What may have spared the United States from such embarrassment, Matthews politely ventured to me, is our level of usage: That is, $1 coins are so unpopular that even counterfeiters can't be bothered.
But could coin counterfeiting happen here? Incredibly, we don't even know if it already has. The Secret Service is in charge of dealing with counterfeit currency; but after making Freedom of Information Act inquiries with them when the $1 presidential coin program was in full swing, I found their countermeasures appeared to be ... nothing at all (PDF). And unlike the authorities in Europe or Canada, the Secret Service has issued no reports of assaying $1 coins or looking for counterfeits. (This despite the fact that in 2003, the Secret Service announced (PDF) busts in Colombia of operations creating fake Sacagawea dollars.) The U.S. Mint website doesn't even mention the possibility of fake modern circulating coinage, nor does it give instructions on how to detect them. Then again, with 25 different $1 coin designs already in circulation—the Susan B. Anthony, four Sacagawea variants, and the first 20 presidents—the $1 coin's identity has been so diluted that few would know a real from a fake anymore. Could you pick James K. Polk out of a lineup?
At least one agency has taken notice of the problem inherent in proposals like the COINS Act, though: the General Accounting Office. "Senior officials at the Federal Reserve and Mint told us the increased circulation of $1 coins could increase the risk of counterfeiting," noted a GAO report last spring. Their analysis—which was otherwise rather favorable to the coin option—noted that the United States was far less prepared for such counterfeiting than other nations: "Both Canada and the U.K. created validation programs. ... The Federal Reserve banks circulate coins they receive from commercial banks, but do not have a comparable validation program."
"There are no public security features or analogous infrastructure for authenticating coins. Therefore, the public is not able to determine whether a coin is genuine or counterfeit ..." it concluded. "Further, the government has no high-speed, automated sorting equipment to detect and remove counterfeit coins, nor is it clear that such a solution exists that could ascertain authenticity. ... If the U.S. replaced $1 notes with $1 coins and we experienced similar counterfeiting levels [to the U.K.], the economic loss in the U.S. would range from $400 to $540 million."
Such warnings have gone unheard in Congress. Examining the text of the COINS Act reveals that, even as it would create a small-change economy where fakes would flourish, its language does not mandate any anti-counterfeiting measures. In fact, the bill makes no mention of currency security or counterfeiting at all.
Perhaps the sponsors were distracted. U.S. Senate disclosure forms show one group, the Dollar Coin Alliance, poured $600,000 into lobbying in 2011 alone. Buried in those same forms is another curious revelation: the two major backers of the Dollar Coin Alliance are PMX Industries Inc. and Global Brass & Copper Inc., both manufacturers in the copper and brass market. The mystery does not exactly deepen when you notice that the Dollar Coin Alliance also shares the same Cedar Rapids street address as PMX Industries.
Not everyone is a fan of the COINS Act, though. Another bill, the Currency Efficiency Act, effectively seeks to phase out dollar coins by keeping production suspended whenever the surplus sitting in vaults "exceeds the reasonable circulation needs for one year." But co-sponsors John Kerry (D-MA) and Scott Brown (R-MA) might not have currency security at the top of their minds either. Crane & Co., the sole supplier of paper in U.S. currency, just happens to be based in—need you ask?—the great state of Massachusetts.