One reason the new $100 bill will decrease counterfeiting is that the Treasury is not recalling the old notes, according to a new study by the Federal Reserve Bank of Minneapolis.

The study found that the Treasury's plan to withdraw old $100 bills gradually from circulation changes the economics of counterfeiting dramatically.

Counterfeiters - unsure how long they can continue to produce fake versions of the old $100 bills - are likely to curtail their activities because they won't be sure of a profit, the study said. And officials said they believe the new $100 bills will be harder to counterfeit.

Writing in Quarterly Review, Minneapolis Fed economists Edward J. Green and Warren E. Weber also noted that recalling the old notes immediately could hurt the economies of developing countries, which rely on U.S. $100 bills as a secondary currency. Up to 70% of U.S. currency is held by foreigners.

Because there is no deadline for the exchange of the old bills, the government can fight counterfeiting while achieving foreign policy goals, according to the study.

Counterfeiting will not stop immediately because enforcement of the laws is not aggressive enough, the study said.

But introducing a new, harder-to-copy $100 bill significantly reduces the level of enforcement required, the authors wrote, noting that continued confiscation of old counterfeit bills is vital to the introduction of the new money.

"The redesigned $100 bills make it more difficult to counterfeit," said Kawika Daguio, federal representative in charge of payment systems at the American Bankers Association.

"The new bills have a good mix of both overt and covert security features," Mr. Daguio said, "making them more difficult to counterfeit. We never say 'never' because the bad guys are always spending more money to break this technology. We have a long way to go before we've dealt counterfeiting a serious blow."

Mr. Ketelaar is a student in the Washington Semester Program at American University.

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