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Counterfeit money (falske penger) in Norway. Counterfeit 19th-century coins (Falske mynter). Norwegian National Museum of Justice. Wolfmann, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons

Few institutions and means are as important to human welfare as money. Considered by most economists to be a market phenomenon, money acts as a social mechanism of distribution, usually by some authority of power. It can be said that this institution has played a key role in the transfer of real resources between parties and the distribution of economic surplus. Remarkably, it has been historically found that the very formation of the modern nation state has been inextricably linked with the process of establishing a unified sovereign national currency. It is no wonder, then, that efforts in war or peacetime to undermine the economies, societies and governments by falsifying their money have proliferated since ancient times. Using counterfeit currency as a method of economic destabilization has existed for centuries because it leaves the population of the target nation unable to afford basic necessities in order to survive.

During World War II, the Nazis decided to begin counterfeiting British banknotes to artificially cause inflation of the British pound. It is a well-known and scientifically proven fact that counterfeit notes from the Operation Bernhard were used to pay the Turkish agent Elyesa Bazna for his work in obtaining top confidential information from the British ambassador in Ankara, the capital of Turkey. British banknotes were successfully counterfeited. It is important to highlight that even the algorithm used to create the alphanumeric serial codes on authentic British banknotes was deduced by the NSDAP agents.

On the authority of the Journal of Economic History of the Federal Reserve of Richmond, Karl Rhode stressed that attacks against American currency began in 1776, during the Revolutionary War (2012, p. 34). Several months before the United Colonies of America declared independence from Britain, the British started counterfeiting Continental currency (continentals) aboard the HMS Phoenix, a gunboat anchored in New York harbor. Plenty of colonists demonstrated their loyalty to the crown by passing counterfeit continentals. This contributed to worsen the counterfeit problem in America, which was already very difficult to handle with in the 1730s.

It should be taken into account that, long before the Secret Service started protecting presidents, the agency was at first charged only with catching counterfeiters. In the decades that followed the year 1865, the Secret Service maintained its zealous pursuit of counterfeiters and its no tolerance policy toward anything that resembled U.S. currency for counterfeit purposes.

As the British Empire began dissolving, newly independent nations began acquiring full monetary sovereignty. More or less, we saw this trend in places like India, Australia and the Americas. Full independence seems to require independent monetary sovereignty. The currency board has served as a method of continued colonial exploitation in exchange for foreign reserves. For instance, only after independence did India assume full sovereign control over the rupee. Having no currency independence makes an entity dependent upon policies that other nations pursue in order to protect its very own interests.

Economist, historian and numismatist Alexander Del Mar — first Director of the Bureau of Statistics at the U.S. Treasury Department from 1866–69 — once said that (1899, p. 102) counterfeiting was a military weapon. On July 3, 1777, it was recorded in the Secret Journal of Congress that a large amount of counterfeit Continental bills had been fabricated in England and brought to America in British men-of-war operating in the Delaware and that the bills had been put into circulation. Therefore, goods in the Americas became more expensive and people poorer than before. Del Mar (1983) also addressed the role of currency amid political conspiracies in his works. One of the most relevant is the conspiracy of 1868, which started previous to the U.S. presidential campaign.

Even if the state of counterfeit money in circulation has improved significantly over time, as Rhodes points out (2012). A joint study by the Federal Reserve, Secret Service, and Treasury Department concluded that less than 0.01 percent of Federal Reserve Notes in circulation worldwide were counterfeit in 2005. Internationally, from 1996 through 2005, the public received approximately $22.4 million in supernotes, and the Secret Service seized approximately $50 million in supernotes. The USD dollar still stands strong, for now, against its foes. A new large counterfeiting operation seems unlikely to happen, as long as the Secret Service keeps leading the way technologically. Moreover, the role of cryptocurrencies and digital money should now be taken into consideration as well. Thus, counterfeiters may sooner than later discover a way to reproduce the most advanced security devices we have today.

Last but not least, one should realize that there is no theory of counterfeiting. Even if this is generally treated as a marginal and unimportant phenomenon that does not deserve to be theorized at all, the use of currency as a means of warfare is a fascinating topic to study the complexity of war throughout history. Perhaps most important, though, is the current use of counterfeiting banknotes in world’s war zones. In 1992, an article titled “Fake-Money Flood Is Aimed At Crippling Iraq’s Economy” got published in the New York Times. As long as money has existed, so has counterfeiting. A proper understanding of the use of currency as a means of warfare is essential for adequate assessment of contemporary economic problems and the policy space available to address them. Nation-states should be preserved. Monetary crimes are a threat to national security and should not be taken lightly, even if their effects seem to be negligible these days.

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Barovsky, T. (2012). Legal and Illegal Moneymaking: Colonial American Counterfeiters and the Novelization of Eighteenth-Century Crime Literature. Early American Literature, 47(3), 531–560.

Cody, E. (15 de febrero de 2000). Uncle Sam: Belgrade’s Abiding Boogeyman. The Washington Post.


Del Mar, A. (1983). Barbara Villiers Or A History of Monetary Crimes. Omni Publications.

Hamilton, E. (1943). Monetary Disorder and Economic Decadence in Spain, 1651–1700. Journal of Political Economy, 51(6), 477–493.

Hamilton, E. (1944). Monetary Problems in Spain and Spanish America 1751–1800. The Journal of Economic History, 4(1), 21–48.

Ibrahim, Y. (27 de mayo de 1992). Fake-Money Flood Is Aimed At Crippling Iraq’s Economy. The New York Times. www.nytimes.com/1992/05/27/world/fake-money-flood-is-aimed-at-crippling-iraq-s-economy.html?pagewanted=all

Krammer, A. (1971). Russian Counterfeit Dollars: A Case of Early Soviet Espionage. Slavic Review, 30(4), 762–773.Economics, 63(2), 175–186.

Krivitsky, W. (2011). In Stalin’s Secret Service. Enigma Books.

Rhodes, K. (2012). The Counterfeiting Weapon. Federal Reserve Bank of Richmond, Econ. Focus, 16(1), 34–37.

Tcherneva, P. (2016). Money, power, and monetary regimes. Working Paper, 861, 1–25.



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