Miniature radio frequency identification (RFID) tags may be hidden in euro banknotes to aid the fight against forgery and money laundering according to a rumour apparently leaked from Japanese electronics firm Hitachi, picked up by ZDNet.com.

Forgery and money laundering are a serious problem for the European Community, and, according to ZDNet's report, the European Central Bank (ECB) is keen to reduce the risk to the three year old euro currency. RFID tags offer a possible solution.

An RFID tag comprises a microchip and a tiny antenna that transmits the data from the chip to a reader. The reader is activated whenever the antenna comes into range and the data can be used to ring up a purchase or trigger an event, such as opening a door. Usually the range is no more than a few feet.

The new technology has so far been tested in goods for such purposes as stock checking, or for speeding up checkout queues. It is controversial because of the potential for a new invasion of privacy.

According to a report by research firm Frost and Sullivan, quoted on ZDNet.com, RFID tags in currency would be able to record details of transactions the particular note went through, whether that be money laundering, an illegal transaction or normal day-to-day shopping.

RFID technology and addressing the privacy fears is the subject of the Rob McCallough's Rough Diamond column in this month's free OUT-LAW Magazine.

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