Advances in technology have created some of the most sophisticated, counterfeit-proof currencies in history. However, these same leaps in technology keep counterfeiters fast on the trail of the latest wave of security improvements and attempts to keep the counterfeiters at bay.

Mighty Greenback
American currency is among the most popular in the world. Despite some recent setbacks, the mighty Greenback is still seen as the most secure store of value and is circulated more outside of the U.S. than inside its borders. One estimate detailed that more than 75% of the nearly $600 billion in $100 bills circulates outside of the U.S. Due to its popularity, the American $100 bill is one of the most counterfeited currencies, but also one of the most difficult to fake.

A slideshow on the website from a couple of years ago interviewed a convicted counterfeiter about his thoughts on the integrity of the U.S. dollar. The slideshow illustrates the sophistication of the technologies to protect the bills, but points out a number of weaknesses that counterfeiters look to exploit. For instance, counterfeiters can replicate color-changing ink by mixing glitter in a blender. They can also use high-quality printers and scanners to assist in copying hard-to-create images. Another common counterfeiting scheme is to remove the watermark from a $100 bill and affix it to a $5 bill, since both bills use the same image. Small images are also easily copied, as are security threads, though the Federal Reserve has plans to embed even more images to stay ahead of the game.

Best of the Best
Each year, the International Association of Currency Affairs (IACA) holds an awards ceremony for currencies and individuals that have made great leaps in protecting the integrity of currencies and the technologies that go into creating and manufacturing them. In 2011, the IACA voted the Bank of Uganda as the winner of the best new banknote.

The Bank of Uganda highlighted the first major redesign in more than two decades and added security features. The bank noted security features that are both visible as well as hidden within the notes. These features include raised printing, serial numbers, watermarks and a security thread that is inside the note and has the denomination printed on it. The currency also has certain "iridescent" features that are visible when the note is held at an angle. Some of the runner-ups for 2011's best new banknote were the Philippines Central Bank and the Central Bank of Sri Lanka. Scotland's Clydesdale Bank won the award in 2010.

The IACA also gave awards for important new security features. Among the more interesting advancements in security were holograms that detailed "depth and movement," and pixel watermarks with a three-dimensional look that could change based on angle and lighting. The most counterfeit-proof currencies are ones that combine the latest technology with features that are difficult to fake. America, Kazakhstan, Mexico, Sweden and Hong Kong were said to have the most difficult-to-fake currencies in 2011.

The Bottom Line
The IACA awards provide some of the best insight into the currencies and technologies that deter counterfeiting. Money may never become counterfeit-proof, but these security advancements should make some currency thieves rethink their careers, as it might be more profitable for them to devote their energy and attention to earning money legally.

Related Articles
  1. Mutual Funds & ETFs

    Mutual Funds Millennials Should Avoid

    Find out what kinds of mutual funds are unsuitable for millennial investors, especially when included in millennial retirement accounts.
  2. Bonds & Fixed Income

    High Yield Bond Investing 101

    Taking on high-yield bond investments requires a thorough investigation. Here are looking the fundamentals.
  3. Investing Basics

    Investing $100 a Month in Stocks for 30 Years

    Find out how you could potentially earn hundreds of thousands of dollars by just investing $100 a month in stocks during your working years.
  4. Forex Education

    The Most Famous Forex Traders Of All Time

    The five most famous forex traders share common virtues such as strong self-confidence.
  5. Mutual Funds & ETFs

    Top 3 Japanese Bond ETFs

    Learn about the top three exchange-traded funds (ETFs) that invest in sovereign and corporate bonds issued by developed countries, including Japan.
  6. Taxes

    Here's How to Deduct Your Stock Losses From Your Tax Bill

    Learn the proper procedure for deducting stock investing losses, and get some tips on how to strategically take losses to lower your income tax bill.
  7. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  8. Forex Fundamentals

    Buying Yuans as a Long-Term Investment: Risks and Rewards

    Examine the current state of the Chinese currency, the renminbi/yuan, and learn whether it is considered a good long-term investment.
  9. Stock Analysis

    3 Solar Stocks to Add to Your Portfolio

    Understand the growth and challenges of the renewable energy market and its success in 2015. Learn about the top three energy stocks to add to a portfolio.
  10. Professionals

    How to Sell Mutual Funds to Your Clients

    Learn about the various talking points you should cover when discussing mutual funds with clients and how explaining their benefits can help you close the sale.
  1. Why have mutual funds become so popular?

    Mutual funds have become an incredibly popular option for a wide variety of investors. This is primarily due to the automatic ... Read Full Answer >>
  2. Do mutual funds pay dividends?

    Depending on the specific assets in its portfolio, a mutual fund may generate income for shareholders in the form of capital ... Read Full Answer >>
  3. What are the main kinds of annuities?

    There are two broad categories of annuity: fixed and variable. These categories refer to the manner in which the investment ... Read Full Answer >>
  4. What are the risks of rolling my 401(k) into an annuity?

    Though the appeal of having guaranteed income after retirement is undeniable, there are actually a number of risks to consider ... Read Full Answer >>
  5. How do I get out of my annuity and transfer to a new one?

    If you decide your current annuity is not for you, there is nothing stopping you from transferring your investment to a new ... Read Full Answer >>
  6. Who decides when to print money in India?

    The Reserve Bank of India, or RBI, manages currency in India. The bank's additional responsibilities include regulating the ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  2. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  3. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  4. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  5. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  6. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!