An Introduction To Machine Readable Security Features

Author: Peter Balke, Senior Policy Adviser, The Netherlands Bank

The cash cycle is only as secure as the weakest link. Just because the banknote has a high level of security, this does not imply that the level of security of the cash cycle is similar to the banknote. If banknote handling machines (BHMs) are not or not yet compliant with a minimum number of banknote’s security features, these machines may become the weakest link. In such cases central banks will urge BEMs and the owners of BHMs to adapt their BHMs in order to read the security features at an appropriate level.

Such a reaction by the central bank is characterized here as traditional and is well known in the business. The feedback given by the BEMs to the request of the central bank is typically an explanation of their business model, and may contain one or more of the following statements:

  • Generations of BHMs typically have a life cycle of 10- 15 years (some are 20+ years) excluding research and development activities. Interruption of the life cycle is inefficient, as it generates additional costs to end users and is labor-intensive.
     
  • BEMs operate worldwide. They seek generic solutions which fit to the worldwide market and therefore they generally do not target a single currency.
     
  • Retrofitting a new detector onto an older generation of machines is in most cases not feasible, as space inside the machines is limited and processing power insufficient. These machines need to be replaced.
     
  • The BEMs require a level playing field. This to ensure that BEMs that adapt their machines do not lose market share due to higher machine costs.
     
  • New features are welcome, however a long term, coordinated strategy is needed for their implementation.

The typical response from central banks on the above claims from the BEMs is: “we are being restricted in being able to release a new series with more sophisticated machine readable security features (MRSF)!”

The typical response from central banks on the above claims from the BEMs is: “we are being restricted in being able to release a new series with more sophisticated machine readable security features (MRSF)!”. However to avoid high costs for the owners of BHMs  for machine adaptation/ substitution a set of selection criteria for MRSFs is proposed. Ultimately the MRSFs which comply with the selection criteria are incorporated by the central bank in a new (series of) banknote(s) to enable a smooth introduction on the BHMs and delivering a high level of security for low costs.

Space on a banknote limits the selection of features. Therefore the attractiveness and usability of a MRSF is increased when the feature supplier incorporates more
characteristics making it suitable for multiple target groups, like the public and the central bank.

It must be noted that BEMs are spending increasing time testing the mechanical aspects of new features and designs, whether that be new substrates or wider threads with clear windows and different thicknesses. Acceptance of new note designs by BHMs is therefore not only limited to the security features however this is out of the scope of this paper.

Read the full white paper here.


Peter Balke will be speaking on the session 'Counterfeit Machine Readable Feature Analyses, Resilience Testing, and Feature Selection for Future Series' at the Anti-Counterfeit & Currency Conference, taking place November 6-8, 2018 in Las Vegas, USA.

This is a free-of-charge conference, to get your delegate pass click here.