Demonetisation 2016: Conspiracy theory and the secret world of currency printing..

This blog had earlier posted on who prints currency is such an important but ignored issue. The  post was amateurish given the depth of the issue.

This article adds fuel to the fire and revives the whole debate.  Who is behind the secret world of printing:

The recent decision to discontinue the Rs 500 and Rs 1000 notes and introduce the Rs 2000 notes was taken with a view to curbing financing of terrorism through the proceeds of Fake Indian Currency Notes (FICN) and use of such funds for subversive activities such as espionage, smuggling of arms, drugs and other contrabands into India, and for eliminating Black Money which casts a long shadow of parallel economy on our real economy. However, are our new currency notes printed with the involvement of the same blacklisted companies that infact were the source of fake notes to Pakistan in the first place?

As per a recent report by Economic Times,

[The notes]were largely printed at Mysuru under utmost secrecy while the paper note on which the printing was done came from Italy, Germany and London. The printing, according to officials, began in August-September and nearly 480 million notes of Rs 2,000 denomination and an equal number of Rs 500 denomination were printed. The printing facility at Bharatiya Reserve Bank Note Mudran Private Ltd. (BRBNMPL) in Mysuru under Reserve Bank of India was set up with the De La Rue Giori, now KBA Giori, Switzerland.

The Hindu reported,

India imports bank note papers from European companies like Louisenthal in Germany, De la Rue in United Kingdom, Crane in Sweden and Arjo Wiggins in France and Netherlands. India had blacklisted two European firms in 2014 amid reports by security agencies that the security features, which come embossed on bank note paper, were compromised and given away to Pakistan.

But the ban was lifted and the companies were removed from the blacklist. Why? Here is the reason given for the lifting of the ban.

“These companies are in the business for 150 years; they will not hamper their trade by passing on information of one country to another. Some of these firms even print currency notes for smaller countries. After the investigations, it was found that the two firms had not compromised the security features and the ban was lifted,” said the official.

However the Serious Fraud Office (SFO) of UK itself in their inquiry had uncovered that a number of De la Rue employees had deliberately falsified certain paper specification test certificates for some of its 150 clients. Recently it was also revealed in the Panama Papers that De la Rue paid out a 15% commission to a New Delhi businessmen to secure contracts from Reserve Bank of India. There are also reports that De la Rue paid £40m in settlement to the RBI for issues in production of paper notes.

Even so after all this it has been given clearance and there are even plans in discussion with De la Rue for setting up of a security paper mill and a research and development centre of identity software in Madhya Pradesh. Martin Sutherland the new CEO of De la Rue in an interview titled Giving Make in India the Currency to Succeed with India Investment Journal said that under the UK-India Defence & International Security Partnership Agreement which was signed in November 2015, De La Rue is committed to supporting both governments on the subject of counterfeiting under this agreement.

Some people might ignore this saying one is just picking a story for the sake of it. Not at all. This is a huge issue.  The printing of currency notes is a hugely secretive business and no one really knows how things are worked out. Given so few firms know how to print these notes, they know the details of currency design of most countries:

The high-security currency printing and technology business is dominated by a few Western-European companies. In his book Money Makers – The Secret World Of Banknote Printing author Klaus Bender offers a detailed view of the banknote industry and its modus operandi by removing the industry’s carefully imposed shroud of secrecy. The only previous attempt to reveal this story was published in 1983 by an American author, Terry Bloom in his book “The Brotherhood of Money – The Secret World of Banknote Printers”. The entire edition of that book was bought up – straight from the printing presses – by two prominent representatives of the industry to prevent the public from getting an inside view of the business.

The four major segments in the currency business are paper, printing presses, note accessories, inks and lastly integrators who provide total, end-to-end currency printing services. It is believed these businesses are tightly run by not more than a dozen companies operating out of Europe. These companies are believed to be operating since the 15th century. De la Rue’s history goes even further back to the company’s plant near Bath which has been a mill operating for 1,000 years.

De la Rue was the official Crown Agent of the British Empire who still prints banknotes for the Bank of England. Crown Agents ran the day-today affairs of the Empire. In his book Managing the British Empire: The Crown Agents author David Sunderland explains how the Crown Agents printed the stamps and banknotes of the colonies; provided technical, engineering, and financial services; served as private bankers to the colonial monetary authorities, government officials, and heads of state; served as arms procurers, quartermasters, and paymasters for the colonial armies. In effect, Crown Agents administered the British Empire, which at one point in the 19th Century, encompassed over 300 colonies and nominally “independent countries” allied to the British Crown.

Later the Crown Agents’ office was set up, under the supervision of the Secretary of State for the Colonies, in 1831 to consolidate the activities previously undertaken by a number of agents of varying efficiency and probity. This was done to properly manage the budding Industrial Revolution that destroyed the traditional Indian markets and economy.

The first colony allowed to issue government notes was Mauritius, which in 1849 began to distribute rupee notes. No other colony was permitted to follow its lead until 1884. Colonies were required to obtain notes from the Agents, who passed orders onto the printing firm De la Rue.

As per official history the bank note printing in India started in 1928 with the establishment of India Security Press at Nashik by Government of India. Until the commissioning of Nashik Press the Indian Currency Notes were printed from Thomas De La Rue Giori of United Kingdom.

Even after Independence, for 50 years, Free India printed its rupees on machines bought from De La Rue Giori, run by the Swiss family Giori and till recently said to control 90 per cent of the banknote printing business. But than something happened at the closing of the 20th century that changed everything.

There is also a very interesting discussion on Kandahar Hijack and printing.

I have written on this blog earlier that politics around fiat currency is highly important. Given government’s complete monopoly over currency across the world and such few currency printers around the world, one wonders what must be the discussions? How does these small number of firms manage to keep details of so many countries secret from one another? This is such a murky world straight out of Dan Brown novels.

Governments very cleverly twist all this agenda. They first design currencies to give and arouse nationalistic feelings around notes. Then they classify their own currencies  as black and white and harass people. Whereas the real issues are all behind the scenes of money designing and creating…

One Response to “Demonetisation 2016: Conspiracy theory and the secret world of currency printing..”

  1. romilla Says:

    what are those real issues behind money printing which the govt hides from the citizens?

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