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Digital Money Forum: Pounded

This is what happens when supermarkets make you put 1 pound coins in the trolley dispensers. Does anyone know how frustrating it is to not a have a pound coin when you really really need a trolley. tch tch.

Pounded

[Dave Birch] A few weeks ago at a conference I said in passing that I thought that about 1 in 50 pound coins in the UK is counterfeit but it turned out that I was way off of the mark and the actual figure may be close to 1 in 20! The economics are worth noting. It costs 10p-20p to make a fake coin, and these fakes are bought by criminals for 70p, so the forgers make 50p per pound. Not a bad return. And he’s another interesting fact I learned about counterfeiting: it’s harder to forge euro coins because they have a magnetised stripe running through them and this makes it easier for machines to spot the fakes.

The reported dynamic is of mass collusion. If you find yourself with a pound coin that you believe to be fake, then you will not report it (because then you are out a pound) but will instead attempt to pass it on to someone else in a Gresham’s Law dance. Thus, they stay in circulation. Instead of just scrapping one- and two-pound coins and getting people to use cards or mobile phones instead, the Royal Mint are “working with banks etc” to remove counterfeit coins before they reach members of the public.

Don’t panic. There’s a way to go before Sterling collapses because of counterfeiting: it’s the Bank of England printing money that is devaluing the currency right now, not garage-based entrepreneurs from the informal economy. It has to get a lot worse. And other countries have been there before, so they know what to do.

President Abraham Lincoln created the Secret Service in 1865 to deal with a crisis: One-third of the nation’s money was counterfeit. Now the fake rate is .02 percent, or one in every 10,000 bills, Green said, but that could easily get worse.

[From Fake money isn’t what it used to be – Kansas City Star]

Well that’s not too bad, especially compared to pound coins, and probably another argument against a dollar coin coming along. However, the counterfeiting rate does get worse, then I’d tend to be on the more radical side in terms of solutions. We could go back to the Chinese tradition of adding tattoos to counterfeiter’s foreheads, or we could cut of their ears (as was the English fashion. Alternatively…

If you ask me, at least one country should take the lead and simply stop printing currency notes for mass circulation. Invest that money to strengthen the electronic payments network. Shock treatment may work well where medication hasn’t so far!

[From How to counter ‘Counterfeit’? Stop printing notes!]

Sensible policies for a better Britain.

P.S. Actually, I’d originally filed away the Kansas City Star article for another reason, which is that it contained a notable anti-globalisation message that I’d not seen before:

In the past, he said, the best American counterfeiters were skilled printers who used heavy offset presses to turn out decent 20s, 50s and 100s. Now that kind of work is rare and almost all comes from abroad.

[From Fake money isn’t what it used to be – Kansas City Star]

Even counterfeiting has been outsourced to low-cost foreign competition. I must drop Pat Buchanan a line.

via Digital Money Forum: Pounded.

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