Euro notes to be embedded with RFID chips

27 May 2003

A bold new move by the European Central Bank may see tiny radio frequency identity (RFID) tags embedded in the euro note if a deal is signed with Japanese electronics giant Hitachi.

RFID tags are tiny computer chips that listen for a radio query and respond by transmitting a unique radio ID code. Technologies such as RFID are finding widespread early adoption in a variety of places, ranging from inventory control in the US Army to collaborations between the Massachusetts Institute of Technology (MIT) and Wal-Mart, to enhance inventory management and the shopping experience of the consumer. Agricultural uses of RFID have also been mooted, with farmers using RFID chips to keep an eye on cattle movements and milk shipments. Others include using sensors and actuators to manage quality control.

It is understood that the move to add RFID tags to bank notes is driven by concern at the European Central Bank that counterfeiting and money laundering are more widespread than ever in Europe. Last year, Greek authorities were confronted with 2,411 counterfeiting cases and seized 4,776 counterfeit banknotes. In Poland police nabbed a gang suspected of making more than a million fake euros and putting them into circulation.

At present businesses across Europe are finding it hard to judge a note’s authenticity as current equipment cannot tell between fake currency and old notes with worn-out watermarks. As well as acting as a digital watermark, the use of radio chips could speed up routine bank processes like counting and a large sum of cash could be counted instantaneously in the same way that inventory in manufacturing and stores is tracked using current RFID systems.

At present, most RFID chips are around the size of a small coin, and Hitachi claims to have developed tiny RFID chips that are half the size of a grain of sand. Last year the firm said it developed a chip that measures one-third of a millimetre across and is capable of wirelessly transmitting a 128-bit number in response to radio signals. The number could contain such information as the date and place of origin of a euro note.

By John Kennedy