Kinds of Paper Money
Bank notes, otherwise called paper money, are a core element of a country's economy, and most --- if not all --- consumers are familiar with them. However, not every bank note circulated is legal tender, while notes with special elements can be worth considerably more in the bank note collectors' market. For this reason, recognizing authentic bank notes, as well as understanding their value is imperative, in order to avoid cases of fraud.
Other People Are Reading
-
Legal Tender
-
The term "legal tender" refers to any recognized and mutually accepted medium of payment and applies to the vast majority of circulated bank notes. Printing money is exclusively a responsibility of each country's central bank or central banks of economic unions, such as the Eurozone and the Central African Economic Community. Legal tender bank notes can be recognized through their various security features, including holographic bands and watermarks. Each bank note has a specific serial number distinguishing it from other notes of the same value.
Specimen Bank Notes
-
Specimen notes are created by central banks at the start of the printing process to check whether the design is suitable for full production. In addition, specimen notes are used to familiarize the public with new currencies or new denominations of the old currency. These notes do not have the value indicated on them and are not legal tender. They are distinguishable from their special serial numbers --- usually all zeros or all nines --- and from an overprint, declaring they are only specimens.
-
Replacement Bank Notes
-
When there is a fault during the production of a bank note series, banks cannot just throw away the notes and produce new. This would compromise banks' monetary policy, which controls the flow of money. Instead, banks note the serial number of faulty bank notes and reproduce them with another serial number and a distinct mark to indicate they are replacements. For example, a U.S. replacement dollar is easily distinguishable by the asterisk on its serial number. Such notes have considerably higher value among bank note collectors.
Counterfeit Bank Notes
-
In contrast to specimens, which have a clear overprint declaring that they are not legal tender, counterfeit bank notes are created to give the impression they are ordinary money. Counterfeit bank notes production is a criminal offense since only the central bank has the authority to print new series. Fake notes can be distinguished by the absence of security features or after an examination of their serial number. Fraudsters prefer counterfeit bank notes over fraudulent coins because of the notes' larger denominations and their lower cost of production.
-
References
Resources
- Photo Credit Jupiterimages/Photos.com/Getty Images
