The European Central Bank said on Thursday it was pressing for European Union wide rules that could prevent the use of personal computers to counterfeit banknotes.
The bank said that it and other major central banks had developed a system to prevent the reproduction of banknotes using standard personal computer hardware and software.
Now it wants EU rules to require manufacturers and importers of computer hardware and software to incorporate the system in their products.
"The European approach has traditionally focused on the banknotes, putting as many technical obstacles as possible in the way of counterfeiters rather than relying heavily on law enforcement," the ECB said in its monthly bulletin.
Central bank governors from the Group of 10 developed countries announced in March they had developed a system to prevent computers and digital imaging tools from capturing or reproducing images from protected banknotes.
The ECB, the central bank of the 12-nation eurozone, said that about 307,000 counterfeit euro banknotes were removed from circulation in the first half of this year, down from 311,000 in the same period last year.
"Whilst the level of counterfeiting of the euro appears to have reached a plateau, one should never be complacent about the future threat," the ECB said.
ECB researchers are developing new security features to pose "insurmountable difficulties" to counterfeiters when the second banknote series is introduced at the end of the decade.
"One example of an area of research is the field of nanotechnology where new material development/processing could give rise to new unique optical properties and/or behaviours that could be used in banknotes," the central bank said.
Euro banknotes more popular even beyond zone
The popularity of euro banknotes is soaring at home and abroad in places like Russia, with high-value notes proving a favoured store of cash, the European Central Bank said on Thursday.
Euro banknotes in circulation rose by 20.3 percent in terms of value and 10.5 percent in terms of volume in the first half of 2004 compared with the first six months of 2003.
And the central bank said in its August monthly bulletin there is no clear sign of a slowdown,
The high face value of euro banknotes - the highest, 500 euros, is now worth $612.60 - means they are favoured by people hoarding cash and by travellers because they are widely accepted in Europe, the central bank said.
"The appreciation of the euro against the US dollar since 2002 may have played an additional role in fostering the non-resident demand for euro banknotes," the bulletin said.
Demand for the euro is also appearing in countries like Russia, where there had been little interest in legacy currencies such as the German deutschemark, the French franc or Italian lira.
But the prospects for adopting the euro in a few years' time among the 10 new member states that joined the European Union in May this year may also have increased demand for euro banknotes outside the euro zone, the ECB said.
Some 9 billion euro banknotes with a value of 450 billion euros circulating as of the end of June. The ECB had previously estimated that 50 billion euros worth of euro banknotes or about 10-12 percent of the total currency in circulation is being held outside the euro area.
Since the launch of euro cash in January 2002 people have shifted their holdings toward the 50, 100, 200 and 500 euro notes relative to the 5, 10 and 20 euro notes, the ECB said.
"The share of the denominations ranging from 50 euros to 500 euros had increased from the initial 25 percent in terms of volume and 69 percent in terms of value to 46 percent and 86 percent, respectively, by early 2004," it said.
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