Tuesday, February 28, 2012

How much counterfeiting can a currency tolerate?

Press inquiries in 2010 found that, with over 41 million faked [British] pound coins in circulation—nearly 3 percent of the total coinage—the Royal Mint was facing the possibility of an expensive currency recall. An internal HM Treasury email (PDF), released under Britain's Freedom of Information law, notes that analysts typically regard 5 percent as the point of no return for any currency. But the report also points out that South African 5 Rand and Malaysian 1 Ringgit coins were both reissued (in 2004 and 2005, respectively) after much lower counterfeit rates. The implication is that Britain's currency is already in peril. ...

What may have spared the United States from such embarrassment, Matthews politely ventured to me, is our level of usage: That is, $1 coins are so unpopular that even counterfeiters can't be bothered. ...

But could coin counterfeiting happen here? Incredibly, we don't even know if it already has. The Secret Service is in charge of dealing with counterfeit currency; but after making Freedom of Information Act inquiries with them when the $1 presidential coin program was in full swing, I found their countermeasures appeared to be ... nothing at all (PDF). The U.S. Mint website doesn't even mention the possibility of fake modern circulating coinage, nor does it give instructions on how to detect them. Then again, with 25 different $1 coin designs already in circulation—the Susan B. Anthony, four Sacagawea variants, and the first 20 presidents—the $1 coin's identity has been so diluted that few would know a real from a fake anymore.
--Paul Collins, Slate, on faking it till you unmake it