MI5 files reveal Nazi counterfeiting of British currency

Newly released MI5 files reveal that Nazi counterfeiting destroyed confidence in the British currency in Europe by the end of World War II.

According to a 1945 report in the National Archives, Germany began production of counterfeit notes five years earlier in a bid to undermine the sterling.

Notes started entering neutral countries by D-Day, with the Bank of England issuing the first of two recalls.

The Nazis produced counterfeit sterling amounting to a face value of £134 million in total, which was the equivalent of 10 per cent of all sterling in circulation at the time.
Included in the newly released files is a report on currency, written by banker Sir Edward Reid of MI5's section B1B in August 1945.

According to Reid, a captured SS Officer had revealed that the Germans had started making the fake notes in 1940 and had plans to scatter them from the air during the invasion of Britain, in a bid to create confusion and damage confidence.

Though the invasion was postponed, the work went ahead with improved quality of counterfeits.