【美聯(lián)儲】估算流通中的假冒美國貨幣數(shù)量-2025.2

BoardofGovernorsoftheFederalReserveSystemInternationalFinanceDiscussionPapers

ISSN1073-2500(Print)ISSN2767-4509(Online)

Number1404February2025

EstimatingtheVolumeofCounterfeitU.S.CurrencyinCirculation

RuthJudson

Pleasecitethispaperas:

Judson,Ruth(2025).“EstimatingtheVolumeofCounterfeitU.S.CurrencyinCirculation,”InternationalFinanceDiscussionPapers1404.Washington:BoardofGovernorsoftheFederalReserveSystem,

/10.17016/IFDP.2025.1404

.

NOTE:InternationalFinanceDiscussionPapers(IFDPs)arepreliminarymaterialscirculatedtostimu-latediscussionandcriticalcomment.TheanalysisandconclusionssetfortharethoseoftheauthorsanddonotindicateconcurrencebyothermembersoftheresearchstafortheBoardofGovernors.ReferencesinpublicationstotheInternationalFinanceDiscussionPapersSeries(otherthanacknowledgement)shouldbeclearedwiththeauthor(s)toprotectthetentativecharacterofthesepapers.RecentIFDPsareavailableontheWebat/pubs/ifdp/.ThispapercanbedownloadedwithoutchargefromtheSocialScienceResearchNetworkelectroniclibraryat.

EstimatingtheVolumeofCounterfeitU.S.Currencyin

Circulation

RuthJudson

rjudson@

DivisionofInternationalFinance

BoardofGovernorsoftheFederalReserveSystem

Abstract

TheincidenceofcurrencycounterfeitingandthepossibletotalstockofcounterfeitsincirculationarepopulartopicsofspeculationanddiscussioninthepressandareofsubstantialpracticalinteresttotheFederalReserve,theU.S.

TreasuryandtheUnitedStatesSecretService(USSS),whoarejointlyresponsibleforU.S.banknotedesign,

includingsecurityfeatures,andproduction.ThispaperassemblesdatafromFederalReserveandUSSSsourcesandpresentsarangeofestimatesforthenumberofcounterfeitsincirculationintheUnitedStates.Inaddition,thepaperpresentsfiguresoncounterfeitpassingactivitybydenomination,location,andcounterfeittype.

Thepaperhastwomainconclusions:first,thestockofcounterfeitsintheUnitedStatesasawholeisatmostabout$30million,orabout1in40,000notesandislikelyabout$15million,orontheorderof1every80,000genuine

notesinbothpieceandvalueterms.Thisestimatemarksasignificantdeclinefromtheestimateof1in10,000notespresentedinTreasury(2006)usingsimilarmethodsanddatasources,andthedeclineislikelyatleastpartiallyduetoincreasedcirculationofhigher-securitybanknotesaswellasincreasedpubliceducationaboutU.S.dollar

banknotesecurityfeatures.Second,whencounterfeitnotesofreasonablequalityareconsidered,lossestotheU.S.

publicfromonlythehigh-qualitycounterfeitsofthemostcommonlyusednotes,the$20andsmallerdenominations,areminuscule.However,thereisarangeofestimatesoverallforcounterfeitsincirculation,andtheseestimates

varybydenomination.

JELcode:C89

Keywords:Banknotes,counterfeiting,estimation,money

Page2of19

1Introduction

1

U.S.banknotesarewidelyusedbothwithinandoutsidetheUnitedStates,andmaintainingthequalityandsecurityofnotesforallusersisasignificantconsiderationindesigndecisions,whicharemadebytheU.S.TreasuryinconsultationwiththeFederalReserveandtheU.S.SecretService(USSS).

2

Asaresult,understandingthelikely

incidenceofcounterfeitsincirculationovertimeisimportantfortheselectionofdesignfeaturesandpublic

education.Inthispaper,IattempttoplaceanupperboundonthequantityofcounterfeitincirculationintheUnited

StatesbasedonsamplesofcounterfeitdatacollectedbytheUSSSandFederalReservetogetherwithourunderstandingofcirculationpatternsforgenuineandcounterfeitcurrency.

3

Tomakethesecalculations,Itakeadvantageofverygoodsamplingdatafromtwosourcesthatcanbe

consideredindependentinvariousdimensions.Inordertodevelopappropriateconfidenceboundsforextrapolation,thedatafromthesetwosourcesarecompared.Bothsourcessuggestthattheincidenceofcounterfeitsinthe

populationisquitesmall,intheneighborhoodofonenotein40,000forthedenominationsnowbeingissuedduringfiscalyear2023.Thisfigurerepresentsasignificantdeclinefromthelastestimateof1in10,000basedondatafrom2005andpresentedinU.S.Treasury(2006).Althoughitisimpossibletoknowwithcertaintyhowvariousfactors

contributedtothisdecline,thisperiodincludedtheintroductionofnew,moresecurebanknotes.

Inadditiontothesecalculations,itisimportanttonotethatitisunlikelythatsmallareascontaininglarge

1

2

3

ThisworkwouldnothavebeenpossiblewithoutgeneroushelpfromJonFerris,SueFortunato,AmandaMoffett,NadiyahAquil,andJohnLapati,USSSCriminalInvestigativeDivision;ElliotShukeandJoannFreddo,Cash

FunctionoftheFederalReserveBankofNewYork;BrianLawler,PeterNiebyl,RichelleStento,andKristen

Wilson,DivisionofReserveBankOperationsandPaymentSystems;andDanielBeltran,DivisionofInternationalFinance.Iamgratefulfortheircomments,insights,andassistancewithdata.TheviewspresentedaresolelythoseoftheauthoranddonotnecessarilyrepresentthoseoftheFederalReserveBoardoritsstaff.

AseriesofearlierpapersandreportsindicatethatthemajorityofgenuineU.S.currencyislikelyincirculation

outsidetheUnitedStates.JudsonandPorter(2001),Porter(1993),PorterandJudson(1996),U.S.Treasury(2000,2003,2006),PorterandWeinbach(1999),JudsonandPorter(2004),Judson(2012,2017,2018,2024).Portionsofthematerialhere,whichwerewrittenbytheauthors,appearinU.S.Treasury(2000,2003,2006).

TheTreasury,U.S.SecretService,andFederalReserveworktogetheroncurrencydesign.CurrencyisproducedbytheBureauofEngravingandPrinting,abranchoftheTreasury.TheFederalReservedistributescurrency.TheUSSSchargedwithsecuringthefinancialinfrastructureoftheUnitedStatesandcombattingcounterfeitingFrom1996to2006,theFederalReserveandTreasurywerelegallyrequiredtoprovideestimatesofgenuineand

counterfeitcurrencycirculatingoutsidetheUnitedStatesaspartoftheAnti-TerrorismandEffectiveDeath

PenaltyActof1996,whichobligatedtheSecretaryoftheTreasury,inconsultationwiththeinteragencyAdvancedCounterfeitDeterrencegroup,see

/offices/domestic-finance/acd/about.html

,tomake

severalreportstotheCongressontheuseandcounterfeitingofU.S.currencyabroad,includingU.S.Treasury(2000,2003,2006).

Page3of19

numbersofcounterfeitscanexistforlongoutsidethebankingsystem,especiallywithintheUnitedStates,andthetotalnumberofcounterfeitscirculatingisatmostacoupleoftimeswhatthesamplingdataindicate.Inparticular,I

findthatanupperboundonthestockofcounterfeitcurrencyincirculation,asashareofgenuine,wouldstillbeabout1in40,000,withthemostlikelyestimateabout1in80,000.Finally,Ipresentevidencethat,forthe

denominationsmostcommonlyhandledbyU.S.consumers,theincidenceofcounterfeitsthatcanpassbasicexaminationbyconsumersandcashhandlersisminute,wellbelowonein1in100,000.

Thepaperproceedsasfollows.ThenextsectionprovidesabriefoverviewofU.S.dollarbanknotedemandandcounterfeitingovertime.Section3reviewsthedatasourcesusedforthisanalysis.ThefourthsectionpresentsestimatesofthelikelytotalvalueofcounterfeitdollarsincirculationwithintheUnitedStatesbasedonFederal

ReserveandUSSSdata.Thefifthsectionconcludes.

2Background

Outoftheapproximately$2.3trillioninU.S.dollarsheldintheformofbanknotes(papercurrency)in

circulationattheendof2023,USSSdatarecorded$102millionincounterfeitcurrencypassedonthepublic

worldwideduringfiscalyear2023.

4

5

AlthoughagreatdealofU.S.currencyisincirculationperU.S.resident,notallU.S.currencyisheldwithintheUnitedStates.

6

U.S.banknotesarealsousedwidelyoverseas:theU.S.dollaristheleadinginternationalcurrencyinmanyregions,andestimatesfromearlierstudiessuggestthatbetweenhalfand

4Fiscalyear2023wasfromOctober1,2022toSeptember30,2023.Allfiguresinthispaperarebasedonfiscalyeardataunlessotherwisenoted.Currencyincirculationismeasuredseveraldifferentways,dependingonwhethercurrencyheldinthevaultsofdepositoryinstitutions(“vaultcash”)andTreasurycurrency,whichincludesTreasurynotes

andcoin,areincluded.TheFederalReserve’sdataoncurrencyincirculation,reportedintheH.4.1StatisticalRelease,coveronlyFederalReservenotes,includingvaultcash,andexcludeTreasurycurrencyandcoin.The

TreasuryBulletinMarch2023issue,

tableUSCC-2,indicatesthat,asofend-2022,coinincirculationwas$50billionandnon-FederalReservebanknotesincirculationwereabout$0.5billion.

5SecretServicedataindicatethatadditionalquantitieswere"seized,"orconfiscatedbeforetheyenteredcirculation.InthispaperIfocusonthefiguresfor"passed"counterfeits.Whileseizednotesposedsomethreatpriortothe

seizure,passedcounterfeitnotesclearlycausedlossestothebanknote-usingpublic.Moreover,thefactthattheywerepassedatleastoncesuggeststhattheypasseda"qualitycontrol"byfoolingatleastonepersonormachine.

6Theobservationsinthissectionaredrawnfromfirst-handobservationsduringvisitstodozensofeconomiesbytheauthorsincethemid-1990sundertheauspicesoftheInternationalCurrencyAwarenessProgram(ICAP)run

jointlybytheFederalReserve,U.S.Treasury,U.S.SecretService,andBureauofPrintingandEngraving;refertoU.S.Treasury(2006),Table3.1foralistofcountriesvisited.TheauthorsalsoparticipatedinaprecursorprogramtotheICAP.Duringthesevisits,theauthorsspokewithhundredsofseniorofficialsfromcentralbanks,

commercialbanks,cashhandlers,andlawenforcementagenciesaboutcurrencyusageandcounterfeitingoutsidetheUnitedStates.

Page4of19

twothirdsofallU.S.currencyincirculationisheldoutsidetheUnitedStates.

7

DespitethelargeshareofU.S.

currencyheldabroad,nearlyallofthe$102.1millionincounterfeitcurrencypassedinfiscalyear2023,$102.0

million,wasrecordedasbeingpasseddomestically.ThisimbalanceislargelybecausetheUSSShasjurisdiction

overcounterfeitenforcementwithintheUnitedStates,whileforeigncountriesmaintainjurisdictionwithintheirowncountries.

Thefigureof$102millioninpassedcounterfeitcurrencyinfiscalyear2023shouldbeconsideredinthe

contextoflossesfromothertypesoffraud.Whilethelossassociatedwithasinglecounterfeittotheindividualwhomistakenlyacceptsitcanbesignificant,theaggregatelossof$102millioninfiscalyear2023amountstoabout30centsperU.S.resident,aminoramount.Lossesfromcounterfeitinghavealsobeenverysmallrelativetothecostofcreditcardfraudandotherformsoffraudulenttransactions.Forexample,in2021,thecostofcreditcardfraud

lossesintheU.S.wasestimatedtobe$12billion,orover100timesthecostofcounterfeiting.

8

2.1U.S.DollarDemandOverTime

TheFederalReservesuppliesU.S.currencyondemand.Inpracticalterms,FederalReserveBanksprovidecurrencyatfacevaluetobanksthathaveaccountswiththem.BanksthatdonothaveaccountswiththeFederal

ReservecanpurchasecurrencythroughtheircorrespondentbanksthatdohaveFederalReserveaccounts.Individualsandnonfinancialfirmstypicallyobtaincurrencyfrombanksorcurrencyexchanges.

Asashareofthemonetaryaggregates,U.S.currencyisrelativelysmall:itmakesupjustoverathirdofthenarrowmonetaryaggregate,M1,andaboutatenthofthebroadermonetaryaggregate,M2.However,thereisagreatdealofU.S.currencyoutstanding:U.S.Currencyincirculationattheendof2023amountedtoabout$2.3trillion,or

nearly$7,000foreveryU.S.resident.

9

EvenallowingforasubstantialshareofforeignholdingofU.S.banknotes,domesticbanknoteholdingsareroughly$3,000perU.S.resident.

DemandforU.S.currency,especiallyfromoverseas,hasrisenovertimeevenaselectronicpaymentshave

7JudsonandPorter(2001,2010),Porter(1993),PorterandJudson(1996),U.S.Treasury(2000,2003,2006),Judson(2012,2017,2018,2024).

8

/newsletters/1232/

.

9WeeklyfiguresonthequantityofcurrencyheldbythepublicarereportedontheFederalReserve’sH.4.1andH.6statisticalreleases.DataoncurrencyincirculationbydenominationarereportedquarterlybytheU.S.TreasuryintheTreasuryBulletin.

Page5of19

becomecheaper,easier,andmorewidelyused.Still,currencydemandconsistentlyrisesintimesofuncertainty.

Mostrecently,theCOVID-19pandemicsparkedenormousdemandforcurrency,ofwhichasubstantialsharewaslikelyfromdomesticsources.

10

Althoughthispaperfocusesonestimatesofthedomesticincidenceof

counterfeiting,itshouldbenotedthattheheavyuseofU.S.dollarsinternationallyisasignificantconsiderationindecisionsaboutU.S.banknotesecurityfeaturesandeducationalcampaigns.Inestimatingtheincidenceof

counterfeitingwithintheUnitedStates,itiscriticaltoadjustfortheseforeignholdings,andthecalculationsinthispaperincorporatethisfactor.

2.2TheEconomicsofCounterfeiting

Boththeoreticalstudiesandthelimitedavailableempiricalinformationsuggestthathigh-quality

counterfeitingisexpensiveandonlyeffectivewhenfewcounterfeitsarepassedrelativetotheamountofgenuine

currencyincirculation.Producinghigh-qualitycounterfeitsrequiresaccesstopresses,inks,andhigh-qualitypaper.Thenotesmustthenbeeitherpassedordistributedtoothersforpassing,whichisacomplicatedundertakingwhenlargevolumesofcounterfeitnotesareproduced.

11

Anindividualmightbefooledintoacceptingabatchof

counterfeitsonce,butwouldlikelybecautiousaboutfurthertransactionswithaknownsourceofcounterfeits.

Similarly,businessesgenerallyconsidercounterfeitspartofthecostofdoingbusiness,butwouldlikelybemorecautiousifasinglecustomerorlocationwereknowntobethesourceofcounterfeitsinthepast.Thus,the

counterfeitnotesmustbeevermorewidelydispersed.InformaldiscussionswiththeU.S.SecretServiceindicatethatthefullcostofproducinganddistributinghigh-qualitycounterfeitsishighrelativetopotentialcounterfeiters’profits.

12

Thefewtheoreticalpapersoncurrencycounterfeitingalsoconcludethattheonlylong-runequilibriaarefor

10SeeJudson(2024)formorediscussionofthisepisode,formorediscussionofinternationaldemandforU.S.

currency,andformoredetailsaboutthechallengesofestimatingdomesticandforeignholdingsofU.S.currency.

11Inverylargequantities,currencyisbulky:$1millionin$100notesweighsabout20pounds(orabout10kg.)andfillsabriefcase.Inaddition,U.S.Customsrequiresreportingofthetransportationofmorethan$10,000in

currencyormonetaryinstruments

(/sites/default/files/documents/currency_reporting.pdf)

.Whetherornotcounterfeiterscomplywiththeserequirements,thereportingrequirementaddspotentialscrutiny.

12Thefixedcostsofproducinghigh-qualitycounterfeitsarerelativelyhigh.Inaddition,thecostsof(successfully)

passingmorethanafewnotesintocirculationcanescalatequicklyasvictimswhohaveacceptedcounterfeit

currencyalongwithlocallawenforcementbecomeawareofthenewthreatandincreasetheirlevelofscrutinyandlocalwarningstothepublic.

Page6of19

twoalternatestates,eitherveryloworveryhighlevelsofcounterfeiting.Lengwiler(1997)findsthatinfacttheonlypossibleequilibriaareforzerocounterfeitingorahighlevelofcounterfeiting.Inhismodel,theequilibriumthat

actuallyoccursisafunctionofthenote'sproductioncost(i.e.,difficultyofcounterfeiting)anditsfacevalue.The

monetaryauthorityismorelikelytoinvestinhigher-costnotesandthusinsureazero-counterfeitingequilibriumthehigheristhecostofcounterfeitingandthehigheristhevalueofthenote.TheU.S.dollar,especiallyitspre-1996

series,hadsignificantlyfewercounterfeitprotectiondevicesthanmanyotherindustrializedcountriesandwas

relativelylowinfacevalue.

13

However,asGreenandWeber(1996)pointout,thetechnologyembeddedinthe

new-design1996-series$100approachedthatofothercountries'currencyatthattime.Thetechnologyofthe

originaleurobanknoteseries,whichwasintroducedin2002,wasgenerallyhigherthanthe1996-seriesU.S.dollar,butiscomparabletothe2004-seriesU.S.dollarfirstissuedinOctober2003.

14

15

SmithandQuercioli(2003)

likewisefindthatabehavioralmodelpredictslowcounterfeitingrates,especiallywhenauthenticationcostsarelow,astheyarewithnewerbanknotedesigns.

3DataSources:AnOverview

WehavetwoprimarysourcesofdatafromtheUnitedStatesSecretServiceandtheFederalReserve.BothsourcesofdatasuggestthattheincidenceofcounterfeitingamongactivelycirculatingU.S.banknotesisquitelow.

3.1U.S.SecretServiceDataonCounterfeiting

TheUnitedStatesSecretService(USSS)isresponsibleforinvestigatingandpreventingcounterfeiting

activity.Theyrecordcounterfeitcurrencyasseized(thatis,foundatthepointofproductionand/orshipment,beforeitenterscirculation)orpassed(thatis,foundincirculation)andbydenomination,location,andproductionmethod.Ifocusonthedataforcounterfeitnotespassedfortworeasons:first,onlycounterfeitpassedwereeverincirculation;second,onlypassedcounterfeitsgenerateaneconomiclosstothepublic.

13ThehighestU.S.denominationnowissuedis$100.Incontrast,manyothercountriesissuedenominationsvaluedbetween$500and$1,000,andafewcountriesissuenoteswhosevalueexceeds$1,000.

14See

/denominations/20

forasummaryofU.S.banknotedesignsandsecurityfeaturesovertime.

15Anewereurodesignwasintroducedbeginningin2013.AnewdesignfortheU.S.dollarisscheduledtobegincirculationin2026.See

https://www.ecb.europa.eu/euro/banknotes/europa/html/index.en.html

and

/currency/currency-redesign

formoreinformation.

Page7of19

Table1summarizescounterfeitpassingactivitysince2000.AsshowninTable1,infiscalyear2023theSecretServicerecorded$102millionincounterfeitcurrencypassedintheUnitedStates.

Table1

PassedCounterfeitCurrencyReceivedbyUSSS

DomesticSourcesOnly,SelectedFiscalYears2000–2023

Millionsofdollars

FiscalYear

ValuePassed

2000

39.7

2004

43.4

2008

64.1

2012

80.6

2016

81.6

2020

99.6

2023

102.0

Note.“Passed”indicatescurrencythatwasexchangedforgoodsorservices.

Source:USSS.

180

160

140

120

100

80

60

40

20

0

Chart1:DollarValueofPassedCounterfeitsPerMillionDollarsinEstimatedDomesticCirculation

2001200420082012201620202023

Note:Forsimplicity,thecalculationsinthischartassumethathalfofcurrencyisincirculation

abroadandhalfisincirculationdomestically.Source:USSSandU.S.Treasury.

Page8of19

Itshouldbenotedthatduringthisperiod,passingofcounterfeitcurrencyincreasedmuchmoreslowlythan

currencyincirculation:passedcounterfeitcurrencyroseby2.5times,butcurrencyincirculationmorethan

quadrupled,fromabout$540billionattheendoffiscalyear2001to$2.3trillionattheendoffiscalyear2023.Asaresult,counterfeitpassingactivityasashareofcurrencyincirculationdeclinedovertime,asshowninChart1.

16

Millions

120

100

80

60

40

20

0

Chart2:DollarValueofCounterfeitsPassedwithintheUnitedStatesFY2001to2023,byDenominationandType,SelectedYears

Highquality$100Highquality$50

Lowquality$100Lowquality$50

Highquality$20Lowquality$20

Highquality$10andlessLowquality$10andless

FY2001FY2004FY2008FY2012FY2016FY2020FY2023

Source:USSS.

Inthispaper,Idistinguishbetweenhigherqualityandlowerqualitycounterfeitnotes.Higherquality

counterfeitnotesattempttoreplicatesomeofthesecurityfeaturesenoughtofoolbanknoteusers.Lowerqualitycounterfeitnotestypicallyareproducedusinginkjetprintersorcopiers.

Chart2displaysthedollarvalueofcounterfeitsreportedbytheUSSS,bydenominationandmethodof

16Judson(2024)andotherpapersestimatetheshareofU.S.currencyheldabroad.Theseestimatescoverawiderange,butashareofhalfiswellwithinthisrange.Theshareofcurrencyheldabroadhasrisenonlymoderatelyoverthisperiod,andsoestimatedgrowthofdomesticU.S.banknoteholdingsissimilar.

Page9of19

production;thedarkershadesforeachdenominationindicatethehigher-qualitycounterfeitnotes.Atthedomesticconsumerlevel,thebreakdownbetweenhigher-qualitycounterfeitnotesandlower-qualitycounterfeitnotesis

significant.Alower-qualitycounterfeitnoteisusuallyofminimalqualitywithfewtonoattemptsatsimulatingthesecurityfeature(s):apersonwithminimaltrainingincounterfeitdetectionandcurrencyauthenticationorafairly

simplemachineshouldbeabletodetectthenotereadilywiththeunaidedeye,andsuccessfulpassingofthenoteoccursonlywhentherecipientofthenotefailstogiveitmuchscrutinyatall.Nearly90percentofthecounterfeitnotesinthe$20andsmallerdenominations,whicharethosemostcommonlyusedbyU.S.consumers,fallintothelower-qualitycategory.Thevalueofhigher-qualitycounterfeitspassedinthe$20andsmallerdenominationsin

2023waslessthan$2million.

Thereisapolicyimplicationtothesefiguresthatdeservestobehighlighted:forU.S.residents,aminimallevelofvigilanceisenoughtovirtuallyruleoutlossesfromcounterfeiting.ConsumerscanfamiliarizethemselveswiththeauthenticationfeaturesofgenuineU.S.currency,includingthedistinctivefeelofthepaper,watermark,

securitythread,andcolor-shiftingink.

17

Similarly,retailoutletscanprovideauthenticationtrainingtocashiersand

mightevenconsiderthepurchaseofauthenticationdevicesrangingfromblacklightstopoint-of-salesystemsiftheyarehandlinglargequantitiesofcash.

18

3.2FederalReserveProcessingData

EachoftheroughlytwodozenFederalReserveCashOfficescollectsdataonitscashprocessingactivities,

includingcounterfeitdetection.

19

Fromcounterfeitdetectionratesandtotalprocessingfigures,wecanestimate

confidenceintervalsfortheincidenceofcounterfeitsamongthestockofdollarscirculatingactivelyatanygiventime.

17$1and$2denominationnotesdonothavethewatermark,securitythread,orcolor-shiftingink.

18Itshouldbenotedthatsomeretailoutletshavethecapabilitytodetectcounterfeitbanknotesbuthavenon-

confrontationpoliciesinplacebecausetheywouldratherincurtherelativelyminorlossfromthecounterfeitnotethanhaveanin-storealtercationandpotentiallyriskvictimizingbystanders.Thesefirmsviewaviolent

confrontationorthelossoffuturebusinessfrombystandersasfargreaterthantheinitiallossofacceptingthecounterfeit.Lossesfromcounterfeitingaresmallrelativetooverallcorporateassetlosses.

19ThenumberofregionalFederalReserveBanksisfixedattwelve,butFederalReserveBankshavebranches,knownasFederalReserveCashOffices.Theseofficescananddoopenandcloseasbusinessneedsevolveovertime.

Page10of19

4EstimatingtheQuantityofCounterfeitDollarsinCirculation

Theestimatesofcounterfeitingrelyonavarietyofdatasourceswithdifferingcharacteristics.Specifically,thispapermakesthreesetsofcalculationstoestimatetheamountofcounterfeitcurrencynowincirculationinthe

UnitedStates.First,IgeneratealowerboundforthetotalnumberofcounterfeitsbydenominationbasedonFederalReservecashprocessingdata,reportedinFigure1.Second,Igenerateanupperboundforcounterfeitsby

denominationbyextrapolatingfromFederalReservedatatocovercounterfeitsfoundoutsidetheFederalReserve,

thoughthisextrapolationisnecessarilytentative,aswillbeseen.Third,Igeneratearangeofplausibleestimatesforalldenominationsbasedontherelativeincidenceof$100counterfeitsandlower-denominationcounterfeits.Inallofthesecalculations,IadjustfortheestimatedshareofbanknotesheldoutsidetheUnitedStates.Iconcludethatthe

totalvalueofcounterfeitsincirculationatanymomentislikelyontheorderof$15million,orlessthan$1forevery$80,000indomesticcirculation,andisunlikelytoexceed$30million,orlessthan$1forevery$40,000in

circulation.

4.1EstimatingtheMinimumStockofCounterfeitsinCirculation:Federal

ReserveCashProcessingData

Iestimatealowerboundonthenumberofcounterfeitsincirculationbyextrapolatingfromthe

concentrationofcounterfeitnotesintotalnotesprocessedbyFederalReserveBanks.Figure3displayssuspected

50

45

Piecespermillion

40

35

30

25

20

15

10

5

0

Figure3:SuspectedCounterfeitNoteDetectionRatesinFRBProcessingByDenomination

1005020105

2000200420082012201620202023

Source:FederalReserveBoard.

Page11of19

counterfeitsdetectedpermillionnotesprocessedbyFederalReserveBanksbydenominationforselectedfiscalyears2000-2023.Asharpdeclineintheincidenceofcounterfeitnotesinprocessinginapparent,especiallyfromfiscalyear2000tofiscalyear2010orso,yearswhenthenewdesignbanknoteswithhighersecuritywere

supplantingolder-designnotes.

20

Giventhesefigures,thecalculationisstraightforward:thenumberofcounterfeitsincirculationisestimatedastheproductofthenumberoftotalnotesincirculationandtherateofcounterfeitdetectioninnotesprocessedat

theFederalReserveBankofNewYork.Table2pr