Despite the rise of digital payments, cash still holds sway in consumer transactions in many countries. In this guise, this means of payment seems to be quite secure: for instance, in January 2023, the European Central Bank (ECB) noted the very limited incidence of counterfeit euro banknotes, with one of the lowest levels since the creation of the European currency at 0.0013%. An in-depth look at the banknotes industry shows that the positive statistics come from cash issuers maintaining a very high barrier to counterfeiters—helped by the security printing industry all along the way—let's see how they manage to keep criminals at bay.

Fake bills used to be a serious problem, but now it's under control: statistics for 2022 show low counterfeiting not only in Europe but in many other regions and countries, from Australia to South Korea. Is it because people use less cash, or maybe this crime has suddenly fallen out of fashion? Certainly not. The figures may be reassuring, yet even a modest presence of fake bills calls on central banks to focus on ensuring a trustworthy circulation of banknotes and minimize forged money—like the ECB, which set to redesign euro bills "with a view to preventing counterfeiting." They are not alone in this game, and their best results come from close partnerships with the security printing industry, its advanced security printing, security features, and, of course, the development of new technologies. To understand how exactly it works, let's start with the primary line of defense against counterfeiters: high-tech security elements found in banknotes across the world.

Banknote substrates (the "cash paper/polymer"), holograms, inks, printing techniques, others... the variety is mind-boggling—just look at any recently issued banknote, like Egypt's 20-pound polymer bill. The banknote features two types of polymer substrates from De La Rue and CCL Secure banknote substrate companies, and, apart from others, an innovative security feature from SURYS holograms supplier. The element essentially looks like a hologram but is nothing less than "a diffractive optical variable image device" designed for better security.

We find a comparable level of innovation on any modern banknote, and the aggregate of them allows for the maximum level of security, explains Astrid Drexler, Product Manager Banknotes at German security printer Giesecke+Devrient: "Only the combination of more complex, more advanced technologies, coupled with a striking design, allows us to offer maximum security for every banknote denomination."

Most of the notes issued in the last 12-24 months carry a similar innovative technology. It has undoubtedly played a crucial role in reducing counterfeiting, and security technology companies make a large contribution here. Their number is very limited, with only a select few possessing the expertise and infrastructure required for high-security applications. Patents, continuous R&D investment, and strict compliance protect their developments from counterfeiters and ensure a trusted partnership with their main customers, central banks, as seen in the example of the heart of the security printing industry: banknote printing equipment manufacturers. Their machinery stands apart from conventional printing apparatuses, such as those used in packaging. The ability to print at an exceptionally higher resolution, to add tactile elements like the raised print for portraits, and to incorporate multi-component verifiable features sets them leagues apart. As standard printing technology advances, security printing firms are compelled to persist in their R&D endeavors and build strategic partnerships to retain the uniqueness of their methods and keep the counterfeiters at a distance.

There are just two main players in the banknote printing equipment market: Swiss provider Koenig & Bauer Banknote Solutions (KBBS) and Japanese Komori. Here, maintaining the level needed to stay one step ahead of counterfeiters is no easy task, says Eric Boissonnas, KBBS's CEO: "The specific features of the equipment needed, along with the level of service demanded by state and private printers, require considerable investment...They are linked to the exclusive nature of the security features that we supply to our customers or that our equipment incorporates into the banknote. In addition to technical requirements, customers are placing increasing emphasis on compliance, by referring to global reference standards. Complying with these requirements is not optional, it is a necessity."

From the outside, the overall security printing market looks like a small and tight-lipped community, but their true nature is less introvertive than it may seem. The industry instills a dominant position over counterfeiters thanks to close collaboration between all the players involved. Safety is the result of an optimal combination of all the components-printing process, material, and design- of their respective dedicated suppliers. Their main goal is to ensure that the security features of banknotes are constantly upgraded to cutting-edge technologies unavailable to criminals. Central banks are included in this circle as well, and, as such, enjoy all the benefits, as an example of a new Kazakh banknote shows.

Kazakhstan, an early adopter of modern banknote technologies and holder of several awards in this regard, issued a new banknote of 20,000 Kazakhstani tenge in 2022. What's the most interesting here is not only its unique design, and not even its commemorative nature background (which denotes 30 years of Kazakhstan's independence). The bill was produced by the local Banknote Factory belonging to the central bank. However, relying on technologies from private companies: SPARK from SICPA, RollingStar from Louisenthal, and composite paper-polymer substrate from Landqart. With their help, Kazakhstan once again achieved an advanced level of security, nearly impossible for an "all-by-myself" player, and proved to be nearly unattainable to counterfeiters wishing to replicate one of the most secure currencies in the world.

In other cases, a partnership is not limited to banknote printing and extends to continuous dialogue regarding raising the bar for counterfeiters, as with already mentioned KBBS and the German Institute for Industrial Information Technology (inIT). The two organizations joined forces to find a new solution to enable authentication through smartphones, meaning that central banks do not have to apply any new or additional security features. They can use this technology on banknotes already in circulation while effectively keeping counterfeiters at bay, says Julian Schubert, head of Data, Vision, and Authentication Solutions at Koenig & Bauer: "The close cooperation makes it possible to always be one step ahead with innovative technologies [...] This allows new, scalable authentication solutions for everyone, as a banknote can be verified by a simple photo with a smartphone."

Even the most ardent supporters of integrated models, such as French security printer Oberthur Fiduciaire, which is not too keen on subcontracting and whose supply chain is strictly controlled, sometimes opt for collaboration. In 2014, the Bulgarian National Bank (BNB) and Oberthur founded a joint venture in Sofia with the goal of maintaining and modernizing the banknote production to the home ground. The enterprise allowed Bulgaria to have direct access to the most recent technology and printing equipment, secure control over production, and even export banknotes to other countries. At that, the process is sometimes attended by other companies, such as in the major banknote redesign of 2018 supported by the BNB, Oberthur, and Louisenthal. The partnership approach proved to work extremely well, with each of the actors excelling in their particular field and resulting in the new 100-lev note winning the High-Security Printing award for cutting-edge security.

Overall, these and other examples show that posing a barrier to counterfeiting extends beyond a mere transactional relationship. Factually, it's about an ongoing collaboration where mutual trust and shared expertise serve to protect cash users around the world, be it in the form of solutions that physically guard supply chains and cash cycles or the anti-counterfeit due-diligence project launched by Interpol and attended by the industry players. All these efforts contribute to the overall volume of safe cash transactions and create trust and confidence, says Eric Boissonnas of KBBS: "This confidence [in banknotes] is also based upon trust; an acknowledgment by the public that the banknote is genuine. Creating such high levels of public confidence and trust is the result of decades of innovation aimed at combatting the counterfeiting of banknotes."

Central banks understand this as well—and bet on cooperation while denouncing the "least acquisition cost" when choosing a supplier, as the example of the Swiss franc (also the product of a collaboration of several companies) shows: "The cost of producing Swiss banknotes depends on the note's size (denomination) and on the production volume, and generally averages around 40 centimes," explains the Swiss National Bank. One of the most expensive banknotes worldwide, on the one hand, and, on the other, a prerequisite for retaining the indispensable advance against counterfeiting; as UBS comments, "On the flip side, the new notes should be more forgery-proof and more durable."

One of the most important features of money is that people need to trust it, reads a recent ECB blog post. This trust comes not only from the state financial system's stability but also from being one step ahead of criminals when it comes to banknote security. "Counterfeiting is a game of responding to new bank note security features. Security printing is a game of anticipating and responding to the threat of counterfeiting," says the Bank of Canada Museum, and this quote almost perfectly sums up all that was said. Almost—because it doesn't mention that on the security printing side, the game is multiplayer, and a victory is impossible without collaborative efforts.