Estimating the Volume of Counterfeit U.S. Currency in Circulation Worldwide: Data and Extrapolation

Abstract

Abstract

The incidence of currency counterfeiting and the possible total stock of counterfeits in circulation are popular topics of speculation and discussion in the press and are of substantial practical interest to the U.S. Treasury and the U.S. Secret Service. This chapter assembles data from Federal Reserve and U.S. Secret Service sources and presents a range of estimates for the number of counterfeits in circulation. In addition, the chapter presents figures on counterfeit passing activity by denomination, location, and method of production. The chapter has two main conclusions: first, the stock of counterfeits in the world as a whole is likely on the order of 1 or fewer per 10,000 genuine notes in both piece and value terms; second, losses to the U.S. public from the most commonly used note, the $20, are relatively small, and are miniscule when counterfeit notes of reasonable quality are considered.

The authors thank colleagues in the U.S. Secret Service Counterfeit Division, the Cash Function of the Federal Reserve Bank of New York, and the Division of Reserve Bank Operations and Payment Systems for assistance in compiling and obtaining data and for valuable discussions and comments. Members of the Divisions of Monetary Affairs and International Finance also contributed helpful comments. The views presented are solely those of the authors and do not necessarily represent those of the Federal Reserve Board, the Federal Reserve Bank of Chicago, or their respective staffs.