Tracking the Supernote

A hat tip to GI in Korea, for this article from a recent edition of the Asia Sentinel. The paper sent reporters to Dandong, a Chinese city on the Yalu River, to buy North Korean "supernotes" --high-quality, counterfeit copies of U.S. $100 bills. Turns out, the fake bills were relatively easy to procure, but easily spotted by professional money changers, and machines used to detect counterfeit currency.

If that's the case, then why are so many bogus bills, printed by Pyongyang, still in circulation. For starters, North Korea counterfeits on an industrial scale, using printing presses, paper and ink that rivals that of the U.S. Treasury. And secondly, as the Sentinel discovered, there are "disincentives" for Chinese banks to detect bad notes and remove them from circulation. Given Dandon'g role in getting the counterfeit currency into circulation, it's obvious that Pyongyang has friends in Chinese commercial and banking circles who provide a ready conduit for the phony Franklins.

North Korea apparently uses the counterfeit bills to obtain needed hard currency and purchase luxury goods for the ruling elite. The Swiss-made printing presses that generate the phony $100 bills in Pyongyang are said to be among the world's best, rivaling those at the U.S. Bureau of Printing and Engraving that produce the real thing. North Korea obviously believes the presses are a sound investment--despite U.S. led efforts to crackdown on the counterfeiting operation, it still generates tens of millions of dollars a year in hard currency. With Pyongyang's printed fakes trading at 30-50% of face value, North Korea still earns a handsome return on its efforts, even when printing and "circulation" costs are factored in.