A rainbow of U.S. money to appear in 2003
By Jay MacDonald • Bankrate.com

This year, that wallet full of drab greenbacks you're carrying around will bloom into a paper bouquet of colored money.

The U.S. Treasury plans to combat high-tech counterfeiting by adding subtle background colors to our bank notes, with fall 2003 as the target date for brighter bills. The $20 will roll off the government presses first; $50 and $100 bills will sport new looks 12 to 18 months later. There are no plans to alter the rarely-faked smaller denominations.

The coming currency changes were officially announced on June 20 by the Federal Reserve and Treasury department. Government officials offered no hint as to what hues will be used, but did say the money will contain enhanced security threads that will glow under ultraviolet light, as well as color-shifting ink so the eventual shade will change when a note is tilted.

"The idea behind the proposal to place subtle background colors on the money is really twofold: it will help consumers to differentiate between denominations while also deterring counterfeiters from attempting to duplicate currency with computers and those types of technologies," says Jim Hagedorn, spokesman for the Treasury's Bureau of Engraving and Printing.

"It is purely a security feature and something to aid the public. It isn't just something to make it pretty and different."

It's a "funny money" world
Multicolored currency -- "funny money" in American retail vernacular -- is by far the worldwide rule. Most countries, including our closest neighbors Canada and Mexico, have long used color to differentiate between denominations. Even the new euro comes color-coded in seven denominations.

Pre-euro ducats were even gaudier. In France, the 100- and 200-franc notes looked like gaily-colored souvenirs of "Moulin Rouge" and the 500-franc note resembled an advertisement for a "Star Wars" sequel.

Good old American greenbacks have been the monotone exception, known and loved worldwide thanks to Hollywood tough guy movies and classic Westerns. Overseas, our dollar has often been the easily identifiable currency of choice in countries on the short end of our exchange rate. American Express even designed its classic charge card in greenback green.

Soon, however, the term greenback itself could face serious devaluation of status when it accurately describes only $1, $2, $5 and $10 bills.

Beat the geeks, round 2
Tinting is just the latest monetary anti-crime effort. We most recently played "Beat the Counterfeit Geeks" with our paper currency (excluding the $1 and $2 bill) back in 1996 when:

• The presidential portraits were enlarged and placed off-center;
• A ghostly watermark portrait, visible when held up to the light, was inserted;
• Color-shifting ink was added to the number in the lower right-hand corner on a bill's front that looks green when viewed head-on, black when viewed at an angle, and sparkles when viewed under magnification;
• A polymer thread was embedded vertically in the note (it reads "USA" plus the note's denomination in microprint) that glows red when held under an ultraviolet light;
• Concentric fine lines were added to the portraits making them difficult to photocopy, and
• Micro-printed words were put in and around the portraits to further frustrate would-be forgers.

Despite these efforts, counterfeiters with increasingly sophisticated scanners, printers and software programs printed themselves a whopping $47.5 million in free money during fiscal 2001, and 39 percent of that was computer-generated, according to the Secret Service.

Oh, and remember those humble $1 bills that our counterfeiters don't bother with? They're quite popular in Colombia, where the bad guys bleach them, then print fresh $100 notes on them. The Secret Service and Colombian authorities recently seized $41 million in bogus U.S. currency in Bogotá.

Which raises the question: Will color really make a difference? Back in 1996, Treasury opted against color, in part because a study by the National Academy of Sciences found that use of color does not really defeat advanced copy machines. What's more, it could have an unintended negative effect by making it easier for watching robbers to tell just how much cash you have in pocket following a bank or ATM withdrawal.

Treasury has repeatedly told Congress that in order to stay ahead of the counterfeiters, it must retool our larger bills every seven to 10 years. This go-around, the color scheme may just be the most visible of several new security features being added, according to Hagedorn.

"There will also be some other security features embedded in the notes that we haven't disclosed," he says. "We have to assume that if we're going to redesign our currency, we're going to add more than one thing to it. I personally don't know what the other plans are for the currency, only the top officials that brief the Secretary of the Treasury would be aware of what's being contemplated. And we still have to surprise the counterfeiters, too."

Easy on the eyes
Although it's being touted for its anti-counterfeiting qualities, colored bills actually address another issue that has so far stumped the best minds at Treasury: How can we help the visually impaired?

Don't think they haven't tried.

The Bureau of Engraving and Printing has gotten numerous suggestions for currency features to ease the monetary dealings of the blind or those with limited sight. But in many cases, says Hagedorn, the agency found it couldn't replicate bills accurately enough, its machines quit working after a certain number (slowing down the printing process), or the visual aids wore out on the notes.

"We need to be able to produce 10 billion notes a year and do it in an efficient, cost-effective way, and also have features on notes that won't wear out after 60 days or something," he says.

"Some people say we should put little bumps in the corner that say this is a $5 note, but we've found that those little bumps wear off," he says. "And if they do, it's almost hurting the cause rather than helping it.

"We did put the big numeral on the back right hand corner of $5 notes and above last time around that did help people who are legally blind but can see a little bit. At least that was a step in the right direction. Maybe the colors will help them, too."

Jay MacDonald is a contributing editor based in Florida.

-- Updated: June 20, 2002