SAN MATEO, Calif. — The European Central Bank is working with
technology partners on a hush-hush project to embed radio frequency
identification tags into the very fibers of euro bank notes by 2005, EE Times has learned. Intended to foil counterfeiters, the
project is developing as Europe prepares for a massive changeover to
the euro, and would create an instant mass market for RFID chips,
which have long sought profitable application.
The banking community and chip suppliers say the integration of
an RFID antenna and chip on a bank note is technically possible, but
no bank notes in the world today employ such a technology. Critics
say it's unclear if the technology can be implemented at a cost that
can justify the effort, and question whether it is robust enough to
survive the rough-and-tumble life span of paper money.
A spokesman for the European Central Bank (ECB) in Frankfurt,
Germany confirmed the existence of a project, but was careful not to
comment on its technologies. At least two European semiconductor
makers contacted by EE Times, Philips Semiconductors and
Infineon Technologies, acknowledged their awareness of the ECB
project but said they are under strict nondisclosure agreements.
The euro will become "the most common currency in the world" at
midnight on Jan. 1, when 12 nations embrace it, according to Ingo
Susemihl, vice president and general manager of RFID group at
Infineon. The ECB and criminal investigators in Europe are already
on high alert, worried not only about counterfeiting of a currency
most people haven't seen, but also of a possible increase in money
laundering, given the euro's broad cross-border reach.
The ECB said 14.5 billion bank notes are being produced, 10
billion of which will go into circulation at once in January, with
4.5 billion being held in reserve to accommodate potential leaps in
Thwarting underworld popularity
Although euro bank notes already include such security features
as holograms, foil stripes, special threads, microprinting, special
inks and watermarks, the ECB believes it must add further protection
to keep the euro from becoming the currency of choice in the
criminal underworld, where the U.S. dollar is now the world's most
counterfeited currency. The ECB spokesman said his organization has
contacted various central banks worldwide — not just in Europe — to
discuss added security measures for the currency.
In theory, an RFID tag's ability to read and write information to
a bank note could make it very difficult, for example, for
kidnappers to ask for "unmarked" bills. Further, a tag would give
governments and law enforcement agencies a means to literally
"follow the money" in illegal transactions.
"The RFID allows money to carry its own history," by recording
information about where it has been, said Paul Saffo, director of
Institute for the Future (Menlo Park, Calif.).
The embedding of an RFID tag on a bank note is "a fundamental
departure" from the conventional security measures applied to
currency, Saffo said. "Most currency security today is based on a
false premise that people would look at the money to see if it is
counterfeit," he said. But "nobody does that. The RFID chip is an
important advance because it no longer depends on humans" to spot
The basic technology building blocks for RFID on bank notes are
similar to those required for today's smart labels or contactless
cards. They require a contactless data link that can automatically
collect information about a product, place, time or transaction.
Smart labels produced by companies such as Philips Semiconductors,
Infineon, STMicroelectronics and Texas Instruments are already used
in such applications as smart airline luggage tags, library books
and for supply chain management of various products.
"Two minimum elements you need for RFID are a chip and an
antenna," according to Gordon Kenneth Andrew Oswald, associate
director at Arthur D. Little Inc., a technology consulting firm
based in Cambridge, Mass. When a bank note passes through reader
equipment, the antenna on the note collects energy and converts it
to electric energy to activates the chip, he said.
The antenna then "provides a communication path between a chip on
the bank note and the rest of the world," said Tres Wiley, emerging
markets strategy manager for RFID Systems at TI. For its part, the
chip "is a dedicated processor to handle protocols, to carry out
data encoding to send and receive data and address memory" embedded
on the chip.
Although the industry is "well down the road with the smart label
technology," Wiley said he was "a bit surprised to learn that
someone goes to that extent — to embed RFID into bank notes — to
combat counterfeit money."
A number of challenges must be overcome before RFID tags can be
embedded on bills, said Kevin Ashton, executive director of the Auto
ID Center at the Massachusetts Institute of Technology. "The most
obvious one is the price," he said. Today's RFID tags cost between
20 cents to $1.00, and "that's not economic enough for most bills,"
Ashton said. "We've absolutely got to get the cost way down." The
goal of the Auto ID Center is to find an application that requires
billions of RFID chips to bring their cost as low as 5 cents, he
While most chip companies with RFID expertise are keeping their
plans for money applications close to their chest, Hitachi Ltd.
announced plans last July for a chip designed for paper money that
would pack RF circuitry and ROM in a 0.4-mm square circuit measuring
60 microns thick. Although the chip features no rewritable
capability, Ryo Imura, chief executive of Hitachi's Mew Solutions
venture, said at the time of announcement, "We'll consider them for
the next generation of products." Hitachi's chip stores encrypted ID
information in ROM during the manufacturing process, presumably to
replace the serial number of each bank note.
Even without writable memory, Hitachi's chip is said to be fairly
costly. Hitachi declined to be interviewed for this article.
While the size of the rewritable memory embedded on an RFID chip
will determine the kinds of information it can store, it also
affects the chip's cost.
Affordable with bigger bills
It is unclear whether the ECB will incorporate RFID chips into
all euro bank notes or just on the larger bills. The EUR 200 and EUR
500 bank notes in particular — equivalent to roughly $200 and $500
in value — are expected to be popular in the "informal" economy.
Embedding a 30 cents chip into a EUR 500 bill would make more sense
than putting it into a European buck, several industry sources said.
Manufacturing processes are also considered a major hurdle to
embedding a low-cost antenna and chip onto bank notes. "The chip is
already so small," MIT's Ashton said. "To connect the two ends of a
coil — an antenna — at precisely the right place on a chip could
present a major problem."
A printing process is an option, Ashton said, but "you need a
breakthrough in the high-volume manufacturing process." Such a
technology does not exist today, he said.
Size and thickness are key attributes of an RFID chip for paper
currency, said Karsten Ottenberg, senior vice president and general
manager of business unit identification at Philips Semiconductors.
"For putting chips into documents, they need to be very small — less
than a square millimeter — and thin such that they are not cracking
under mechanical stress of the document. Thinning down to 50 micron
and below is a key challenge." That would require advanced
mechanical and chemical techniques, he said.
Bank notes present "an interesting future application for us,"
said Tom Pounds, vice president of RFID projects at Alien
Technology, which holds the rights to a fabrication process that
suspends tiny semiconductor devices in a liquid that's deposited
over a substrate containing holes of corresponding shape. The
devices settle on the substrate and self-align. Rather than working
on the interconnection to an RF antenna one chip at a time, "we can
do a massively parallel interconnection," Pounds said. Bank notes
are not Alien's primary focus at present, he said