Introduction to Finance

FIGURE 2.5
Old and Current Designs of the $20 U.S. Federal Reserve Note
Old Design $20 Bill
[Relatively easy to copy and counterfeit]
Current Design $20 Bill
[More difficult to copy and counterfeit]
Current Design $20 Federal Reserve Note (issued beginning in 2003)
Old Design $20 Federal Reserve Note (small size issued 1929–97)

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32
C H A PT E R 2 Money and the Monetary System
from the origins of money creation, there have been individuals driven by greed who have 
engaged in counterfeiting activities to illegally obtain money rather than work for it. It is 
diffi
cult for most of us to understand such extreme unethical behavior, which typically results 
in getting caught, serving prison time, and destroying reputations of those involved.
Unfortunately, attempts to counterfeit U.S. currencies represent a big illegal business for 
some individuals and organizations. Furthermore, the ability to counterfeit currency has been 
aided in recent years by the introduction of high-quality color copiers. To thwart counterfeit-
ing eff orts, the U.S. Treasury Department’s Bureau of Engraving and Printing has developed 
new currency designs in recent years. A new series of notes that made use of microprinting 
and an embedded security strip was introduced in 1990 to improve security and to make coun-
terfeiting more diffi
cult. A more complete design change began with the $100 “large-portrait” 
bill in 1996. Large-portrait $50 bills were introduced in 1997, and $20 bills were placed in 
circulation in 1998. New $5 and $10 bills were introduced in 2000 so that today only the $1 
bill continues to use the small-portrait format.
Further currency design changes were implemented in 2003. The bottom portion of 
Figure 2.5 shows the most recent large-portrait $20 bill, which still features Andrew Jackson. 
In the 1998 version, the larger portrait was for the fi rst time placed off -center to allow the 
inclusion of a watermark that is visible from both sides when held up against a light. The bill 
contains a vertically embedded security thread, which glows red when exposed to ultraviolet 
light, at the far left of the portrait. Color-shifting ink, fi ne line printing, and microprinting 
were added. In the 2003 version, U.S. currency began taking on added colors. Peach and light 
blue hues were added to the previous green-and-black bills. Other changes included removing 
the circle around Andrew Jackson’s head and adding a faded bald eagle to the left of the por-
trait and the words “Twenty USA” and “USA Twenty” to the right of the portrait.
These anti-counterfeiting eff orts, while very costly, are essential to maintaining the pub-
lic’s trust and confi dence in fi at money. Of course, it is important to remember that even 
though the appearance of U.S. paper money may be changing, the government honors all 
previously issued U.S. paper currency at full face value. There is no requirement or time limit 
for exchanging old notes for new ones. Old notes continue to remain in circulation until depos-
itory institutions return them to the Fed to be retired.