Counterfeit Money: Big Game for Economy

Picture extracted from Nepali Sansar

On August 11, 2023, Nepal Police arrested 9 individuals on the counterfeit Nepali Currency case. Counterfeit Nepali currency of around 52 lakhs had been confiscated in Nagadhunga Kathmandu. And this is not the first time that police encountered such activity. But why is this counterfeit currency grabbing the attention of every household? And how does it affect the economy? 

Firstly, counterfeit money is referred to as fake currency that runs in the market without government authorization. It increases the money in the economy, affecting the country's economic status. It decreases the value of real money and is a reason for an increase in inflation. This brings us to the reason why government doesn’t print more money. Printing more money increases the demand of consumers as people would want to buy more and almost everything that they want. But the resources remain the same, so the producers or suppliers would only be able to sell whatever is available. In this case, when demand is more they increase the price of goods and services. This is exactly when inflation takes place and the value of the currency goes down. It worsens the economy. The Hyperinflation in Zimbabwe in mid-2008 was a clear example of why the government doesn’t print more money and why they restrict counterfeit money. 

But how does this counterfeit money enter the economy despite all the security measures? Fake currencies enter the market during the peak or busy times such as the festival season. 

Counterfeit money is a lucrative business. It is usually used to finance all sorts of illegal activities such as human trafficking, organ trafficking, drug dealing, and even terrorism. It is through restaurants, shops, and cafes that these currencies make their way into Nepali households. The note then circulates throughout the market until someone notices it. Counterfeit notes can be noticed through the guidelines mentioned in the Nepal Ratra Bank’s security feature section. https://www.nrb.org.np/banknotes-security-features/ Visit the mentioned link and ensure that the notes that you have are not counterfeit. 

If you ever encounter a fake note immediately visit the bank or police station and report it. 

Nepal Rastra Bank’s website

Simply put, more money or bringing counterfeit money does no good in the economy as well as in the social aspect of society. The economy grows when resources are developed and increased not when money is increased.

-Preeti Pantha