Table of Contents
Introduction …………………………………………………………… 3
The new $100 bill…………………………………………………………4
Controversies that delayed the new $100 bills……………………………5
Problems in the printing press
Inspector General’s report…………………………………………….. .. 7
Crow’s Feet………………………………………………………………. 8
Network flaws…………………………………………………………… 8
State of the art printing technique…………………………………………9
Sorting and destroying the bills……………………………………………10
New $100 bills- facts and figures-……………………………………… 10
The history of the currency of the United States exists even before the country was born, when it was nothing but a cluster of colonies. The Massachusetts Bay Colony had to print paper currency to buy arms, so the currency was introduced in the year 1690, followed by other colonies. But the restrictions remained in place for printing of currency by the British. In 1775, a currency was printed and was distributed by the Continental Congress.
Later, the Congress came up with the Bank of North America along with the assistance of the government, thus the dollar became USA’s first official monetary unit in the year 1785. In 1792 a monetary system was introduced under the Coinage Act, and coinage in gold, silver and copper were produced which became the means of all transactions, til 1863 when paper was used as dollar bills or greenbucks to finance the Civil War. The seal of the Treasury and engraved signatures were utilized to allow fewer chances for any counterfeiting. In the same year the US Treasury was permitted by the Congress to put together the national banking system and oversee that the National Bank notes are duly issued and delivered. Thus national banks got the authority to purchase US bonds easily.
In 1913, through a single central banking system, the Federal Reserve Note was issued under the Federal Reserve Act. Federal Reserve Notes were issued in the form of a $10 bills in 1914 and to save on costs of the production the size was reduced by about 30%. Further a uniform design was printed across all denominations in place of separate designs for varying currencies. Only after considerable improvements again in 1996 the design of the notes were changed to save it from counterfeiters. The images that have been used in the past 300 years in notes have consisted of and still consist of eagles, pyramids, even frogs and Santa Claus, to name a few. Some of them have been abolished and some are retained today. In America the symbolisms in notes have meaningful messages and give the idea of hope, patriotism and optimism, that was what the Founding Fathers desired for all of Americans to share.
The new $100 bill
The Treasury Department in Washington for the first time on the 21st April 2010, unveiled the new design of the $100 bill, this was designed in a hitech makeover in order to be one step ahead of the counterfeiters. Because dollars were flowing overseas and technology was not limited to the US, hence a more sophisticated version of this bill was necessary. Hence the US Treasury and the Federal Reserve System introduced a newly designed $100 bill, which was more sophisticated in design and highly costly to counterfeit.
Controversies that delayed the new $100 bills
According to the inspector general’s report, immense problems were encountered in the highly sophisticated printing process. The bureau didn’t perform the required testing to resolve technical problems and went ahead with production of the bill. This, and other controversies, surrounded the new $100 bill. Intermittent creasing of paper as it was being printed often resulted in blank spots, at places. Due to printing errors, the eyes of Benjamin Franklin were not printed correctly and sometimes the signature went blank. Then all respective departments in close co-ordination with Crane & Company, suppliers of the paper for the new currency, put their heads together to figure out what caused these errors and to come up with a solution. Crane & Company was not some new entrant in the paper market, rather for the last 130 years it has provided with paper for the US currency, and was a trusted company. It was announced by the Fed that the new bills are being put on hold; this important issue did not get the absolute notice till a report by CMBC drew attention to this major problem. According to the report nearly 1 billion of the $100 bills, all bearing the signature of Geithner were kept in storage at the secure vaults of Engraving and Printing in Washington and Fort Worth, Texas. Serious discussions and deliberations were held by officials to identify how many bills have been rendered unusable.
The first series of notes issued by the Federal Reserve Banks featured George Washington, Thomas Jefferson, Abraham Lincoln, Andrew Jackson, Grover Cleveland, and Ulysses S. Grant on the fronts. The backs displayed a far more symbolic variety of themes. The eagle carrying the U.S. flag on the $1 bill radiates confidence and patriotism. The World War I battleship on the $2 bill symbolizes strength and power. On the $50 bill the word “Panama” appears at the bottom of this beautiful engraving, since this note was issued the year that the Panama Canal was opened.
This was a tough time for the officials who were at a fix with how and when to distribute the bills. American government rarely has encountered such problems in the line of production. The core reason of the problem was the use of highly sophisticated technology to stay ahead of counterfeiters. The more complex the technology, more chances of unimagined hitches.
The only delay that was encountered by the Treasury was in the year 1987, when the issuance of the first redesigned American dollar bill has to be delayed for several years; this delay was encountered in more than fifty years.
The last being the new $100 bill was attempted with a makeover and redesign process. This redesigning process started in the early 2003 with US$ 20 bill. It was essential to give it a makeover as the 100$ bill was and still remains, the most counterfeited currency outside America.
According to the Treasury department the new $100 bill is the most sophisticated currency to be ever circulated; and such sophisticated currency needs the services of an equally sophisticated printing system. But the fact of the matter is, that if the old
$100 bills were allowed to be in circulation till the time when all the old bills are withdrawn, so the chances of counterfeiting remains. It appears that this policy will not help decrease counterfeiting in the near term until the old bills are fully stopped from circulation. In the long run, when the old bills are no more allowed to be used, the policy of introducing new bills can be immensely helpful in eradicating counterfeiting.
Problems in the printing press
The inspector general’s report said about immense problems in the highly sophisticated printing process which has never been used in printing of bills in the United States. Added to this was the controversy about ‘production validation’, besides it was also disclosed that more than $15 million worth of equipments are necessary to detect inspect the flawed notes. Once again no guarantee was provided that this costly equipment will successfully perform 100% correct detection.
Any inspection system which is acquired to detect overall flaws would not be able to detect a flaw which human eyes can see and detect, the crow’s feet’, or even wrinkles hence it was recommended that no equipment to detect flaws should be purchased rather try for destroying the flawed bills which again would cost nearly $800,000 and nearly 92 million to replace the flawed notes.
There are three kinds of equilibria which are present in a model economy, the first is where counterfeiting is present, while the others, where counterfeiting is absent. It is evident that the policy will ultimately put a stop to counterfeiting. But all successful policies do not bring immediate results hence time is the key factor in this case. 
State of the art printing technique
Counterfeit money is part of the big game, it has not stopped earlier it will not stop fully in future, the counterfeit bills will be accepted by the trade, but asymptotically stop circulating. As it is seen that counterfeiting is present in some equilibria and absent in others, it is then known that equilibrium is present in such stages when counterfeiting comes to a stop at some date. Hence this policy is not such where its failure is impossible. The knowledge that at one stage or another counterfeiting has to come to a stop may reduce the present pessimism.
When undesired and damaging creases were first detected in the newly printed $100 bills, the government ran into hot waters.1 billion of new bills were found to have creases. Then came a stage when during printing the ink smeared, and it also delayed the introduction of the new $100 bills. The Treasury said that bills to the tune of $900 billion are worthy and will remain in circulation but will also be phased out in a gradual manner when they are asked to be returned to the Fed facilities. With a life of more than fifteen years, this new bill is the largest in denomination which is in circulation, as the $1 bill lasts only for 5.9 years. Some new sophisticated features of this bill are:
-3-D blue color woven ribbon set inside the note
-The number 100 and the changing images of the bells when the note is tilted
-Within the inkwell is a liberty bell which, if tilted, changes its color
-The large size ‘100’ in the front which if tilted changes color
-The larger ‘100’ at the back meant for persons with eye problems bill
-The feel of the rough texture all over due to raise printing
-On Franklin’s collar ‘The United States of America’ is microprinted along with ‘USA 100’ on the watermark.
The dollar has sometime been adopted and sometimes used as the official currency in various regions and countries, this is called dollarization. It has been present in the British Virgin Islands, East Timor, Ecuador, El Salvador, Marshall Islands, Federated States of Micronesia, Palau, Panama, Pitcairn Islands, and Turks and Caicos Islands.
Sorting and destroying the bills
The total face value of the potentially unusable bills is $110 billion dollars. In the meantime, while the Treasury Department and Federal Reserve begin resolving the issue, production of the old-style bills has been resumed. The release date for the new bills was hence suspended indefinitely. For such huge amount sorting by hand can take decades, if done by machines, and then they have to be made. Machines that also can see Microprinting, feel the texture and be able to identify white spots left in printing. The bills found to be defective will eventually be destroyed and destroying them will cost in millions. The cost of each bill is 12.5 cents, which is double the cost of conventional bills.  As earlier stated, the bills which have flaws amount to more than 100 billion dollars. 
New $100 bills- facts and figures
In 2010, the Bureau of Engraving and Printing in the United States printed 26 million notes every day! They have two facilities where the notes are printed: Washington, DC and
Fort Worth, TX and the average cost to produce a banknote ranges from 3-12 cents, with an average of 9.6 cents per note.
US paper currency is designed with numerous anti-counterfeiting security features (both covert and overt), such as watermarks, micro-printing, security threads that glow under UV light, serial numbers, federal reserve markers and low vision numerals. The Security Features Development Group within the Bureau works very closely with the Secret Service and Federal Reserve Bank to design anti-counterfeiting features.
Various types of inks are used to produce each banknote, such as optically variable ink that changes color as the note is tilted, as well as ink that reacts in near-infrared light. Color control and rheology (the flow of ink) become critically important when printing this type of security document; therefore the process can be incredibly complex. The US cotton notes are soil-resistant, chemical-resistant and durable. The Bureau of Engraving and Printing’s paper has been sourced from the same company (Crane and Company) since 1879 and it is 75% cotton and 25% linen blend. There are fluorescent security threads, watermarks and red and blue fibers embedded in the paper at the time of manufacturing. Consistent color and feel of the paper is critical to the success of the notes over multiple runs. The fibers of the paper have been super calendared (flattened) to increase smoothness. The highest denomination ever printed in the United States is a $100,000 note, which was an inter-bank and trading note. The largest denomination printed today is the $100 note. The lifetime of a $1 bill is approximately 3.5 years, but higher denominations last longer simply because they are handled less often. 
The world had more than 820 million of Benjamin Franklins during the last year, thus among the world currencies this new $100 bill was the most popular bank note. The amazing part is that the major portions of the new $100 bills were shipped to the outside world in pallets worth $64 million by the Fed in pallets. And it remains a most sought after bill for drug mafia and weapons smugglers as well as for the unstable economies as a store of value and worth.
80% of all the US currency which remains in circulation is in the denomination of $100 bills, because huge amounts of dollars are being spent outside America. Most of the $100 bills originate from Federal Reserve Cash Office which is situated in New York, it also the export point of huge amount of dollars.  With the crucial role that is played by the United States in the world, it is not amazing that the dollar has a special place in global transactions. But things are fast changing, and it is expected that some sort of associated evolution in the international financial architecture is in the offing. Today, the dollar alone is not the sole international currency; Euro, Yen and Chinese RMB are also being used in global business transactions. According to William Frederick, author of the Corning Epiphany, all the dollar bills have some hidden information to convey for example if the $20 bill if folded in a certain way depicts both the World Trade Center attach as well as Pentagon attack. So this new $100 bill is being inspected by the great minds and pundits to see what secrets it has in it.
A currency has many international roles like a medium of exchange, transaction currency in foreign exchange and capital markets etc. The dollar has all those qualities which make it the most suitable currency for all occasions; it has maintained its commanding role in all the key functions. However with the tremendous rise of China as an economic giant and undoubtedly, an Asian Superpower, will be reshaping the international economic system. The international community holds dollars due to its being fully secure. America has always honored its obligations but after another great recession the federal debt is going to touch 75% of American GDP. Deficits are huge, in trillions of dollars. The tough burden of debt servicing is too heavy and so the international community may ask how the U.S is going to maintain the value of its debts. This scenario will make the international community hesitant to keep all the eggs in the basket of dollars giving chance to other major currencies to be its arch rival.
But it is a historical artifact that dollar satisfied all the roles following the devastations of the Second World War. Within the Bretton Woods system, its status is institutionalized. Dollar has proved that its credit worthiness and openness is beyond doubt. Similarly, any decline in dollar’s dominant primacy is not a threat to America, when this decline gives more impetus to the growth of economy in America. The role of US Dollars in forex is reinforced by its being extensively used in invoicing of the international trade. Still, some critics say that great benefits are extracted due to the eminent position the dollar commands internationally. United States exerts its influence in the economic horizon through institutions like the IMF and the World
Bank. This and various other reasons hold sway. Changes in the value of the dollar also are associated with well-established facts on competitiveness of U.S. exporters and importers  .
United States exerts its influence in the economic horizon through institutions like the IMF and the World Bank. This and various other reasons hold sway. Gourinchas and Rey provided a conceptual counter that an insurance premium is being paid by the international community to America for its exorbitant duty in providing the world a stable anchor. But the fact remains that amounts measured in billions of dollars can be bought and sold readily, anonymously, without influencing the price of the outstanding bills and that is exactly why the dollar reigns supreme.
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