Printing money

Quantitative easing in a new capital of counterfeiting

LIMA--NOT to be outdone by the world's central bankers, some Peruvians have taken to printing money. In the past two months, Peru's police have seized some $40m in near-perfect replicas of American dollar bills in $20, $50 and $100 denominations, as well as $5m in fake Peruvian currency and smaller amounts of Venezuelan bolívares and of euros. That compares with total worldwide seizures of counterfeit dollars by the United States Secret Service (one of whose jobs is to protect the integrity of the currency) of $103m between October 2007 and August 2008. These figures suggest that Lima has become the counterfeiting capital of the Americas.

Colonel Alejandro Díaz, who heads the fraud unit of Peru's National Police, suspects that the counterfeiters have moved to Lima from Colombia, which was an important source of fake dollars. The police surmise a link between counterfeiting and drug trafficking. Apart from the fake money, Peruvian counterfeiters have also become adept at forging passports, visas and the requisite seals and stamps needed for travel around the world. In one raid, officers seized passports from 16 different countries, from China to Poland.

The immigration service has detected several ways in which travellers are entering Peru without proper documents. They use the country as a staging area to get to North America or Europe. Many of these cases involve Chinese who make their way to Peru, obtain fake Japanese documents and then try to travel to the United States.

Colonel Díaz says that most of the fake dollars are sent to Ecuador and El Salvador, which together with Panama use the greenback as their national currency. Just as the Federal Reserve has adopted "quantitative easing" to inject more liquidity into the American economy, it seems that the informal economy may have found a way to expand the money supply in these countries.