The Bank of Tanzania (BoT) has directed all banks and bureau de change in the country to take necessary precautions over possible existence of counterfeit US dollar notes in the foreign exchange market.
In its precautionary letter to all banks and bureaux de change in the country, BoT said it has received information regarding a seizure of a large amount of counterfeit US dollar notes in one of the foreign countries which were destined to the African continent.
“All banks and bureaux de change are required to take necessary precautions including strengthening the systems of identifying the counterfeit notes,” the BoT statement said.
The BoT said further that banks and bureaux de change are advised to continue educating customers on the consequences of using non-authorised dealers of foreign exchange business including possible issuance of counterfeit notes.
A seasoned economist-cum-banker, Dr. Hildebrand Shayo said in his understanding, counterfeit or copycat money is created with the intention of misleading.
“Since creating counterfeit money has no legal repercussions, it is equivalent to forgery or fraud,” he said.
Dr. Shayo said manufacturing of fake money going into the history books is as old as money itself, as seen by the numerous reports of counterfeit cash occasionally entering marketplaces throughout the world’s monetary history.
Prior to the invention of paper money, there have been multiple cases of counterfeit metal cash.
Furthermore, these incidents were not confined to any one area rather, they were commonplace worldwide.
Although many users of these currencies may not be aware of it, the introduction of paper money led to advancement in the art of counterfeiting.
One of the most famous cases of currency fraud dates to the Second World War, when the Nazis produced large amounts of counterfeit US dollars and British pounds to undermine the economies of both nations.
Even now, there is a massive amount of counterfeit money in circulation worldwide, some of which are of a very good grade, making identification of it more challenging, if not impossible.
The BoT’s public notice warning is timely since money counterfeiting is a crime that constantly jeopardises a nation’s economy and causes financial damage to its people.
According to him, negative effects of counterfeit money on society include a decline in the value of real money, an increase in prices (inflation) because of more money being in circulation.
Counterfeit money leads to a reduction in the acceptability of paper money and losses incurred by traders who are not compensated by banks for counterfeit money they discover, even if it is seized.
However, the macroeconomic repercussions of currency counterfeiting could not be seen in nations where paper money makes only a small portion of the overall amount in circulation.
However, there could be significant microeconomic impacts, including increased faith in currency.
The important thing especially at the time in Tanzania’s hard currency USD is in demand, the reputation and efficiency of a nation’s central bank can be negatively impacted by a failure to take decisive action against counterfeiting, which can result in uninsurable risk, he said.
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