Obviously, such tags would make counterfeiters’ lives far more difficult. But according to De La Rue, a British firm that is one of the world’s leading “security” printers and paper makers, the ECB is already aware of many new anti-counterfeiting technologies that would be just as robust as, and less expensive than, RFID. If this is the case, the additional benefits of RFID banknotes—such as the greater ease with which cash could be tracked—are the likeliest explanation for why the technology is now attracting serious consideration.
RFID-tagged notes mean that it would be possible to gather “real-time” inventories of notes within banks. And, if cash registers were equipped with authorised readers (tags can also interrogate reading machines to establish a reader’s “authority” to ask particular questions), details of the transaction and the notes involved could be collated in a central database.
Accurate knowledge, and monitoring, of the population of banknotes could be a powerful tool. The mining of data on how different banknotes move through the economy would make it easy to spot suspicious transactions—for example, a large deposit of notes that had been out of circulation for a long time.
There are further possibilities. Known notes could be slipped into the “informal” economy by law-enforcement agencies that wanted to find out where they turned up. Kidnappers could no longer insist on unmarked bills, for there would be no such things. Even the theft of cash would become a much trickier affair.
Clearly, the technology would have huge privacy implications. On the one hand, customers of illicit and semi-licit goods and services, such as recreational drugs and prostitution, would risk losing their anonymity unless they were careful. On the other, ham-fisted policing might implicate the innocent in transactions to which they had not been a party, merely because they once handled suspect notes.
Nevertheless, it is likely that the threat of terrorism and organised crime, and the precedent of existing methods for tracking money, will be strong counter-arguments in favour of tracking technology. The relatively high cost of the tags has led to speculation that they would be practical only in high-value notes—in the case of the ECB, euro200 and euro500. But it is just such notes that are of concern to agencies such as Britain’s National Criminal Intelligence Service, which warns that these new denominations make it easier to move large amounts of currency discreetly (and possibly illegally) around the world. The global reach of the euro, a currency that is policed by a fragmented group of authorities, highlights weaknesses that RFID technology may be well-placed to rectify. For criminals, money may no longer talk. Instead, it may squeal.
Copyright © 2002 The Economist Newspaper and The Economist Group. All rights reserved.