Appendixes



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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real Appendixes

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real This page intentionally left blank.

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real A Statement of Task and Organization of the Report STATEMENT OF TASK Primary Tasks: Identify technologies, both existing and emerging, that pose the most significant counterfeiting threats to Federal Reserve notes (FRNs). Threats known today include digital methods of producing images, desktop scanners, digital cameras, color printers, digital imaging software, and digital pre-press and printing equipment. The evaluation should include existing emerging threats to FRN features used by the general public to authenticate currency, as well as features used in vending, ATMs, retail sorters, the gaming industry and other automated currency processing. Identify features, materials, and technologies to deter counterfeiting of FRNs, and assess their relative effectiveness. The study should include the identification, analysis, evaluation, and ranking by effectiveness of technologies that may deter the counterfeiting of FRNs and that could be incorporated into U.S. banknotes in the longer term (more than 5 years). The evaluations of technologies should include the following criteria: Effectiveness in deterring the counterfeiting of FRNs (i.e., difficulty in duplicating or simulating FRNs using existing or emerging commercially available materials and processes). Promoting visual authentication (i.e., technologies that are visually distinctive and obvious to the untrained observer, as well as noticeable,

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real understandable, and easily used by the general public as a method of visually authenticating FRNs in a variety of lighting conditions). Uniqueness and aesthetics (i.e., novel or strikingly different from existing features used to deter counterfeiting of high-security documents, and aesthetically pleasing in the design of FRNs). Identify potential costs, including material costs, equipment costs, and the costs of processing banknotes for the Federal Reserve System and third-party users of FRNs, including transportation, storage/handling, and eventual disposal. Feature evaluation should evaluate the implications of implementing proposed materials, technologies, or features on the BEP’s FRN manufacturing operations, including the following: Evaluation of the merits of exploiting the three-dimensional character of a banknote. Development of a new class of deterrents based on compositional changes of the substrate [the surface or material on which printing is done], incorporating new materials in a variety of new innovative ways, or incorporating optical or auditory security elements into the substrate. Evaluation of alternative banknote substrates relative to each other, and the potential of blending various substrates with other substrates—including standard banknote paper to create a hybrid that expands value as a counterfeit deterrent or new security feature. Include substrates already used for banknotes worldwide, as well as potential materials not yet in use, but that may have significant potential benefits. Secondary Task (not required, but to be completed if time and funds allow): Identify, including analysis, evaluation and ranking of the effectiveness of technologies that could be incorporated into FRNs in the long term (more than 5 years) for denominating or authenticating by the blind, for forensic analysis, and for third-party machine denominating or authenticating (e.g., point of sale), including estimated costs of implementation. ORGANIZATION OF THE REPORT Chapter 1, “Background and Motivation for the Study,” provides background information and an overview of the main motivations for the report and is an important foundation for understanding the directions taken in the study by the committee. Chapter 2, “Understanding Counterfeiting,” describes five classes of counterfeiters and summarizes a flow model of counterfeiting that can be further developed to provide quantitative insight into the deterrence effectiveness of U.S. banknote features. While not answering any one element of the charge—although it is most pertinent to Task 1 of the statement of task—Chapter 2 also provides

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A Path to the Next Generation of U.S. Banknotes: Keeping Them Real important background information about the threat to currency and how the committee established a system to evaluate potential new features and feature platforms. The committee found that much of the information in this chapter was not at all obvious and as such was valuable to share with the wider audience for this report. Chapter 3, “Emerging Counterfeiting Technology Threats,” which addresses Task 1, reviews current and emerging technologies that present significant counterfeiting threats. Chapter 4, “Innovative Counterfeit-Deterrent Features” discusses the evaluation process used by the committee and summarizes the advanced features that could be incorporated in FRNs within a short to intermediate time frame—that is, 4 to 7 years. Features particularly useful for classes of users, such as the blind, are identified, and plastic substrates are discussed. The features summarized in Chapter 4 are described in more detail in Appendix C. Together, Chapter 4 and Appendix C address a portion of the feature identification and prioritization undertaking requested in Tasks 2 and 4 and the alternative substrate evaluation requested in Task 3. Chapter 5, “Disruptive Feature Platforms,” presents game-changing ideas for feature technologies that extend beyond conventional approaches and which will require long-term development (beyond 7 years). Appendix D contains more detailed descriptions of the platforms. Chapter 5 and Appendix D address a portion of the feature identification and prioritization requested by Tasks 2 and 4 and offers long-term concepts for alternative substrates, as requested in Task 3. Chapter 6, “A Path Forward,” discusses a strategy for further developing the feature concepts to the point that a decision could be made for their incorporation into an FRN. Factors of cost, aesthetics, and durability are explained. Chapter 6 addresses the remaining elements of Tasks 2, 3, and 4.