Answer by A Quora admin:
There is no one "formula" for printing money. But because it is so tempting to consider making your own at home, governments have been engaged for centuries in an ever-escalating battle with counterfeiters.
Counterfeiting of money is one of the oldest crimes in history. It was a serious problem during the 19th century when banks issued their own U.S. currency. At the time of the Civil War, it was estimated that one-third of all currency in circulation was counterfeit. At that time, there were approximately 1,600 state banks designing and printing their own notes. Each note carried a different design, making it difficult to distinguish the 4,000 varieties of counterfeits from the 7,000 varieties of genuine notes.
It was anticipated that the adoption of a national currency in 1863 would solve the counterfeiting problem. However, the national currency was soon counterfeited so extensively it became necessary for the government to take enforcement measures. On July 5, 1865, the United States Secret Service was established to suppress counterfeiting.
Every time the bad guys figure how to print realistic-looking currency, the government changes the way the real stuff is made, to make it ever harder to forge. This began by moving from letterpress-printed, flat currency, to engraved, intaglio-printed currency, which gave the ink a raised appearance that could be felt by hand. Engraving also enabled extremely fine lines and sharp edges that were difficult for an unskilled criminal to reproduce. They printed the bills in multiple colors (shades of green and dark green), each of which would require a carefully calibrated additional pass through the printing press. And then they went even further, and commissioned special paper to be manufactured in secure factories, of 75% cotton and 25% linen, that had a special feel to it, had red and blue fibers mixed into the pulp, and was commercially unavailable (not to mention illegal to attempt to reproduce.)
As counterfeiters succeeded in carefully engraving plates to duplicate real bills, the Treasury Department began making small variations in the designs of each series, which would make the forgers re-do their whole plate in order to stay current. For example, on the $20 note, the portrait of Andrew Jackson shows him gripping the front of his coat. In the 1934 Series, you can see one of his fingers in the oval frame. But when it was re-designed in 1950 they carefully redrew the portrait to show a second finger!
But over time, the crooks got smarter, and with new technologies, such as color copying machines, a larger number of unskilled people were able to get into the fake money business. This occasioned a lot of federal soul-searching during the 1980s, and by 1990 all US currency incorporated two additional major security features that were very, very difficult to fake:
Security Thread: A security thread is a thin thread or ribbon running through a bank note substrate. All 1990 series and later notes, except the $1 and $2 notes, include this feature. The note's denomination is printed on the thread. In addition, the threads of the new $5, $10, $20 and $50 notes have graphics in addition to the printed denomination. The denomination number appears in the star field of the flag printed on the thread. The thread in the new notes glows when held under a long-wave ultraviolet light. In the new $5 note it glows blue, in the new $10 note it glows orange, in the new $20 note it glows green, in the new $50 note it glows yellow, and in the new $100 note it glows red. Since it is visible in transmitted light, but not in reflected light, the thread is difficult to copy with a color copier which uses reflected light to generate an image. Using a unique thread position for each denomination guards against certain counterfeit techniques, such as bleaching ink off a lower denomination and using the paper to "reprint" the note at a higher value.
Microprinting: This print appears as a thin line to the naked eye, but the lettering easily can be read using a low-power magnifier. The resolution of most current copiers is not sufficient to copy such fine print. On the newly designed $5 note, microprinting can be found in the side borders and along the lower edge of the portrait's frame on the face of the note. On the new $10 note, microprinting appears in the numeral "10" in the lower left-hand corner and along the lower edge of the portrait's frame on the face of the note. On the Series 1996 $20 notes, microprinting appears in the lower left corner numeral and along the lower edge ornamentation of the oval framing the portrait. On the $50 notes, microprinting appears on the side borders and in Ulysses Grant's collar. On the $100 notes, microprinting appears in the lower left corner numeral and on Benjamin Franklin's coat. In 1990, 1993 and 1995 series notes, "The United States of America" is printed repeatedly in a line outside the portrait frame.
So the bad guys upped their game as well. They printed simulacrums of the security thread, and counted on the fact that casual users wouldn't pull out a magnifying glass to read the microprinting. And bogus bills continued to flood the market. Now the fight began to escalate in earnest, with ever-increasing speed. In the 1996 and later series, half a dozen additional security features were added to American printed currency:
Watermark: The watermark is formed by varying paper density in a small area during the papermaking process. The image is visible as darker and lighter areas when held up to the light. Since the watermark does not copy on color copiers or scanners, it makes it harder to use lower denomination paper to print counterfeit notes in higher denominations and is a good way to authenticate the note. It depicts the same historical figure as the engraved portrait.
Color-Shifting Inks: These inks, used in the numeral on the lower right corner of the face of the note, change color when the note is viewed from different angles. The ink appears green when viewed directly and changes to black when the note is tilted.
Fine-Line Printing Patterns: This type of line structure appears normal to the human eye but is difficult for current copying and scanning equipment to resolve properly. The lines are found behind the portrait on the front and around the historic building on the back.
Enlarged Off-Center Portraits: The larger portrait can incorporate more detail, making it easier to recognize and more difficult to counterfeit. It also provides an easy way for the public to distinguish the new design from the old. The portrait is shifted off center to provide room for a watermark and unique "lanes" for the security thread in each denomination. The slight relocation also reduces wear on most of the portrait by removing it from the center, which is frequently folded. The increased image size can help people with visual impairments identify the note.
Low-Vision Feature: A large dark numeral on a light background on the lower right corner of the back. This numeral, which represents the denomination, helps people with low vision, senior citizens and others as well because it is easier to read. This feature first appeared on the Series 1996 $20 note.
Also, a machine-readable feature has been incorporated for the blind. It will facilitate development of convenient scanning devices that could identify the denomination of the note.
But the crooks, now equipped with high resolution scanners and printer, kept improving their game as well, so even more anti-counterfeiting technology got added into the currency:
3-D Security Ribbon: Look for a blue ribbon on the front of the note. Tilt the note back and forth while focusing on the blue ribbon. You will see the bells change to 100s as they move. When you tilt the note back and forth, the bells and 100s move side to side. If you tilt it side to side, they move up and down. The ribbon is woven into the paper, not printed on it.
Bell in the Inkwell: Look for an image of a color-shifting bell, inside a copper-colored inkwell, on the front of the new $100 note. Tilt it to see the bell change from copper to green, an effect which makes the bell seem to appear and disappear within the inkwell.