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This study by the National Materials Advisory Board was conducted under Contract No. TEP-92-58(N) with the U.S. Treasury Department, Bureau of Engraving and Printing.
Copyright 1993 by the National Academy of Sciences. All rights reserved.
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COMMITTEE ON NEXT-GENERATION CURRENCY DESIGN
GLENN T. SINCERBOX Chair,
IBM Research Division, Almaden Research Center, San Jose, California
STEVEN ANDRIOLE,
Drexel University, Philadelphia, Pennsylvania
NORBERT S. BAER,
New York University, New York, New York
DONALD BAUDER,
Sandia National Laboratory (Retired), Albuquerque, New Mexico
MITCHELL J. FEIGENBAUM,
Rockefeller University, New York, New York
JOSEPH GAYNOR,
Innovative Technology Associates, Ventura, California
STEVEN M. GEORGE,
University of Colorado, Boulder
ANNETTE B. JAFFE,
Apple Computer, Inc., Santa Clara, California
MICHAEL MORRIS,
University of Rochester, Rochester, New York
KURT NASSAU,
AT&T Bell Laboratories (retired); Nassau Consultants, Lebanon, New Jersey
ROBERT R. SHANNON,
University of Arizona, Tucson
RODNEY SHAW, Consultant,
Pittsford, New York
Liaison Representative
SARA CHURCH, Department of the Treasury, Bureau of Engraving and Printing, Washington, D.C.
National Materials Advisory Board
ROBERT E. SCHAFRIK, Director
ROBERT SPRAGUE, Consultant
JANICE M. PRISCO, Administrative Assistant, Project Assistant
ACKNOWLEDGMENTS
The committee is grateful to the many individuals who presented invited briefings on specific technical areas relevant to the production of banknotes, details of particular counterfeit deterrence features, reprographic technology, and the detection of counterfeit bills.
The committee acknowledges the following industry representatives:
Barney Barnes, Mars Electronics International: low technology bill validators
Haim Bretler, Director General, SICPA Holdings SA, Switzerland: overview of optical variable ink technology
Tim Crane, Crane & Co.: counterfeit deterrence features in banknote paper
Jim Farrand, James River Corp: overview of innovative security paper
Tom Gazda, Arthur D. Little: market survey on color reprographic equipment
John Haslop, Thomas DeLaRue Corp: counterfeit deterrence features used in world currency, and issues in designing secure banknotes
Bill Jumper and Bruce Radl, Ektron: input scanners and currency inspection methods
Mike Ott, IA Corporation: sensors for high speed Federal Reserve Board equipment
Bill Patton, General Electric Aerospace: engineering considerations of radar reflective paper
Roger Phillips, Flex Products: optically variable pigments
Jim Tsujita, Canon Corporation: counterfeit deterrent features built into copiers and printers
The committee acknowledges the following government and Federal Reserve System representatives (members of the New Currency Design Task Force are noted by an *):
James Brown* and Craig Einsel, U.S. Secret Service: counterfeiting experience in the U.S. and in foreign countries
Len Buckley, Bureau of Engraving and Printing: banknote designing and engraving
Jon Cameron*, Federal Reserve Board: how the Federal Reserve System operates
John Collins, Bureau of Engraving and Printing: counterfeit deterrent research
Tom Ferguson,* Bureau of Engraving and Printing: role of this study assisting the New Currency Design Task Force in evaluation of counterfeit deterrence methods
Mark Hepfinger, U.S. Army Natick R&D Center: dyes and pigments
Dan Littman, Federal Reserve System, Bank of Cleveland: survey of advanced counterfeit deterrence features
James Reese,* Federal Reserve Bank, Richmond: importance of secure currency
John Stoides,* Currency Technology Office, Federal Reserve System: advances in instrumental methods used by the Federal Reserve Banks to screen banknotes
Robert Stone,* Bureau of Engraving and Printing: issues related to counterfeit deterrent features
The committee is particularly grateful to the Bureau of Engraving and Printing's liaison representative, Dr. Sara Church,* Office of Advanced Counterfeit Deterrence for her active participation at all data gathering meetings and for providing valuable supporting materials and data for the committee's use.
Finally, the committee acknowledges the support of Dr. Robert Schafrik, the senior staff officer at the National Materials Advisory Board (who also assumed the responsibilities first as acting director then director of the board during the course of this study); Dr. Bob Sprague, who provided very able insight and help during the preparation of the report; and Ms. Janice M. Prisco, who provided much appreciated assistance and administrative support throughout the course of the study.
PREFACE
The Department of Treasury's Bureau of Engraving and Printing (BEP) has designed, engraved, and produced U.S. banknotes since 1862. (The BEP has produced all U.S. currency since October 1, 1877.) Having begun with only six employees and borrowed equipment to print $1 and $2 treasury demand notes, the BEP has evolved into a major industrial operation. The BEP now employs 2,300 people who work around the clock. At any given time, as much as $200 million may be in production. In 1991 the Federal Reserve System ordered 7 billion banknotes (all denominations) from the BEP. The 1994 order may be as high as 9.3 billion banknotes.
An important part of the Department of Treasury's mission is the deterrence of counterfeiting. As new and improved reprographic methods have come into use, the Department of Treasury has made changes to banknotes to enhance their resistance to counterfeiting. Specific legislation is not required for a change in the design of currency, since the Secretary of the Treasury is empowered by law to issue paper money in a suitable form (12 U.S.C. 418). But realistically, any change to the design of the currency would not be made without a period of public debate; it is hoped that this report will add value to the debate.
In 1992, the Department of Treasury requested that the National Research Council, through its National Materials Advisory Board, analyze and recommend overt counterfeit deterrence features that could be incorporated into a redesign of U.S. banknotes. Previous studies by the board had assessed counterfeit deterrence features at a time when a major redesign was not undertaken (NRC, 1985, 1987). The major conclusions and recommendations from these studies are summarized in Appendix A. It should be noted that the security thread, implemented in the Series 1990 U.S. banknotes, was one of the recommendations in these reports. This change was the subject of Congressional Hearings (House of Representatives. 1985).
As a matter of historical interest, one of the first studies undertaken by the National Academy of Sciences after its formation in 1863 concerned counterfeit deterrence. The Secretary of the Treasury, in August 1863, requested that the Academy provide advice on ways to eliminate the counterfeiting of greenbacks (Cochrane, 1978). The Committee on Prevention of Counterfeiting was formed and its first confidential report was presented directly to the secretary on January 7, 1864. Until it was disbanded several years later, after counterfeiting ceased to be a problem, the committee analyzed different methods being suggested to reduce counterfeiting.
The major objectives of the current study were to:
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analyze and recommend new overt (e.g., readily visible and recognizable to the general public) counterfeit deterrence features that can be incorporated into U.S. currency in the short term, intermediate term, and long term; and
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assess technological directions of future reprographic techniques that could be used for counterfeiting by “casual” and “professional” counterfeiters.
A committee (of 12 members) with expertise in advanced reprographic technology, chemistry, color, optical science and engineering, paper, physics, security marking, and systems engineering was formed. The committee met six times between June 1992 and June 1993. Invited presentations by experts from industry and government provided data relevant to the production and inspection of banknotes, advanced reprographic technology, and advanced counterfeit deterrence features and methods.
The report reviews and assesses a number of possible counterfeit deterrent features. Conclusions and recommendations are presented to assist the U.S. Treasury Department in developing the design of the next-generation currency, and in ensuring that U.S. currency remains secure well into the next century. Due to the fact that some readers may not be familiar with many of the technical terms used, a glossary is provided at the end of the report for their convenience.
Any comments or suggestions that readers of this report wish to make can be sent via Internet electronic mail to nmab@nas.edu or by fax to the National Materials Advisory Board at (202) 334-3718.
Glenn Sincerbox, Chair
Committee on Next-Generation Currency Design
REFERENCES
Cochrane, R. C.1978. The National Academy of Sciences: The First Hundred Years, 1863–1963. Washington, D.C.: National Academy Press.
House of Representatives. 1985. Hearing on the Currency Design Act. First Session on H.R. 48. June 18, 1985. Subcommittee on Consumer Affairs and Coinage Committee on Banking, Finance, and Urban Affairs. Serial No. 99-27. Washington, D.C.: U.S. Government Printing Office.
National Research Council (NRC). 1985. Advanced Reprographic Systems: Counterfeiting Threat and Deterrent Measures(U). National Materials Advisory Board. Washington, D.C.: National Academy Press.
National Research Council (NRC). 1987. Counterfeit Threats and Deterrent Measures. National Materials Advisory Board. Washington, D.C.: National Academy of Press.
TABLES AND FIGURES
TABLES
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Table 2-1 |
Counterfeits Produced by Ink-Jet Technology, October 1992 through June 1993, |
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Table 2-2 |
Estimated 1995 Non-Impact Color Printer Costs, |
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Table 3-1 |
Resistance Against the Threat, |
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Table 3-2 |
Technical Success Probability, |
FIGURES
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FIGURE 2-1 |
Cases of counterfeiting $20 notes using ink jet technology, |
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FIGURE 2-2 |
Trend in color copier placements, |
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FIGURE 2-3 |
Trend in non-impact color printer placements, |
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FIGURE 3-1 |
Distribution of BEP currency printing cost distribution, |
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FIGURE 4-1 |
Photomicrograph of intaglio printed image, |
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FIGURE 4-2 |
Photomicrograph of photocopied image, |
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FIGURE 4-3 |
Photomicrograph of lithographic printed image, |
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FIGURE 4-4 |
Color-shifing device principle of operation, |
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FIGURE 4-5 |
Color-shifting ink, |
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FIGURE 4-6 |
Cross-section of color-shifting pigment, |
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FIGURE 4-7 |
Infrared dye spectrum, |
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FIGURE 4-8 |
Fresnel zone plate pattern, |
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FIGURE 4-9 |
Digital image produced by sampled a fresnel zone plate, |
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FIGURE 4-10 |
Frequency-modulated image, |
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FIGURE 4-11 |
Copy of image made using a state-of-the-art color copier, |
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FIGURE 4-12 |
Space filling pattern, |
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FIGURE 4-13 |
Moiré image of the pattern in Figure 4-12 that had been reduced (50 µm line width), |
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FIGURE 4-14 |
Optical setup for recording a hologram of an object, |
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FIGURE 4-15 |
Structure and reflection spectrum of an embedded lamellar diffraction grating, |
