This post was written by Charles Best

Despite the digital revolution, cash remains a resilient force in the financial world. Thanks to
continuous innovation in banknote technology and rigorous standards set by central banks,
physical currency is becoming increasingly secure, ensuring its continued practicality and
bolstering consumer confidence. 
 
Digital platforms, contactless cards, and mobile apps have undeniably reshaped the financial landscape in recent years. However, this digital realm also presents vulnerabilities, as cybercriminals constantly devise new methods to exploit online transactions, putting users and their financial data at risk. The scale of this crime has already reached such proportions that insurance companies have begun offering cyber insurance coverage aimed at protecting their clients from data breaches and financial losses. However, even this coverage cannot fully protect against ransomware, as the insurance companies only pay out in 32 percent of cases, compared to an average of 40 percent across all sectors.

On the other end of the payment spectrum lies cash, a less visible yet familiar and popular means of payment that remains available to populations worldwide. Crime in this area is also present, but it has been significantly reduced recently. Consider one of the most popular currencies globally, the euro: “The likelihood of receiving a counterfeit is low, as the number of counterfeits is very small in proportion to genuine euro banknotes in circulation. In 2024, 18 counterfeits were detected per million genuine banknotes in circulation, which is very low compared with the levels observed following the launch of the euro,” states the ECB in its latest report. 

This statistic has a pretty solid basis: the ability for criminals to successfully replicate banknotes is demonstrably decreasing thanks to the ever-tightening security standards and consistent research and development within the banknote printing industry. A quick look at the latest trends here shows that the concerted push for innovation and regulation has reached a point where producing high-quality counterfeit currency is becoming an increasingly complex and unprofitable endeavor. 

When every detail matters 

In 2020, scientists conducted an interesting experiment that showed you don’t have to be an expert cash handler to reliably verify the authenticity of a banknote. The results indicated that the general public could recognize a genuine banknote well above chance, even when viewing it for only 500 milliseconds. And when given the opportunity to both see and touch the bill, their performance improved even further, especially with ample time to examine the banknotes. 

Based on the study, recommendations were issued for central banks to continue considering security features that appeal to both touch and sight. In fact, this aligns with an ongoing trend in the cash industry—both among central banks and banknote manufacturers. To provide up-to-date protection and stay one step ahead of counterfeiters, they analyze counterfeiting trends and identify vulnerabilities, subsequently incorporating increasingly sophisticated measures. 

Often, the need to stay one step ahead of the scammers presents a complex array of technical challenges. It requires advanced materials science for durable substrates, printing techniques capable of micro-precision, and the incorporation of layered security features that are both easily verifiable by the public yet extremely difficult for counterfeiters to replicate. A banknote, meanwhile, needs to present a cohesive whole in which every detail is yet another defense against fraudsters—even if it’s just ink, says Paul Cooper, President of security ink producer Luminescence Sun Chemical Security: “We see a push for using high-security inks already incorporated in the substrate at manufacturing stage instead of at the convertor of the bank note or document. Using this layered approach adds additional barriers against the counterfeiters so for us it is important to develop our products so they work at all stages of the supply chain.”  

Collaborative Security in Banknote Innovation 

The increasing sophistication of widely available technical means (for instance, high-resolution printers), which are also available to the counterfeiters, presents another challenge. This is why banknote manufacturers are very protective of their technical solutions, and their lengthy research processes invariably result in patent filings. These patents provide legal protection against unauthorized replication and allow security printers to maintain a technological advantage over counterfeiters. 

Heavily shielded against unauthorized access to their developments, industry players still cooperate with each other. And, as in any industry, there’s an opportunity for synergy in innovation and development that ultimately benefits both users and manufacturers tells Thomas Savare, CEO of French banknote and security printing firm Oberthur Fiduciaire which owns more than 1,000 patents: “Developing new solutions is more important than ever, which is why, in addition to our crucial in-house research, we decided recently to take control over the Swedish company Rolling Optics. This synergy saves us effort and time. For example, we have launched a new product – Anima™ – in partnership with Rolling Optics. This thread is extraordinary because it offers spectacular and unique movement with different variations that make it virtually impossible to copy.” 

Central banks also facilitate such synergies, as their requirements often lead to a combination of solutions from several manufacturers in a single banknote. An example of this is a series of Kyrgyzstan’s updated Som banknotes issued in 2023. This issue combines materials and security features from Oberthur Fiduciaire and other manufacturers to enhance security, the Kyrgyz central bank explains in its release: “The idea is that if one feature is counterfeited or effectively simulated, the other feature cannot be attacked by the same means, requiring significant additional effort to counterfeit the note.” On top of this, cooperation between several companies can add additional benefits: for instance, the 50, 200 and 1000 Soms banknotes use not only security technologies, but also Bioguard™, the French company’s solution offering anti-bacterial, anti-fungal and anti-viral protection to ensure public health safety. 

Innovative Technologies for a Cash-Digital Future 

All the efforts within the banknote manufacturing industry have already propelled the effectiveness of cash technologies to an unprecedented level, creating new possibilities for the future of physical currency. Not only do these advancements directly enhance the security of banknotes and deter counterfeiters; they are also bridging the perceived gap between the convenience of digital payments and the inherent security of cash, potentially converging into a single, enhanced form of money. 

One example of this convergence, which simultaneously enhances security and hints at digital integration, is the incorporation of electronics into banknotes. The Bundesdruckerei, the German state security printer, recently used such technology in the form of a microchip from semiconductor solutions provider Infineon. The chip, embedded directly into the banknote, is only 70 microns thick, making it almost invisible. Previously, we only saw this in bank cards, but this development takes cash to a whole new level, says Adrian Heuberger-Lewerenz, Bundesdruckerei’s designer: “The chip uses NFC to access a full range of digital payment services that central banks may wish to offer. Its functionality can be tested by holding a smartphone against the chip.” 

These chips, as well as other innovations in the industry, suggest a future where physical cash remains in widespread use. The speed and convenience of digital payment systems may excel at facilitating remote transactions and leveraging online commerce, but they can’t offer the tangible security and universal accessibility of well-protected banknotes. These features make cash ideally suited for certain types of transactions and demographics, offering a reliable and private means of exchange that will remain relevant as long as people need to be 100% certain of their financial security. 

This content was produced independently from the Worldcrunch editorial team.