Nazi Counterfeiting Operation Shook Confidence in British Currency
Counterfeit British banknotes created by the Nazis accounted for 10% of sterling in circulation.
By Sanchia Berg, Today Program, BBC Radio 4.
A Threat to British Currency
Newly released MI5 files reveal that Nazi counterfeiting severely damaged trust in British currency across Europe by the end of World War II. A 1945 report in the National Archives states that Germany began producing fake sterling notes in 1940 to undermine the British economy.
By the time of D-Day, counterfeit notes had entered neutral countries. In response, the Bank of England began recalling notes in circulation. In total, the Nazis produced counterfeit notes valued at £134 million — about 10% of all sterling at the time.
Inside the Nazi Counterfeit Scheme
Sir Edward Reid, a banker working with MI5’s B1B section, wrote a detailed report in August 1945. He stated that a captured SS officer admitted the plan: Germany had intended to drop counterfeit notes from planes during a planned invasion of Britain to cause chaos and erode confidence in sterling.
Although the invasion was delayed, production continued. Over time, the forgeries improved. Reid observed that the quality eventually became so high that only experts could distinguish fakes from real currency.
Sachsenhausen: A Dark Production Site
MI5 did not know during the war that Sachsenhausen concentration camp prisoners, many of them Jewish, were forced to create the fake notes. In 2007, I met one of them — Adolph Burger. He proudly showed me a counterfeit £5 note.
It was printed on watermarked paper, using elegant copperplate script and an engraving of Britannia. A tiny pinhole in the image marked it as a Sachsenhausen forgery. The prisoners had discreetly identified their work.
Early Warnings and Currency Recalls
Although not all fake notes entered circulation, the Bank of England grew concerned by 1943. Historian John Keyworth notes that the year marked the recall of all notes worth £10 or more.
MI5 discovered that German agents in Britain carried fake currency. Many of the forged notes were used in neutral countries like Portugal and Spain to fund Nazi operations. Later, some even appeared in Egypt.
Fake Currency Floods Britain
After D-Day in June 1944, counterfeit notes started showing up in Britain. According to MI5, many Polish and American soldiers sold army supplies on the black market for French francs. They exchanged these francs for discounted sterling — much of which turned out to be fake. Banks in Britain identified the forgeries when the notes were deposited.
Rebuilding Confidence in Sterling
By August 1945, trade in fake notes was slowing down. But Sir Edward Reid insisted that only a full recall of notes valued at £5 or more could restore public trust. The Bank of England followed through, issuing new notes with added security features, including a metal strip.
These redesigned notes became the highest denomination available and remained so until the early 1960s. Reid concluded, “In general, it can be said that the German object of destroying confidence abroad in Bank of England notes has been achieved.”
Chaplin Investigated by MI5
Among the newly released files is one about actor Charlie Chaplin. The FBI had revoked his U.S. re-entry permit in 1952, partly over suspicions of Communist ties. MI5 investigated and concluded he posed no threat.
However, they couldn’t locate Chaplin’s birth certificate, which led to speculation about his birthplace. He always claimed to have been born in south London in 1889. Chaplin’s biographer, David Robinson, dismissed the doubts. He pointed out that not all births were registered at the time, and there is solid evidence that Chaplin’s family lived in London then, frequently entering and leaving the workhouse.
