Euro bank notes to embed RFID chips by 2005

R. A. Hettinga rah at
Fri Dec 28 10:09:24 EST 2001

Euro bank notes to embed RFID chips by 2005

By Junko Yoshida
EE Times
(12/19/01, 3:03 p.m. EST)

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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

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 demand.

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

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 funny money.

RFID basics

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

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 added.

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

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.
R. A. Hettinga <mailto: rah at>
The Internet Bearer Underwriting Corporation <>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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