27 July 2010

Got any £1 coins? They may be counterfeit.

...new figures indicated there were £41 million fake £1 coins in Britain – one in every 36 in circulation. This is a record level and suggests that the proportion of counterfeit coins had tripled in the last decade...

Scrapping the £1 coin would be very expensive for the Government as well as major upheaval for consumers. However, other countries have been forced to take similar action when counterfeits became too prevalent. The 5 rand coin in 2004 was reissued after taxi-drivers and shopkeepers in South Africa started to refuse to accept them. Fakes were just 2 per cent of all coins, compared with 2.81 per cent with the British £1.

Experts said it was becoming increasingly difficult for shoppers in Britain to spot a fake. The only time they usually notice is when they are rejected by a parking meter or vending machine, which contain devices to monitor whether the metal composition of the coins is correct. However, at least half the fakes are now so good they pass these tests...
Of course, if coins had any intrinsic metallic value, this wouldn't be such a problem...

More at The Telegraph.


  1. I don't understand how making coins out of material that is more valuable in any way mitigates the problem of counterfeiting.

    You can counterfeit silver or gold coins by producing coins of similar density and color using alloys.

    In fact it is much easier to embed anti-counterfeiting features in non-metal money tokens. The US Treasury maintains a site describing the security features of our currency. I think that it is a shame that almost no retailers train their cashiers to use these advanced features to detect counterfeiting. Instead they rely on the truly bogus iodine pen.

    Also I am philosophically suspect of any notion of "intrinsic value".

    Gold is a shiny rock. It has value because there is a finite amount of it and people want it given their current circumstances.

    Money is a government issued piece of paper. It has value because there is a finite amount of it and people want it given their current circumstances.

    In an extreme famine I would not give one grain of rice for all the gold on earth or all the US dollars ever printed.

    I like fiat money because it allows us to control inflation and deflation. It also protects us from our money changing value drastically as the precious metals market rises and falls dramatically.

  2. Thanks nolandda! Good ideas to contemplate.


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