Table Of ContentA Path to the Next Generation of U.S. Banknotes: Keeping Them Real
http://www.nap.edu/catalog/11874.html
A PAth to the Next GeNerAtioN
of U.S. BANkNoteS
keePiNG them reAl
Committee on Technologies to Deter Currency Counterfeiting
Board on Manufacturing and Engineering Design
Division on Engineering and Physical Sciences
Copyright © National Academy of Sciences. All rights reserved.
A Path to the Next Generation of U.S. Banknotes: Keeping Them Real
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NOTICE: The project that is the subject of this report was approved by the Governing Board of the
National Research Council, whose members are drawn from the councils of the National Academy
of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of
the committee responsible for the report were chosen for their special competences and with regard
for appropriate balance.
This study was supported by Contract No. TEP-05-0002 between the National Academy of Sciences
and the U.S. Department of the Treasury, Bureau of Engraving and Printing. Any opinions, fndings,
conclusions, or recommendations expressed in this publication are those of the authors and do not
necessarily refect the views of the organizations or agencies that provided support for the project.
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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real
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The National Academy of Sciences is a private, nonproft, self-perpetuating society of distinguished
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The National Research Council was organized by the National Academy of Sciences in 1916 to as-
sociate the broad community of science and technology with the Academy’s purposes of furthering
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Vest are chair and vice chair, respectively, of the National Research Council.
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Copyright © National Academy of Sciences. All rights reserved.
A Path to the Next Generation of U.S. Banknotes: Keeping Them Real
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COMMITTEE ON TECHNOLOGIES TO DETER
CURRENCY COUNTERFEITING
ROBERT E. SCHAFRIK, GE Aviation, Chair
MARTIN A. CRIMP, Michigan State University
CHARLES B. DUKE, University of Rochester
ALAN H. GOLDSTEIN, Alfred University
ELIZABETH A. HOLM, Sandia National Laboratories
PRADEEP K. KHOSLA, Carnegie Mellon University
CAROLYN R. MERCER, NASA Glenn Research Center
STEPHEN M. POLLOCK, University of Michigan
ARTHUR J. RAGAUSKAS, Georgia Institute of Technology
JOHN A. ROGERS, University of Illinois at Urbana-Champaign
BARTON RUBENSTEIN, Rubenstein Studios
MICHAEL A. SMITH, France Telecom R&D
GARY K. STARKWEATHER, Microsoft (retired)
DENNIS J. TREVOR, OFS Laboratories
Staff
MICHAEL MOLONEY, Study Director (from February 2006)
TONI MARÉCHAUX, Study Director (until February 2006)
MARTA VORNBROCK, Research Associate (until July 2006)
TERI THOROWGOOD, Administrative Coordinator
LAURA TOTH, Senior Project Assistant (until June 2006)
iv
Copyright © National Academy of Sciences. All rights reserved.
A Path to the Next Generation of U.S. Banknotes: Keeping Them Real
http://www.nap.edu/catalog/11874.html
BOARD ON MANUFACTURING AND ENGINEERING DESIGN
H.M. REININGA, Rockwell Collins, Inc., Chair
THOMAS HARTWICK, Adviser, Snohomish, Washington, Vice Chair
RON BLACKWELL, AFL-CIO
PAUL B. GERMERAAD, Intellectual Assets, Inc.
MANISH MEHTA, National Center for Manufacturing Sciences
NABIL Z. NASR, Rochester Institute of Technology
DENISE F. SWINK, Adviser, Germantown, Maryland
ALFONSO VELOSA III, Gartner, Inc.
BEVLEE A. WATFORD, Virginia Polytechnic Institute and State University
JOHN F. WHITE, Altarum
Staff
GARY FISCHMAN, Director
v
Copyright © National Academy of Sciences. All rights reserved.
A Path to the Next Generation of U.S. Banknotes: Keeping Them Real
http://www.nap.edu/catalog/11874.html
Copyright © National Academy of Sciences. All rights reserved.
A Path to the Next Generation of U.S. Banknotes: Keeping Them Real
http://www.nap.edu/catalog/11874.html
Preface
This report serves three purposes. First, at the request of the U.S. Department
of the Treasury’s Bureau of Engraving and Printing (BEP), the Committee on Tech-
nologies to Deter Currency Counterfeiting undertook a systematic investigation
of the trends in digital imaging and printing technologies in order to assess evolv-
ing counterfeiting threats to U.S. currency. This task was accomplished through
a review of current literature and practice under the guidance of members of the
committee who are experts on these topics.
Second, the committee generated ideas for potential new features of Federal
Reserve notes (FRNs) that could provide effective countermeasures to these threats.
These ideas were subsequently evaluated using a two-step process. The frst step
consisted of highlighting features that the committee evaluated to be diffcult for
at least one class of counterfeiter to simulate while also being easy for the public
and/or experienced cash handlers to detect; for some of these features, authenti-
cation requires assistance from a simple device. Features that survived this frst
round were then evaluated for key development risks and issues, which include
the durability of the feature, its aesthetic appearance as part of a U.S. banknote,
social acceptability issues (for example, toxicity of the materials, privacy concerns,
and so on), and the estimated production cost of the feature. For those innovative
features that have not been used in a security-feature application, the committee
highlighted particular durability, cost, and other relevant concerns as top risk areas
that should be evaluated early in the development program. Depending on the
maturity level of a feature, it was considered as implementable in the intermediate
term (less than 7 years) or the long term (more than 7 years).
vii
Copyright © National Academy of Sciences. All rights reserved.
A Path to the Next Generation of U.S. Banknotes: Keeping Them Real
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P r e f a c e
viii
The primary sources of data used by the committee in conducting these
analyses were the expert knowledge of the committee members themselves, who
are knowledgeable practitioners of most of the technologies applied by these new
features. Consultation with the BEP, the U.S. Secret Service, and BEP vendor and
advisory personnel also characterized this phase of the committee’s activities. Care
has been taken to ensure that the material cited in the report is available from open,
public sources.
Finally, the third purpose served by this report relates to the committee’s real-
ization, toward the conclusion of its deliberations, that it had generated so many
new feature concepts that a structured development process would be necessary
to determine the feasibility of the most promising features. Thus, the committee
provided an overview of a requirements-driven development process that is com-
monly employed by the aerospace industry. This type of process could be adapted
to develop an advanced-generation currency.
The committee’s report thus constitutes a comprehensive assessment of current
technology-enabled counterfeiting threats, an enumeration of potentially effec-
tive countermeasures, and an indication of how the BEP might implement these
countermeasures in a cost-effective and timely fashion. This report necessarily does
not contain an exhaustive list of all possible new features. Additional technologies
undoubtedly could be successfully employed to improve counterfeit deterrence.
However, the committee believes that the process followed in conducting this study
would be applicable to the analysis and development of other candidate features.
It is anticipated that the audience for this report will extend beyond the sponsors
at the BEP, to include government decision makers not intimately familiar with
banknote security features, those performing research that could be relevant to
advanced security features, interested members of the public, and so on. Therefore,
the report provides context and background information so that its discussion is
understandable to a variety of readers who are not necessarily banknote-security
experts.
The title of this report, A Path to the Next Generation of U.S. Banknotes: Keep-
ing Them Real, is a refection of the challenge that the Department of the Treasury,
through the BEP, faces in maintaining the worldwide security of U.S. banknotes
without compromising their unique character and recognizability.
Three themes that are elaborated on in the body of the report emerged from
the committee’s discussions and analysis:
• First, digital printing technology is continuing to advance at a rapid pace,
driven in large measure by the overwhelming success of digital photogra-
phy. Therefore, within 10 years, low-skill amateurs will be able to duplicate
almost any two-dimensional image. In a sense, the “battle of the printed
image” will be lost to the counterfeiters. This advancing threat can best be
Copyright © National Academy of Sciences. All rights reserved.
A Path to the Next Generation of U.S. Banknotes: Keeping Them Real
http://www.nap.edu/catalog/11874.html
P r e f a c e
ix
met with new features that will allow the BEP to stay a step or two ahead
of the counterfeiters. Owing to banknote design and production lead times,
a “step or two ahead” translates to staying more than 5 years ahead of the
most advanced technology that will be available to counterfeiters. Intrinsic
limits in printing resolution, registration, pattern layouts, and inks associ-
ated with these printing methods motivate a search for radically different
materials and manufacturing concepts.
• Second, a paradigm shift in security features seems possible. For instance,
there appears to be tremendous potential to make fundamental modifca-
tions to the banknote substrate—that is, the paper in current notes. New
feature design concepts are possible, such as incorporating heterogeneous
materials and active elements into the substrate. There is an opportunity
to leverage the large national effort in nano- and biotechnology to provide
unique, highly secure features. These new approaches employ materials
and technologies that have not necessarily been proven in other banknote
applications.
• Third, in order to be realized, these advances in security features require
a proactive approach to their development. The current materials used in
Federal Reserve notes are well known and proven, with a wealth of expe-
rience gained over many years. Incorporating into security features new
materials that possess expanded functional performance is not a step that
can be taken without considerable additional technical development and
cost-to-beneft justifcation. Moreover, while resistance to counterfeiting is
vital, another important aspect of banknotes is that they are a manufactured
product used daily by millions of people around the world. Therefore, for
each of the billions of notes produced each year, features must be repro-
duced reliably. Notes must also be durable during normal use and able
to survive folding, crumpling, and occasional laundering. Their design
should be aesthetically pleasing. Finally, as with any manufactured product,
banknote production should be cost-effective. A successful research and
development effort must address each of these multifaceted objectives.
Development must also span the entire sequence, from demonstrating the
concept of a new counterfeit-resistant feature to its design incorporation
and production in fnished banknotes. The committee outlines a banknote
development process that meets these criteria.
Historically, the BEP has been quite attuned to the threat of counterfeiting.
Indeed, the bureau was established during the Civil War as a key element in the
national strategy to reduce the volume of counterfeit currency fooding the Union.
In recent years, the bureau has recognized that modern information technology
could lead to entirely new types of counterfeiting threats. Consequently, over the
Copyright © National Academy of Sciences. All rights reserved.
A Path to the Next Generation of U.S. Banknotes: Keeping Them Real
http://www.nap.edu/catalog/11874.html
P r e f a c e
x
past two decades, it has asked the National Research Council (NRC) to perform sev-
1
eral studies to assess and characterize these evolving threats. The BEP has further
initiated a series of currency design changes aimed at reducing the vulnerability
of U.S. banknotes to counterfeiting.
Recognizing the evolving threat of counterfeiting created by digital imaging
and reprographics technologies, the BEP requested that the NRC undertake a
new study to provide the bureau with up-to-date information on the factors that
would allow it to produce designs to enhance the security of U.S. Federal Reserve
notes. The committee’s statement of task is presented in Appendix A, along with
a description of the organization of the report. The NRC appointed the Commit-
tee on Technologies to Deter Currency Counterfeiting to carry out this statement
of task. The committee members have expertise encompassing a broad range of
disciplines and felds, knowledge of which was necessary in order to assess the fu-
ture of the digital reprographic threat and to evaluate new technologies that could
provide a paradigm shift for counterfeit-deterrence features. Appendix F presents
biographical sketches of the committee members. Members of the committee
are knowledgeable in analog and digital imaging and printing, art, biomaterials,
computer software and hardware engineering, decision analysis and operations re-
search, materials science and engineering, nanomaterials, optics, optical materials,
paper science, and systems engineering. By design, the committee had no experts in
currency design and production or in the various aspects of counterfeiting. Invited
speakers and site visits supplemented the committee’s knowledge base, especially
in these areas.
2
The committee met a total of six times. The meetings in May and July 2005
and in March and June 2006 included sessions that were open to the public; the
remaining meetings were devoted to the preparation of the report.
Complementing the committee meetings, a number of site visits were con-
ducted so that members could gain an appreciation of banknote production,
counterfeit detection, and verifcation equipment. The committee thanks the fol-
lowing organizations and companies for making their personnel, facilities, and
time available:
• Bureau of Engraving and Printing, Washington, D.C.;
• U.S. Secret Service, Washington, D.C.;
1
The following reports, published by the National Academy Press, Washington D.C., have been is-
sued by the NRC in response to these requests: Advanced Reprographic Systems: Counterfeiting Threat
Assessment and Deterrent Measures (1985), Counterfeit Threats and Deterrent Measures (1987), and
Counterfeit Deterrent Features for the Next-Generation Currency Design (1993).
2
May 23-24, 2005, and July 21-22, 2005, in Washington, D.C.; October 10-11, 2005, in Woods Hole,
Massachusetts; March 23-24, 2006, and June 1-2, 2006, in Washington, D.C.; and September 14-15,
2006, in Irvine, California.
Copyright © National Academy of Sciences. All rights reserved.
