New $100 bill: Why the high-tech redesign?

The new $100 bill includes advanced security features designed to simultaneously thwart counterfeiters and allow for authentication without special tools.

A hundred dollar bill? "Dottie," a Starbucks cashier, says she almost never sees them.

“Maybe, once in a month someone will pull one out,” she says, placing four tall lattes into a cardboard carrier. “Otherwise, no way Jose.”

After a quick spot query of the café shows that not a single person has one in his or her wallet, the question arises: Why is the US's new $100 bill necessary?

The quick answer, say banking experts, is that $100 bills are the most common use of American currency by foreigners. Two-thirds of all $100 bills are in foreign pockets. Therefore, international counterfeiters feel they can get away with bigger sums of fake cash in the far reaches of Europe, Africa, and Asia – not to mention being far from the spotlights of law enforcement.

“The necessity of such a move can be easily debated. Counterfeiting of US currency is quite a big deal, especially in markets outside the US,”, says Scott J. Dressler. Assistant professor of economics at Villanova University’s School of Business.

Among the many new high-tech security features, a blue ribbon will give a 3-D effect to micro-images on the bill. Tilt the note back and forth and you will see tiny bells on the ribbon change to 100s as they move. And that's one of the reasons for the new design. “You can check these features without holding the bills up to a special light,” says Edwin Donovan of the US Secret Service.

While the added security features should thwart counterfeits of the new note for the time being, the old note will remain in circulation and can still be counterfeited, Mr. Dressler says. “While the old notes get retired, counterfeiting becomes more difficult. Therefore, you can think of this as the beginning of the end for counterfeiters - until they can successfully pass off a counterfeit of the new bill.”

The perception that paper money is on the way out as consumers opt for debit and credit cards is incorrect, says Chad Wasilenkoff, CEO of Fortress Paper, which produces high quality security paper including bank notes and passports. "Contrary to popular opinion, banknotes, which are commonly known as 'paper money,' 'bills,' or 'notes,' are more in demand than ever across the globe," he says.

The design of the new bill was unveiled Wednesday, but won’t appear in circulation until February, 2011.

“As with previous U.S. currency redesigns, this note incorporates the best technology available to ensure we’re staying ahead of counterfeiters,” said Secretary of the Treasury Tim Geithner, at the unveiling.

Those still in possession of the old-style bills needn't do anything, officials say. “When the new design $100 note is issued ... the approximately 6.5 billion old design $100s already in circulation will remain legal tender,” said Chairman of the Federal Reserve Board Ben S. Bernanke. “U.S. currency users should know they will not have to trade in their old design notes when the new notes begin circulating.”

[Editor's note: The original version mistakenly attributed a quote to Edwin Donovan and has been corrected.]