RDP 2019-12: Confidence in Australian Banknotes 5. Conclusion

In this paper we investigate various factors that might influence the general public's confidence in the security of Australian banknotes, using a unique series of online banknote surveys conducted for the Bank since 2010. We measure this confidence in three main ways: the perceived likelihood of receiving a counterfeit over the next 12 months; the belief that there is a counterfeiting problem in Australia; and confidence in the current system to remove counterfeits from circulation.

We find that past experience of problems using banknotes significantly worsens both perceived counterfeit risk and confidence in the system to remove counterfeits. This suggests that central banks can reduce perceptions of counterfeiting risk by improving the quality and usability of banknotes. Females, younger adults, people with low income, and those who reported having received counterfeits in the past are also found to assess the counterfeit risk more negatively. However, with the exception of being a younger adult, confidence in the system to remove counterfeits was largely unaffected by demographic factors or reported past experience with counterfeits. Awareness of a banknote upgrade program does not seem to have much effect on confidence, although it worsens perceptions of the current level of counterfeiting suggesting that some people associate banknote upgrades as responding to a current counterfeiting problem. Finally, knowing more banknote security features 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 submitted in error 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.