Counterfeit money relates to fraudulent notes which are illegally produced and do not have value they seem to possess. The aim of the perpetrator is the deception of recipients as to the true value, and the production of counterfeit money, is a punishable offence worldwide.
Counterfeiting is credibly as old as money itself, in the Second World War there was a counterfeiting operation ran by the Security Service of the German Empire under the code name Operation Bernhard. The large-scale counterfeit of foreign bank notes were prepared in order to destabilize the economies of enemy countries.
Today, original coins and banknotes are equipped with special security features to make the creation of counterfeit money as difficult as possible.
Counterfeits are detected through several techniques which include use of the multi-denomination machine BPS 1000th, capable of detecting 99.9% of counterfeit notes, it recognizes fakes through special sensors (black boxes).
Coins on the other hand, are controlled by an automatic coin machine (NGZ 6000), which has in comparison to the paper money processing machines a lower recognition rate of 96%.
M-feature is a special coating machine, which is still one sure way to distinguish fakes from real bills. Each banknote passes through it on average about every three months, at a central bank branch and checked.
Security features of banknotes include intaglio, security thread (silver thread), watermark, hologram, color change upon tilting, special film/special film element, iridescent stripe, microprint. UV-light fluorescence (fibers in the paper, luminescent materials in the ink), infrared: IR-absorption or fluorescence property and special paper.
Security researchers are always working tirelessly to make bills more secure. One line of research pertains to photochromic dyes which fade at high exposure, to render the photo copying techniques useless. The starting point is the protein bacteriorhodopsin, in normal ambient light takes the normal color of the note.
This effect is the current state of science and takes a wash repeated millions of times at 60°C, without damaging. Other methods include labeling of the paper fiber orientation on the paper through an encrypted and hidden number on the note or a ticket with a grain of sand equipment microchip.
Counterfeit money causes a decline in the value of real money, and is capable of ushering in inflation as a result of additional notes conspicuously entering into circulation in the economy causing an unsustainable increase in money supply.
Public and retailer confidence is lowered, and this can lead to preference of electronic transactions or card based payment methods, as people fear the worst. Ordinarily, business entities are not compensated if they unwittingly take receipt of fake money.