The spectre of fake currency notes

The issue of counterfeit currency circulating in the county has largely come to the public domain since it was discussed during a briefing given by a team from SBP to the Senate's Standing Committee on Finance a few days ago. It was reported that banks had issued a large number of fake currency notes to the public during Eid-ul-Azha. On 6th October, the SBP in a statement categorically rejected the allegation that banks were involved in injecting counterfeit currency systematically and assured that it was employing all available resources to curb the menace. However, it recognised that the presence of counterfeit currencies was not only limited to Pakistan but was witnessed across the globe. Further, the SBP stated that it had adopted a three-pronged strategy; ensuring state-of-the-art security features in bank notes that were difficult to counterfeit; developing necessary capacity and infrastructure with banks to issue genuine and authenticated banknotes to the public; and creating awareness among the general public. State Bank also pointed out that banks are required to issue only sorted cash to the public from their cash counters and ATMs; and added that such sorting was, nonetheless, manual and vulnerable. Banks have also been advised to install banknotes authentication and sorting machines. To lead by example, SBP was installing most modern high speed banknote processing machines in its subsidiary SBP-BSC, besides using the desktop note sorting machines. The success of these initiatives, central bank reminded, will among other things, depend on public co-operation in reporting fake banknotes to law enforcing agencies.
The phenomenon of fake currency notes circulating in the country is indeed worrying and could cause a lot of anxiety to the public at large after the recent statement of the SBP that presence of counterfeit currency in the country was an undeniable fact. Previously, it was very rare for the people to face this problem and they could never believe that even notes directly issued to them by the banks could be fake. Of course, as pointed out by the SBP, such an evil may also be prevalent in other countries but their systems remain alert to the situation and they are able to track the source of evil and punish it accordingly to remove the possibility of its recurrence. So far as the statement of SBP is concerned, it could only give little hope to the people in the country that the authorities would be able to mend the situation in the near future and restore the full authenticity of the currency. Why the relevant authorities have been, more or less, sleeping over the matter in the past could also be questioned? The timetable of January, 2017 offered to the banks to issue machine-authenticated banknotes means that public has to wait at least for another year and a half to be fully confident about the authenticity of banknotes. Moreover, measures to remove the menace by the SBP, especially, creating awareness among the public, would not yield the desired results. It is hard to understand how the ordinary people would be able to distinguish between fake and genuine currency notes when cashiers of the banks have been found wanting in this task. Even if a person finds a fake banknote in his valet, he would be least inclined to go to the law-enforcing authorities because of their tendency to ask irrelevant questions and delay the investigation of such matters.
Another problem with the SBP statement is that, although it is the largest stakeholder in the system, it has largely put the onus of detecting and dealing with fake currency on the banks, ordinary public and law enforcing agencies. We feel that the overall banking system, including the State Bank, needs to play a leading role to restore the credibility of the financial system and ensure that only real currency notes circulate in the country. A person going to his bank for withdrawal of his hard-earned savings should be absolutely certain that the currency notes given to him are perfectly genuine. If the depositors who are not professional tellers have to assess the genuineness of their money at the cash counters, it would create a mess at the bank premises and harm the trust between bankers and their customers. In our view, once the matter of fake currency is reported in the press, it is the responsibility of the relevant authorities to ensure that the matter is taken seriously to undo the damage likely to be caused by this evil phenomenon. One can well imagine the pain of an ordinary person who is told by the shopkeeper that a Rs 5,000 note given by him is a fake.