Research Discussion Paper – RDP 2019-12 Confidence in Australian Banknotes

We investigate various factors that might influence the general public's confidence in the security of Australian banknotes, using a unique series of online banknotes surveys conducted by the Reserve Bank of Australia since 2010. We find that past encounters with counterfeits, and past experience of problems using banknotes, significantly worsen an individual's perceived counterfeit risk. Females, younger adults, and people with low income are also found to assess the counterfeit risk more negatively. Conversely, and with the exception of being a younger adult or having had serious problems using banknotes, confidence in the system to remove counterfeits is largely unaffected by demographic factors or past exposure to counterfeits. Awareness of a banknote upgrade program does not seem to have much effect on confidence, while knowing more security features of banknotes is associated with higher confidence. To assess the relationship between media coverage and public confidence in banknotes we use monthly data on media reports on counterfeiting, genuine banknotes mistakenly submitted as counterfeits, and actual counterfeit detections. As more unique counterfeit incidents are reported in the media, more genuine banknotes are mistakenly submitted as counterfeits, which we interpret as media coverage heightening the sense of counterfeit risk.