The number of fake euro notes in circulation in Italy is on the rise, according to figures from the treasury. In 2003 there were nearly four times as many fakes changing hands as in 2002, the first year of the currency.

The number of counterfeit notes confiscated in Italy in 2003 was 122,287, with a value of over 5,8 million. Over three-quarters of the fakes were 50-notes. Nearly half of the false money 45 per cent was found in Lazio and Campania, followed by Lombardy and Piedmont. The market for forged coins is more limited; 753 fake coins were identified last year, most of them 1-coins.

The business of producing counterfeit money is firmly in the hands of highly-specialised professionals, many of whom are based in Poland, Lithuania and Bulgaria. It appears that about 20 per cent of the fakes are produced with professional equipment, with very large print runs, while 80 per cent is made using home computers and printers. The cost of a fake 100-note on the black market is about 40.

The European Central Bank is working with a Japanese company on the development of a microchip that will track notes' circulation and allegedly make them unforgeable. While the technology for making the chip, which would be about the size of a grain of sand, is already available, production costs, which must not exceed a few cents per note, are still too high.