The use of counterfeit money in Australia may not be too prevalent, but the potential costs can nevertheless affect both business and the general public.
According to The Cost of Currency Counterfeiting, a new report released by the Reserve Bank of Australia (RBA), $1.2 million in fake currency was detected in 2013. The reports find that, while the overall number is not very high, the costs to society are “non-trivial”.
Approximately 34 per cent of counterfeits were found by businesses, 32 per cent were detected by the RBA, banks and others cash management companies, and 10 per cent were detected by the general public.
Of the businesses detecting counterfeits, over a quarter were found to be supermarkets. Restaurants, cafes and fast food outlets were responsible for finding 20 per cent.
“The impact of fraud loss from counterfeiting can be a significant cost for some agents in the economy. Low-income households use cash more than other payment methods and could be exposed to fraud losses from counterfeiting more than other households,” the report said.
“For low-margin businesses, it is possible that the loss from receiving a counterfeit could exceed daily profits. For example, as highlighted by the Bank of Canada, grocers operating on margins of one to two per cent would have to sell up to C$5 000 worth of goods to recoup the loss from accepting a single C$50 counterfeit.”
The study revealed that the public’s “demand for banknotes is found to decline following a counterfeiting shock”, which the RBA holds consistent with the response seen with a drop in currency confidence.
“The stock of bank deposits and the stock of credit card debt are found to increase, which is consistent with the public substituting cash for other payment methods.”