wear would depend on many factors. And that's my point: you'd have to constantly pay attention to the expiration date on the bills. BTW I said "sort of" on Switzerland because it's not like every bill in Switzerland expires 20 years after it's printed. As I understand it, they expire 20 years after a new series comes out. So the old bills presumably look recognizably different. Maybe that's an important element to make an expiration scheme work. – Jay Jan 21 at 22:33
  • Yes, that's what I mean with "you would notice". When a new series comes out, the bills look noticeably different, so you can't really go wrong. Same thing with the euro bills. – Ant Jan 21 at 23:55
  • "t's likely someone would notice and they would get inspected" -- sure, I don't disagree. But it doesn't seem like the best protection ever, especially since U.S. dollar bills are visually identical (correct me if I'm wrong). I mean, banks would get suspiscious of anyone coming in to change 20k dollars in cash. That doesn't mean we don't use try to curb counterfeit money by adding special security features. – Ant Jan 21 at 23:57

If you deposit money in a bank, the bank teller (the person who processes the deposit) takes the cash and puts it in a cash counting machine. The machine is entirely capable of doing any number of checks on the money. In particular, it can check that the paper is the type of paper on which money is printed (as opposed to, say, copier paper). And yes, the machine can systematically aggregate information with other machines.

One of the big problems with counterfeiting money is getting good paper. One solution to that was to take $1 bills, bleach them, and print higher denominations on them. With the new money, the $1 bills have unbleachable marks in them. So the bill may look like a $20 bill to the eye but actually recognized by the machine as a $1 bill masquerading as a $20.

Yes, the criminals could continue using old $1 bills printed to look like old $20 bills. But the $1 bills are increasingly scarce. Because any bill older than about three years gets sent back to the Treasury department to be replaced. So they don't have an inexpensive source for old $1 bills.

A bank would almost certainly catch a counterfeit bill at the time of deposit because the equipment is designed for that. The greater problem is that someone may pass counterfeits somewhere other than a bank. The typical Wal-Mart does not have the same kind of counting equipment. But it's harder to pass large numbers of bills at a Wal-Mart. They only take moderate amounts at a time, say $500 for a really large order.

The initial purchase will almost certainly be successful. But after the initial purchase, surveillance video will show who made the $500 purchase with cash. They'll be on the lookout for more counterfeits.

So for $500 in merchandise, the counterfeiter paid $25 or more to get the $1 bills. Had to find the old $1 bills, when most are newer than that. Paid more money to do the counterfeiting. And can't sell the $500 merchandise for $500 but probably more like $250 after costs. And can't scale things up because a repeat visit is much more likely to be caught. A $200 profit on a counterfeiting event is not that much. They really need more money for it to be profitable compared to other illegal things that they might do.

  • Thank you for your answer. It seems to me though that what you says applies to counterfeiting in general, and does not really address my question. – Ant Jan 22 at 0:02

In addition to Jay's excellent answer...

the old bills need to be removed from circulation, for example by setting an expiry date How do countries whose bills don't have an expiry date handle counterfeit?

Paper money wears out, and old bills get pulled out of by banks, then sent to the Fed for shredding/burning.

More importantly, a 1957 US $1 bill would have been:

  1. a Silver Certificate, which would mightily confuse retailers and bank tellers, and
  2. only made in $1, $5 and $10 denominations, so trying to pass them off as $20 or $50 or $100 bills would be known as fakes with a little research.

https://en.wikipedia.org/wiki/Silver_certificate_(United_States)

The small-size silver certificate (1928–1964) was only regularly issued in denominations of $1, $5, and $10.

enter image description here

  • Please do not answer a question and also vote to close. Either retract your close vote, or delete your answer. – Ben Miller Jan 22 at 11:15
  • I don't understand your point #2. $1 silver certificates were issued only in $1 denominations, not $5 or $10. Federal Reserve notes were also in circulation at that time, in denominations ranging up to $10,000, so the "only $1, $5, and $10 denominations" can't be an attempt to describe all bills in circulation. Although, the image you post is very helpful for displaying that even people not normally attentive to currency design would notice something off about many bills from the 1950's. – user4556274 Jan 22 at 12:23
  • @user4556274 I'm quoting Wikipedia. Evidence of only $1 denominations is always welcome. – RonJohn Jan 22 at 14:46
  • Well, 1950's were just an example - take bills from the 1970s then – Ant Jan 22 at 16:27
  • @Ant I'd question whether or not there enough bills remaining in circulation to make it worth all the effort. – RonJohn Jan 22 at 16:44

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