The Reserve Bank of Australia has released a study into the business and economic damage caused by forged banknotes.

The Social Cost of Currency Counterfeiting concludes that current counterfeiting activity is low. However, the potential costs to Australian businesses may not be trivial.

In 2013 fake bills worth $1.2 million were detected circulating throughout the economy. This works out to a miniscule $16 out of every million minted notes – costing 5 cents per Australian.

Compare this to the Eurozone, where $44 million worth of fake currency was apprehended – costing 13 cents per person.

But the runaway winner (or loser) was the United Kingdom; where $19 million worth of funny money was found in circulation. Because of the smaller amount of currency in its economy this $19 million works out to be 230 for every one million legitimate notes – with a cost to citizens of $2.30 each.

But don’t be fooled by the apparently small numbers. $2.30 mightn’t sound like much, but it can be a very big deal to small businesses.

“For low-margin businesses,” said the report, “it is possible that the loss from receiving a counterfeit could exceed daily profits. For example, as highlighted by the Bank of Canada, grocers operating on margins of one to two per cent would have to sell up to C$5,000 worth of goods to recoup the loss from accepting a single C$50 counterfeit.”

Likewise low-income families will find a larger proportion of their household budget wiped away when they realise they’ve been duped with a counterfeit note.

“Of the counterfeits detected,” the report continues, “in these data in 2013, the general public detected approximately 10 per cent, businesses detected around 34 per cent, the RBA, banks and other cash management companies detected another 32 per cent.”

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