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Bank of Canada Governor Mark Carney walks past a poster of the bank's new circulating $100 bill, Canada's first polymer bank note, in Toronto on Nov. 14, 2011. (Nathan Denette/The Canadian Press/Nathan Denette/The Canadian Press)
Bank of Canada Governor Mark Carney walks past a poster of the bank's new circulating $100 bill, Canada's first polymer bank note, in Toronto on Nov. 14, 2011. (Nathan Denette/The Canadian Press/Nathan Denette/The Canadian Press)

Funny money: How counterfeiting led to a major overhaul of Canada's money Add to ...



It’s a crucial change: Counterfeiting undermines the credibility of a currency and the confidence people have in it. Since the last person holding a counterfeit is the one who gets burned with the loss, forged bills have a direct impact on businesses and consumers, and the economy as a whole.



Despite the talk of technology and innovation that surrounds the new money, the makeover of Canadian banknotes is a project designed specifically to lower Canada’s counterfeiting rates – and keep them low.



This is the story behind the planned scrubbing of Canada’s money, the shift to polymer bills, and one unusual discovery by an Australian scientist that changed currency as we know it.



HOW COUNTERFEITING BOOMED IN CANADA



The first time Wesley Weber forged a $100 bill, he scanned the image on his home computer, just to see what would happen.



It was late 2000, and the 25-year-old self-professed computer geek from Windsor, Ont., was flat broke and enchanted by the idea of being able to print money himself.



He focused his attention on the $100 bill from the Birds of Canada series – a brown banknote with a picture of a Canada Goose on the back – which was a challenge for most counterfeiters.



The series was first introduced in 1986 with the sole purpose of thwarting a new technology: the colour photocopier. The design made the notes difficult to reproduce by machine. Fine details in the face and hair of the Queen and former Prime Ministers depicted on the bills were too finicky for photocopiers to handle and appeared fuzzy in reproductions. A shiny gold metallic patch placed on each bill turned dark when replicated, further thwarting the forgers.



In 1990, only a few years after the Birds of Canada series was introduced, the country's counterfeit ratio – the proportion of counterfeit bills in the money supply – was admirably low.



Counterfeiting is measured using a system borrowed from chemistry known as parts per million (PPM). Normally used to judge the potency of molecules in a solution, PPM in the counterfeit sense refers to the number of fake banknotes found in circulation for every one million genuine notes. In 1990, Canada's counterfeit ratio was just 4 PPM, ranking its currency among the most secure in the world.



But the Bank of Canada made a crucial error. Amid tight budgets in Ottawa, the series was allowed to stick around longer than it should have. By the late 1990s, the rise of powerful and affordable home computers, store-bought graphics software, easy-to-use scanners and colour ink-jet printers were breeding a new generation of counterfeiters.



Fake bills started seeping into the monetary system in greater quantities. The number of fake Canadian bills rose as high as 117 PPM by 1997. Most G20 nations used 50 PPM as their benchmark to stay below.



Inside the Bank of Canada, there was growing concern. Though the number of fake bills in circulation was arguably microscopic compared to the 1.5 billion legitimate banknotes that circulate annually, the counterfeit ratio was becoming a black eye. Foreign banks were casting a skeptical eye on Canada’s currency.



“Let’s just say that colleagues of mine, internationally, recognized that we had to do something,” said Gerry Gaetz, chief of the Bank of Canada's currency department. “There was clearly organized groups in Canada targeting banknotes.”



In Windsor, Mr. Weber figured out that if he scanned the Canadian $100 bill on his computer, he could enlarge the image thousands of times the normal size. Using commercially available graphic-design software, he spent weeks correcting the fuzziness of the image, pixel by pixel, making the forgery sharper and more convincing.



Mr. Weber then began researching the best paper to use, shopping around for the right weight and colour to mimic the feel of money, which is made out of cotton fibre. He also needed paper that didn’t glow under UV light, another key trait of banknotes.



He settled on 24-pound Mohawk Super Fine soft-white stock with an eggshell finish – long a favourite of counterfeiters, according to Corporal Tim Laurence of the RCMP's Integrated Counterfeit Enforcement Team. Because a fake bill only needs to be passed once to profit the counterfeiter, it doesn’t need to be a perfect match; it just needs to be good enough. So the substrate – the material out of which the banknote is made – merely needs to resemble the real thing.

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