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Microchips may be embedded in euro notes
Thursday, January 03 2002
by Matthew Clark


According to reports, the European Central Bank is investigating the possibility
of embedding chips in euro notes as a means to block counterfeiting. 



A spokesperson for the ECB would not comment on the issue when contacted by
ElectricNews.Net, but multiple media reports have emerged in recent days that
claim that the Bank is considering the move. Despite the secrecy surrounding the
project, Michael J. Liard, AIDC/RFID analyst from the Massachusetts-based
research firm Venture Development Corporation (VDC), said the technology exists
to implement such a "massive undertaking." Currently there are no currencies
in the world that have such sophisticated anti-counterfeiting measures. 



The RFID (radio frequency identification) market, the technology that the ECB
would use for the system, has been growing in recent years according to the
latest estimates from Venture Development Corp. VDC says that global shipments of
RFID systems, including transponders (tags), readers, software, and services
reached USD890 million in 2000. Last month the company said that shipments of
RFID systems are expected to increase by approximately 24 percent annually to
USD2.65 billion by the year 2005. 







Some of the larger RFID makers in the world include Philips, Siemens and Sokymat
in Europe, as well as Texas Instruments and TransCore in the US. The technology
is already used for a variety of applications such as airline luggage tags,
library books and for supply chain management of various products. 





Presently the US dollar is the most counterfeited tender in the world, but
following the introduction of the euro earlier this month there is a rising
concern that euro-counterfeiting could become especially prolific. It is thought
that the ECB is working with partners to embed the radio frequency identification
tags into euro bank notes by 2005. For the moment however it is unknown whether
the chips could survive the severe wear and tear they would undergo as part of a
currency. Currently the EU has some 10 billion euro notes in circulation. 



If used, the RFID tags, in conjunction with the holograms, foil stripes, special
threads, microprinting, special inks and watermarks already used on the euro
notes would make counterfeiting exceedingly difficult. 



The RFID tags themselves would allow anti-counterfeiting agencies to track where
bills have been by giving each tagged euro-note an electronic serial number and
possibly a "history," Liard explained. When passed through a scanner that emits
radio waves, the chips are activated and send a signal to the scanning equipment,
including an identification number. Additionally the tags can be built to store
information such as where and when they were last scanned. 





But there are some hurdles to overcome before such a technology can be
implemented, cost being the primary concern. At the moment RFID tags cost around
USD0.20 apiece, and even if millions were ordered, the cost of the tags is not
likely to drop below USD0.05. Furthermore, according to Liard, prices vary widely
depending on sophistication and market conditions. 



It is thought that if given the go-ahead, the chips would be first introduced in
higher denomination notes such as the EUR200 and EUR500 bills. 



Size is also believed to be an issue. At present RFID chips are smaller than one
millimetre, but are above 50 microns in thickness, and would need to be reduced
in order to survive the heavy use they would experience as part of any currency
they were built into.