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Counterfeiting: A Canadian Perspective

John Chant

Staff Working Papers from Bank of Canada

Abstract: Counterfeiting is a significant public policy issue, because paper money, despite rumours of its demise, remains an important part of our payments system. Various parties have a stake in the prevention of counterfeiting. For individuals and businesses, the share of counterfeits in outstanding currency indicates the likelihood that the next bill they receive will be counterfeit. For government, it indicates the extent to which the circulation of counterfeits displaces legitimate currency and reduces its seignorage benefit from the right to issue currency. Most significantly for monetary authorities, it indicates the degree to which counterfeiting challenges the integrity of the nation's currency. The author considers the economic issues that counterfeiting raises. He proposes an innovative method for estimating the quantity of counterfeit currency in circulation and develops estimates for Canada for 2001. Such a measure can make a significant contribution to public policy by providing a basis, through international comparisons, for assessing the effectiveness of different currency features in combatting counterfeiting.

Keywords: Bank; notes (search for similar items in EconPapers)
JEL-codes: E5 E58 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2004
New Economics Papers: this item is included in nep-mon and nep-reg
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Handle: RePEc:bca:bocawp:04-33