International Finance Discussion Papers (IFDP)
Staff working papers in the International Finance and Discussion Papers (IFDP) series are primarily materials produced by staff in the Division of International Finance. These topics are focused on, though by no means limited to, international macroeconomics, international trade, global finance, financial institutions, and markets, as well as international capital flows.
Estimating the Volume of Counterfeit U.S. Currency in Circulation
Abstract:
The incidence of currency counterfeiting and the possible total stock of counterfeits in circulation are popular topics of speculation and discussion in the press and are of substantial practical interest to the Federal Reserve, the U.S. Treasury and the United States Secret Service (USSS), who are jointly responsible for U.S. banknote design, including security features, and production. This paper assembles data from Federal Reserve and USSS sources and presents a range of estimates for the number of counterfeits in circulation in the United States. In addition, the paper presents figures on counterfeit passing activity by denomination, location, and counterfeit type.
The paper has two main conclusions: first, the stock of counterfeits in the United States as a whole is at most about $30 million, or about 1 in 40,000 notes and is likely about $15 million, or on the order of 1 every 80,000 genuine notes in both piece and value terms. This estimate marks a significant decline from the estimate of 1 in 10,000 notes presented in Treasury (2006) using similar methods and data sources, and the decline is likely at least partially due to increased circulation of higher-security banknotes as well as increased public education about U.S. dollar banknote security features. Second, when counterfeit notes of reasonable quality are considered, losses to the U.S. public from only the high-quality counterfeits of the most commonly used notes, the $20 and smaller denominations, are minuscule. However, there is a range of estimates overall for counterfeits in circulation, and these estimates vary by denomination.
Keywords: Banknotes, counterfeiting, estimation, money
DOI: https://doi.org/10.17016/IFDP.2025.1404
Geopolitics Meets Monetary Policy: Decoding Their Impact on Cross-Border Bank Lending
Abstract:
We use bilateral cross-border bank claims by nationality to assess the effects of geopolitics on cross-border bank flows. We show that a rise in geopolitical tensions between countries — disagreements in UN voting, broad sanctions, or sentiments captured by geopolitical risk indices — significantly dampens cross-border bank lending. Elevated geopolitical tensions also amplify the international transmission of monetary policies of major central banks, especially when geopolitical tensions coincide with monetary policy tightening. Overall, our results suggest that geopolitics is roughly as important as monetary policy in driving cross-border lending.
Keywords: Monetary policy; Geopolitical tensions; Cross-border claims; Diff-in-diff estimations
DOI: https://doi.org/10.17016/IFDP.2025.1403
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ISSN 2767-4509 (Online)
ISSN 1073-2500 (Print)