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For any interested in the related costs: https://www.theguardian.com/money/2014/mar/19/cost-new-pound-coin-business https://www.theguardian.com/money/2014/mar/

For any interested in the related costs: https://www.theguardian.com/money/2014/mar/19/cost-new-pound-coin-business https://www.theguardian.com/money/2014/mar/19/cost-new-pound... Seems like there are £45m worth of counterfeit coins in circulation, but the switch may cost over £100 million. ____ EDIT: The percent of fake coins in circulation appears to be in flux, which makes me wonder what methods they use to estimate the fakes in circulation, if they use controls like injecting known fakes into the count to see if they are spotted, if the sample is truly random, the maths is correct, etc.: 1% 2004 [1] 3.03% May 2014 [2] 2.55% May 2015 [2] Of note is that the Royal Mint states in the 2016 annual report that the last survey for fakes was in May 2015, but the report was issued in July 2016, which means at least as of that date they failed to do the annual survey; or at least publish the results.[3] [1] http://www.telegraph.co.uk/finance/personalfinance/10707540/How-can-I-spot-a-fake-1-coin.html http://www.telegraph.co.uk/finance/personalfinance/10707540/... [2] http://www.royalmint.com/discover/uk-coins/counterfeit-one-pound-coins http://www.royalmint.com/discover/uk-coins/counterfeit-one-p... [3] http://www.royalmint.com/~/media/Files/AnnualReports/ar_2015_2016.pdf http://www.royalmint.com/~/media/Files/AnnualReports/ar_2015...

andy_ppp 10y ago
So there was no point in doing it? This seems super weird for a financial institution that should be looking at hard data; maybe they did some analysis about the increasing ease of forgery?
- robjan 10y ago
  The main reason for doing it is that they don't want the public to lose faith in the "value" of the pound, which will eventually happen if forgeries become more abundant.
- nraynaud 10y ago
  There is some kind of psychological cost too, since the money is only valued as much as people want to value it. Too much fakes might damage the brand more than the face value of the fake coins.
  - larelogio 10y ago
    This is legal tender inside the UK, people can't put a value on it. Outside the UK the coins have no value as only bank notes can circulate abroad.
- Gustomaximus 10y ago
  I would suspect the rate of introduction is increasing. So while maybe it took 20 years to circulate this 45m amount, they may expect the next 45m to come though in a few years. That and pride/confidence in money validity. This is my guess and not fact.
  - ljf 10y ago
    Anecdata, I know - but certainly even 5 years ago it was rare for me to spot a forgery in my change. Over the last few years I found more and more - so I'd think that the process and cost for creating fakes is dropping. Though since contactless payment has been around I can honestly say I've spent actual cash about 4 times this year so far, so my collection of 'interesting coins' has not been added to like it once was.
- ocfnash 10y ago
  If we knew that there would only ever be £45m worth in existence then perhaps not but one would expect that this figure is growing.
- belorn 10y ago
  Sweden is also replacing the coins with new ones and a major advantage I keep hearing is that their weight is lighter, which reduce transportation costs and makes it easier for bank. But I would guess from a public relation perspective, asking a whole population to replace their coins just to make it cheaper and easier for banks is a harder sell that arguing security.
  - Reason077 10y ago
    It isn't really a cost/problem to "ask the whole population to replace their coins". Coins are constantly being circulated, with worn ones replaced by new ones anyway. The cost of changing comes primarily from businesses having to update vending machines, coin counting machines, etc (as well as increased production costs due to the new security features.) But this switch has been planned for many years, so businesses have had a long time to prepare.
  - linsen 10y ago
    From experience, the lighter weight makes the coins harder to tell apart. The old coins had three denominations: 1kr (~$0.10), medium sized, thin, silver; 5 kr (~$0.5), big, thin, silver; and 10 kr, small, thick, golden. Their big size (compared to Euro coins) make them comfortable in the hands and trivial to count the right amount. By comparison, the new, smaller coins are much harder to grasp and the new denomination (2kr) is hard to tell apart from the new (1kr). The new notes are similarly hard to tell apart, as they all i) have the same height, and ii) use similar (pastel) colors. "Never attribute to malice what you can blame on stupidity", but it almost feels like they are making the new cash hard to use on purpose.
- petercooper 10y ago
  Not sure if this is flawed, but I want to attempt an analogy that felt right to me.. Let's say they figured out catching a thief cost £500 and it became public knowledge the police wouldn't investigate any theft under £500. The cost of transitioning to the £1 seems worth it to prevent further abuse.
  - thaumasiotes 10y ago
    > Let's say they figured out catching a thief cost £500 and it became public knowledge the police wouldn't investigate any theft under £500. Is this not already true? When my laptop was stolen, I was advised "don't bother reporting it to the police".
    - jessaustin 10y ago
      It might well be true, but the police themselves can't say that it's true in an irrevocable way. The recent indie film "I Don't Feel at Home in This World Anymore" is an entertaining consideration of this scenario.
  - gejjaxxita 10y ago
    Your analogy is flawed because you are discussing investigating a crime that has been committed. The purpose of the new coin is to prevent the crime from being committed in the first place by making it harder to commit. Given the expense of rolling out the new coin, it probably makes more sense from a economic and moral point of view to spend money investigating these crimes rather than preventing them.
- branchless 10y ago
  I'd imagine the point is to prop up confidence in fiat money. Cash represents 3% of "money" so a small counterfeit issue with pound coins is a fraction of a %. Meanwhile the entire currency is debased annually by failing to include land prices into the inflation calculations, despite most credit creation being against land. This debases GBP for workers every year. Therefore propping up confidence is vital.
- willvarfar 10y ago
  Its a politically strategic time to reaffirm some kind of public 'pride' in the Pound. Its a symbol of nationalism. (am brit)
  - djhworld 10y ago
    The new pound coin has been in the works for years, it's not some knee jerk reaction to Brexit.
- deleted 10y ago
  [deleted]
- GCA10 10y ago
  If forgers can infiltrate 2.5% to 3% of the market, there's no reason for them to stop at such modest levels. Why not try for 30%? We also don't know anything about the volume of forged coins withdrawn from the market each month. If detection at pubs, grocery stores, etc. is poor, then fake coins enter the market at will and are detected only when merchants present their cash to banks. That's annoying for everyone, and it's possible to come up with scenarios in which each year sees 2x or even 5x the introduction of fake coins, with many of them staying in circulation for only a few months but causing damages anyway. In either of these scenarios, clamping down now on forgery is economically prudent, even if the 100 > 45 comparison doesn't reveal the true cost.
pdog 10y ago
The societal cost of counterfeiting goes far beyond the nominal value of the fake coins in circulation (approximately one in thirty one pound coins is a counterfeit).
- jessriedel 10y ago
  Yea, it would be a bit like conflating the nominal value of currency in circulation and the actual value to society of having physical currency at all. There are huge multiplier effects.
  - kpil 10y ago
    I used some coins today. It was probably the first time in a year I used cash... While I see the value of failsafe money (except it really isn't) I think the returns are diminishing...
mabbo 10y ago
There are £45m of fake pound coins in circulation currently. The various banks and mint, etc, will be removing them as they come in, taking losses from that. There's an ongoing cost every day. If a one-time cost of £100m will remove the fake coins and prevent new fakes, it's well worth the price tag.
- xchaotic 10y ago
  The new coin will not get rid of forgeries completely, at least not until the old is removed from circulation. In pure money terms, it's not worth it. But since they're printing money anyway, I guess if it's too costly, they can just print more money to pay for it ;)
  - mabbo 10y ago
    The old one will be out of circulation in October. Did you read the page?
peter303 10y ago
Who is counterfeiting? They dont usually do such small denomination.
- deleted 10y ago
  [deleted]
- fennecfoxen 10y ago
  Unlike large notes with security features, no one really checks £1 coins for authenticity. You can spend them all over the place with very low risk (especially if you can get anything useful from vending machines – buy a train ticket at a major station, for instance, and it'd be essentially risk-free).
- Someone1234 10y ago
  It is definitely more efficient to counterfeit larger denominations but you also have to measure the relative difficulties and chance of getting caught. The old £1 Coin was relatively easy and cheap to counterfeit and the counterfeits were practically perfect (I've had a few over the years, they're REALLY hard to spot unless you know what you're looking for, just Google "spot a fake £1" for some examples of how good they are). Seems like many of the counterfeit coins come from abroad, in particular countries with a much lower cost of living and where counterfeiting foreign currency may be ignored. There's also a huge market in pushing counterfeit money onto foreign exchanges in other countries.
- yellow_viper 10y ago
  1 in 30 pound coins is fake. If you have a handful of smash and examine the pound coins you can usually find at least 1 fake one. Counterfeiters made millions before anyone caught on
  - kfrzcode 10y ago
    Off topic: I love English idioms like "handful of smash." Keeps me smiling.
    - 10y ago
JoeAltmaier 10y ago
Yes I wondered about the 'more secure' claim - secure for whom? I don't have any trouble spending counterfeit coins that may end up in my pocket. Where's the issue? Not with the public.
- JoeAltmaier 10y ago
  For comparison, the American $100 bill was widely counterfeited (by the Libyans?) to the tune of maybe a billion dollars in circulation. The US Treasury left it be for years - too costly to detect the very good copies. Eventually bills were reformulated to include harder-to-copy features but for years the only response was to print fewer. Since so many good ones were in circulation already.

andy_ppp 10y ago

So there was no point in doing it? This seems super weird for a financial institution that should be looking at hard data; maybe they did some analysis about the increasing ease of forgery?

robjan 10y ago
The main reason for doing it is that they don't want the public to lose faith in the "value" of the pound, which will eventually happen if forgeries become more abundant.
nraynaud 10y ago
There is some kind of psychological cost too, since the money is only valued as much as people want to value it. Too much fakes might damage the brand more than the face value of the fake coins.
- larelogio 10y ago
  This is legal tender inside the UK, people can't put a value on it. Outside the UK the coins have no value as only bank notes can circulate abroad.
Gustomaximus 10y ago
I would suspect the rate of introduction is increasing. So while maybe it took 20 years to circulate this 45m amount, they may expect the next 45m to come though in a few years. That and pride/confidence in money validity. This is my guess and not fact.
- ljf 10y ago
  Anecdata, I know - but certainly even 5 years ago it was rare for me to spot a forgery in my change. Over the last few years I found more and more - so I'd think that the process and cost for creating fakes is dropping. Though since contactless payment has been around I can honestly say I've spent actual cash about 4 times this year so far, so my collection of 'interesting coins' has not been added to like it once was.
ocfnash 10y ago
If we knew that there would only ever be £45m worth in existence then perhaps not but one would expect that this figure is growing.
belorn 10y ago
Sweden is also replacing the coins with new ones and a major advantage I keep hearing is that their weight is lighter, which reduce transportation costs and makes it easier for bank. But I would guess from a public relation perspective, asking a whole population to replace their coins just to make it cheaper and easier for banks is a harder sell that arguing security.
- Reason077 10y ago
  It isn't really a cost/problem to "ask the whole population to replace their coins". Coins are constantly being circulated, with worn ones replaced by new ones anyway. The cost of changing comes primarily from businesses having to update vending machines, coin counting machines, etc (as well as increased production costs due to the new security features.) But this switch has been planned for many years, so businesses have had a long time to prepare.
- linsen 10y ago
  From experience, the lighter weight makes the coins harder to tell apart. The old coins had three denominations: 1kr (~$0.10), medium sized, thin, silver; 5 kr (~$0.5), big, thin, silver; and 10 kr, small, thick, golden. Their big size (compared to Euro coins) make them comfortable in the hands and trivial to count the right amount. By comparison, the new, smaller coins are much harder to grasp and the new denomination (2kr) is hard to tell apart from the new (1kr). The new notes are similarly hard to tell apart, as they all i) have the same height, and ii) use similar (pastel) colors. "Never attribute to malice what you can blame on stupidity", but it almost feels like they are making the new cash hard to use on purpose.
petercooper 10y ago
Not sure if this is flawed, but I want to attempt an analogy that felt right to me.. Let's say they figured out catching a thief cost £500 and it became public knowledge the police wouldn't investigate any theft under £500. The cost of transitioning to the £1 seems worth it to prevent further abuse.
- thaumasiotes 10y ago
  > Let's say they figured out catching a thief cost £500 and it became public knowledge the police wouldn't investigate any theft under £500. Is this not already true? When my laptop was stolen, I was advised "don't bother reporting it to the police".
  - jessaustin 10y ago
    It might well be true, but the police themselves can't say that it's true in an irrevocable way. The recent indie film "I Don't Feel at Home in This World Anymore" is an entertaining consideration of this scenario.
- gejjaxxita 10y ago
  Your analogy is flawed because you are discussing investigating a crime that has been committed. The purpose of the new coin is to prevent the crime from being committed in the first place by making it harder to commit. Given the expense of rolling out the new coin, it probably makes more sense from a economic and moral point of view to spend money investigating these crimes rather than preventing them.
branchless 10y ago
I'd imagine the point is to prop up confidence in fiat money. Cash represents 3% of "money" so a small counterfeit issue with pound coins is a fraction of a %. Meanwhile the entire currency is debased annually by failing to include land prices into the inflation calculations, despite most credit creation being against land. This debases GBP for workers every year. Therefore propping up confidence is vital.
willvarfar 10y ago
Its a politically strategic time to reaffirm some kind of public 'pride' in the Pound. Its a symbol of nationalism. (am brit)
- djhworld 10y ago
  The new pound coin has been in the works for years, it's not some knee jerk reaction to Brexit.
deleted 10y ago
[deleted]
GCA10 10y ago
If forgers can infiltrate 2.5% to 3% of the market, there's no reason for them to stop at such modest levels. Why not try for 30%? We also don't know anything about the volume of forged coins withdrawn from the market each month. If detection at pubs, grocery stores, etc. is poor, then fake coins enter the market at will and are detected only when merchants present their cash to banks. That's annoying for everyone, and it's possible to come up with scenarios in which each year sees 2x or even 5x the introduction of fake coins, with many of them staying in circulation for only a few months but causing damages anyway. In either of these scenarios, clamping down now on forgery is economically prudent, even if the 100 > 45 comparison doesn't reveal the true cost.

pdog 10y ago

The societal cost of counterfeiting goes far beyond the nominal value of the fake coins in circulation (approximately one in thirty one pound coins is a counterfeit).

jessriedel 10y ago
Yea, it would be a bit like conflating the nominal value of currency in circulation and the actual value to society of having physical currency at all. There are huge multiplier effects.
- kpil 10y ago
  I used some coins today. It was probably the first time in a year I used cash... While I see the value of failsafe money (except it really isn't) I think the returns are diminishing...

mabbo 10y ago

There are £45m of fake pound coins in circulation currently. The various banks and mint, etc, will be removing them as they come in, taking losses from that. There's an ongoing cost every day. If a one-time cost of £100m will remove the fake coins and prevent new fakes, it's well worth the price tag.

xchaotic 10y ago
The new coin will not get rid of forgeries completely, at least not until the old is removed from circulation. In pure money terms, it's not worth it. But since they're printing money anyway, I guess if it's too costly, they can just print more money to pay for it ;)
- mabbo 10y ago
  The old one will be out of circulation in October. Did you read the page?

peter303 10y ago

Who is counterfeiting? They dont usually do such small denomination.

deleted 10y ago
[deleted]
fennecfoxen 10y ago
Unlike large notes with security features, no one really checks £1 coins for authenticity. You can spend them all over the place with very low risk (especially if you can get anything useful from vending machines – buy a train ticket at a major station, for instance, and it'd be essentially risk-free).
Someone1234 10y ago
It is definitely more efficient to counterfeit larger denominations but you also have to measure the relative difficulties and chance of getting caught. The old £1 Coin was relatively easy and cheap to counterfeit and the counterfeits were practically perfect (I've had a few over the years, they're REALLY hard to spot unless you know what you're looking for, just Google "spot a fake £1" for some examples of how good they are). Seems like many of the counterfeit coins come from abroad, in particular countries with a much lower cost of living and where counterfeiting foreign currency may be ignored. There's also a huge market in pushing counterfeit money onto foreign exchanges in other countries.
yellow_viper 10y ago
1 in 30 pound coins is fake. If you have a handful of smash and examine the pound coins you can usually find at least 1 fake one. Counterfeiters made millions before anyone caught on
- kfrzcode 10y ago
  Off topic: I love English idioms like "handful of smash." Keeps me smiling.
  - 10y ago

JoeAltmaier 10y ago

Yes I wondered about the 'more secure' claim - secure for whom? I don't have any trouble spending counterfeit coins that may end up in my pocket. Where's the issue? Not with the public.

JoeAltmaier 10y ago
For comparison, the American $100 bill was widely counterfeited (by the Libyans?) to the tune of maybe a billion dollars in circulation. The US Treasury left it be for years - too costly to detect the very good copies. Eventually bills were reformulated to include harder-to-copy features but for years the only response was to print fewer. Since so many good ones were in circulation already.