In This Article
In 1943, a British banknote that had passed through Tangier, Morocco, presented the Bank of England with a disturbing problem. Its appearance was convincing. Its paper, printing and design seemed genuine. But its serial number matched a note already recorded in the Bank’s ledgers as paid. [1]
The same number appeared to belong to two different banknotes.
That discovery exposed part of Operation Bernhard, Nazi Germany’s secret effort to counterfeit British currency during the Second World War. Inside Sachsenhausen concentration camp, Jewish prisoners were being forced to manufacture remarkably convincing pound notes.
The original ambition was to undermine confidence in British money. The operation eventually became something more practical: a way to finance espionage, acquire valuable goods and conduct transactions using currency that Germany had never legitimately earned.
The counterfeits did not destroy sterling. But they exposed a weakness at the heart of paper money: a banknote depends on more than its appearance. It depends on the public believing that the institution behind it can distinguish genuine promises from false ones.
Operation Bernhard and the Plan to Attack Britain’s Currency
The idea of using counterfeit money against Britain emerged early in the Second World War.
German security officials began developing a programme known as Operation Andreas around 1939–1940. Its proposed weapon was not a bomb, a submarine or an invading army. It was a supply of forged Bank of England notes. [2]
The initial concept involved producing enormous quantities of counterfeit sterling and distributing the money inside Britain, potentially by dropping it from aircraft.
The reasoning was straightforward. If large amounts of false money entered everyday circulation, British authorities might struggle to distinguish genuine notes from counterfeits. Merchants, banks and ordinary citizens could become suspicious of the currency they were receiving.
An attack on confidence might then become an economic problem.
There were two possible mechanisms. Counterfeit notes accepted and spent as genuine could increase the effective supply of money in circulation. More importantly, widespread uncertainty about authenticity could make people reluctant to accept cash at all.
These were related but different dangers. Inflation would require enough additional purchasing power to enter the economy and affect spending and prices. A loss of confidence could emerge even before that threshold if people believed counterfeit notes were everywhere.
Neither outcome was automatic.
Printing millions of convincing notes was only the first challenge. Germany also needed to distribute them in sufficient quantities, persuade people to accept them and avoid detection by British financial institutions.
The original plan never achieved the scale required to collapse Britain’s monetary system.
Nevertheless, German officials discovered that high-quality counterfeit notes might serve another purpose. Even without destroying the pound, they could provide purchasing power abroad.
When the programme was revived in 1942 under SS officer Bernhard Krüger, this practical use became central to the operation. [3]
| Documented Figure / Metric | Historical Significance & Archival Context |
|---|---|
| £134,610,810 | The Smithsonian's National Museum of American History records a more precise production figure of 8,965,080 notes, with a total face value of £134,610,810. |
| £135 million | Other historical records provide somewhat different totals, including figures above £135 million. |
| £9 million | Later accounts of the recovered material referred to considerably smaller quantities, including reports of counterfeit notes with a face value of about £9 million being destroyed in Austria. |
| £10 | A new £10 note appeared in 1964, followed by a new £20 note in 1970 and a £50 note in 1981. |
A Counterfeiting Factory Inside Sachsenhausen
The renewed operation was organised under the Nazi security apparatus, the Reich Main Security Office, known as the RSHA.
Its production centre was Sachsenhausen concentration camp, north of Berlin.
The SS searched concentration camps for Jewish prisoners possessing specialist skills. They wanted printers, engravers, graphic artists, paper experts and people familiar with banking practices.
Approximately 142 Jewish prisoners were ultimately assigned to the counterfeiting unit, according to the Bank of England and Sachsenhausen Memorial. Some historical accounts give slightly different totals. [4]
The prisoners worked in a specially equipped and isolated area of the camp. Their assignment was to reproduce British currency closely enough that bankers and experienced currency handlers would accept it.
The SS provided equipment and materials necessary for the work. The counterfeiting prisoners also experienced conditions that were comparatively less brutal than those endured by many other Sachsenhausen inmates.
They could receive better food, clothing and sleeping arrangements. These differences did not make them free workers. They were prisoners performing forced labour under a regime responsible for their persecution and potential murder. Their professional abilities had become the reason the SS considered them useful.
The distinction matters because Operation Bernhard is sometimes described primarily as a brilliant technical achievement. That description can conceal the coercion that made the programme possible.
One of the prisoners was Adolf Burger, a trained printer from Slovakia.
Burger and his wife, Gisela, had been arrested in 1942. He was deported to Auschwitz, while Gisela was murdered at Auschwitz-Birkenau. Burger was subsequently transferred to Sachsenhausen for the counterfeiting operation. [5]
After the war, he became an important witness to the programme and the experiences of the prisoners forced to participate.
The counterfeiting unit’s technical success therefore cannot be separated from its human cost.
How the Nazis Reproduced British Banknotes
British banknotes had characteristics that made them both distinctive and vulnerable.
Before the war, the Bank of England’s traditional white notes had retained much of their basic appearance for generations.
They featured elaborate black printing on white cotton-based paper, with Britannia appearing in the design. Their visual style was familiar and respected, but the relatively unchanged design also offered determined counterfeiters an established model to study.
The Germans approached the task as a technical investigation.
Paper, Watermarks and Hidden Security Features
A convincing counterfeit required more than reproducing the visible artwork. Banknote paper had a particular texture, strength and watermark. These qualities helped experienced handlers distinguish genuine currency from ordinary printed paper. The counterfeiters experimented with specialist paper manufacturing to reproduce the appropriate appearance and feel. They also studied the small identifying features incorporated into genuine banknotes.
According to the Bank of England Museum, the prisoners identified approximately 150 different security marks. Some were intentionally introduced minor imperfections in the printed design. [6]
These details were supposed to make counterfeiting more difficult. Once understood and reproduced, however, they helped the counterfeit notes resemble authentic ones. The prisoners prepared printing plates for denominations of £5, £10, £20 and £50. They reproduced intricate engraving, signatures and the details surrounding Britannia. [7]
Producing a newly printed note was not enough. A perfectly fresh-looking banknote could attract suspicion, particularly if it appeared unusually clean. The operation therefore included a process of artificial ageing. Prisoners handled, folded and rubbed the notes to give them the wear associated with ordinary circulation. The result was currency convincing enough to deceive many experienced observers.
The Serial-Number Problem
One important feature remained difficult to reproduce: the Bank of England’s serial-number system. Each genuine banknote carried identifying numbers that helped distinguish it from other notes. The counterfeiting operation succeeded in copying many physical features but did not fully reconstruct the Bank’s numbering system. Instead, it reused serial numbers associated with genuine notes.
This was a serious vulnerability. A counterfeit note could pass an ordinary visual inspection. But if its serial number was checked against sufficiently detailed banking records, a duplicate could expose the forgery. The problem illustrated a fundamental difference between copying the appearance of money and reproducing the institutional system that gives money its authenticity.
The Banknote That Exposed Operation Bernhard
The serial-number weakness became decisive in 1943. A counterfeit banknote that had passed through a British bank in Tangier eventually came under scrutiny at the Bank of England. Bank clerks maintained records of notes that had already been paid and withdrawn from circulation. When one clerk examined the suspicious note, its serial number matched a recorded note that had already been paid. [8]
The physical banknote appeared genuine, but the record showed that something was wrong. An authentic note should not have reappeared in that form after its serial number had been recorded as paid. The discrepancy revealed that the note was counterfeit. The discovery was particularly troubling because the forgery’s physical quality was exceptionally high.
Ordinary examination of the paper and printing could fail to identify it. Earlier counterfeit samples from Operation Andreas had already demonstrated the danger. Notes submitted through Switzerland for examination had reportedly been accepted as genuine. The 1943 discovery showed that convincing forgeries were no longer merely an experimental possibility. They were entering international financial channels. [9]
For the Bank of England, the problem was larger than identifying a few suspicious pieces of paper. If banks could not reliably separate genuine sterling from counterfeits, confidence in higher-denomination notes could suffer. The Bank therefore took defensive action.
In 1943, it stopped issuing banknotes above £5, while higher-denomination white notes were withdrawn as a precaution against the counterfeiting threat. [10]
This did not mean Britain abandoned its currency or experienced a general monetary collapse.
It meant the central bank had to restrict part of its own established banknote system because an enemy government had successfully imitated it.
From Economic Warfare to Secret Wartime Finance
The operation’s greatest practical significance was not the destruction of Britain’s currency. It was the conversion of counterfeit sterling into resources useful to the Nazi war effort. A forged £20 note had no legitimate claim on the Bank of England. But if someone accepted it as genuine, the German intelligence apparatus could obtain something valuable in exchange. That might be another currency, gold, equipment, scarce materials or information. [11]
This created a form of illicit wartime finance. Consider a simplified transaction. A German agent possesses counterfeit British banknotes. The agent approaches an intermediary willing to exchange sterling for another currency. If the intermediary accepts the notes, the agent receives spendable funds without Germany having supplied genuine sterling.
The intermediary now carries the risk that the Bank of England or another institution will eventually identify the counterfeits.
The counterfeit money has effectively transferred purchasing power to the German operation while passing the potential loss to whoever accepts the false notes.
The International Distribution Network
The counterfeit currency moved through a network of intermediaries and agents rather than through a single, transparent financial channel.
A study by historian V. H. C. von Lengeling, published online in 2022 in the Journal of Intelligence History, examines the distribution of counterfeit pounds across wartime Europe.
The study identifies transactions involving foreign currencies, gold, valuable goods, weapons, scarce materials and intelligence. Some intermediaries converted forged sterling into assets that could be used elsewhere. Others helped place the notes into circulation through commercial and financial transactions. The process is often described as money laundering: disguising the illegitimate origin of funds so that they can be used or exchanged as if they were legitimate. In Operation Bernhard, the principal trick was to turn counterfeit banknotes into assets with genuine purchasing power.
This was especially useful for clandestine activity.
An intelligence service operating abroad needed ways to pay informants, compensate agents, acquire supplies and finance activities that could not easily pass through ordinary government accounting.
Sterling was an internationally recognised currency, making convincing pound notes valuable beyond Britain itself. Yet not every forged note produced was successfully distributed. Nor did every counterfeit necessarily generate its full printed face value in usable resources. Intermediaries faced risks, demanded compensation and could reject suspicious notes. The value printed on a counterfeit note was therefore not the same as the economic benefit ultimately obtained by its creators.
How Much Fake Money Did Operation Bernhard Produce?
Operation Bernhard operated on an extraordinary scale for a counterfeiting programme.
The Bank of England estimates that Nazi Germany printed almost nine million counterfeit notes with a combined face value of approximately £134 million.
The Smithsonian’s National Museum of American History records a more precise production figure of 8,965,080 notes, with a total face value of £134,610,810. Other historical records provide somewhat different totals, including figures above £135 million. Such differences reflect variations in surviving documentation, accounting methods and estimates of the operation’s total output. For a financial-history analysis, the crucial distinction is between three quantities:
- The total face value of notes manufactured.
- The value of counterfeits successfully distributed or accepted.
- The value of genuine resources obtained through those transactions.
These figures are not interchangeable.
Why £134 Million Did Not Mean £134 Million Entered Britain
The production total was enormous. The Bank of England has compared the counterfeit notes’ face value with more than one-tenth of the value of banknotes then circulating in Britain. That comparison demonstrates the potential scale of the threat. It does not establish that all those counterfeit notes entered Britain’s economy.
Some were held in storage. Some were distributed through continental Europe and neutral markets. Others were never successfully spent, while substantial stocks remained undistributed as the war approached its end.
The amount actually circulating within Britain was therefore much smaller than the full production total, although its precise scale is difficult to establish. Nor can the nominal value of the forged notes be treated as a direct measure of inflation or monetary damage. For a counterfeit note to influence prices through additional spending, it must first be accepted and used in economic transactions. To undermine trust more broadly, people must also become aware of the danger and change their behaviour.
A government might print a huge quantity of counterfeit currency yet fail to cause a national crisis if most of that currency never reaches the intended market.
This is why Operation Bernhard’s manufacturing achievement should not be confused with the success of its original economic-warfare objective.
Germany proved that it could manufacture credible British banknotes on a massive scale. It did not prove that it could force the British monetary system to collapse.
What Happened as Nazi Germany Collapsed?
By early 1945, Germany’s military position was deteriorating rapidly. As Allied forces advanced, the SS began moving the counterfeiting prisoners and their operation away from Sachsenhausen. The prisoners were transferred to the Mauthausen concentration camp system in Austria, including the Redl-Zipf subcamp, before being moved to Ebensee. The production operation was not successfully re-established on its previous scale.
Meanwhile, counterfeit notes, printing equipment and other materials had to be concealed or destroyed to prevent their capture.
One of the most famous locations associated with the operation’s final days was Lake Toplitz, a deep Austrian mountain lake.
Accounts of the retreat describe counterfeit notes and equipment being dumped into the lake. The precise quantity disposed of there remains uncertain, and surviving recovery reports should not be confused with a complete inventory of everything the operation produced. The prisoners’ situation was far more immediate. They remained under SS control while Germany was nearing defeat, and their knowledge of the counterfeiting programme left them in danger.
On 6 May 1945, American forces liberated the prisoners at Ebensee.
Adolf Burger survived.
His subsequent testimony helped preserve the experiences of the people whose forced labour had sustained the operation.
The Money That Reappeared After the War
The end of Nazi Germany did not immediately eliminate the counterfeit notes. Some continued appearing in circulation after 1945. In 1959, reports emerged of divers recovering boxes of forged British banknotes from Lake Toplitz. The discoveries renewed public interest in the operation and encouraged dramatic claims about how much counterfeit money might still be hidden underwater.
Some contemporary press reports suggested enormous sums. Later accounts of the recovered material referred to considerably smaller quantities, including reports of counterfeit notes with a face value of about £9 million being destroyed in Austria.
These reports are evidence of the continuing search for the operation’s remains, not proof that the reported quantities represented all surviving counterfeits. The Bank of England also had to manage the longer-term consequences for its banknotes. The traditional higher-denomination white notes did not simply return to normal circulation after the war. A new £10 note appeared in 1964, followed by a new £20 note in 1970 and a £50 note in 1981.
Their designs incorporated more sophisticated visual and security features than the older notes.
Operation Bernhard had exposed how dangerous it could be for a familiar banknote design to remain vulnerable to technically advanced forgery.
Did Operation Bernhard Nearly Destroy the British Pound?
The answer depends on what is meant by success. As an attempt to destroy the British economy through a flood of counterfeit currency, Operation Bernhard failed. Britain did not experience the monetary collapse the original planners had envisioned. There is no convincing evidence that the counterfeits caused nationwide hyperinflation, a general breakdown of sterling or the collapse of Britain’s banking system.
But describing the entire operation as unsuccessful would also be misleading. The counterfeits were sufficiently convincing to enter international financial channels, deceive experienced handlers and force defensive measures by the Bank of England. They also provided a means of financing covert activities and obtaining resources. The project therefore achieved a different kind of result from the one originally imagined.
Instead of becoming the decisive economic weapon that destroyed Britain’s currency, forged sterling became an instrument of German intelligence and wartime procurement. The distinction is essential. Financial warfare can involve attempts to cause widespread economic disruption, but it can also involve exploiting the financial institutions and trusted currencies of an adversary. Operation Bernhard demonstrates both approaches.
The planned attack on monetary confidence remained limited. The exploitation of the pound’s international credibility produced a more tangible operational benefit.
The Financial Lesson: Money Depends on Trust
The story of Operation Bernhard reveals a paradox. The counterfeiters tried to exploit the reputation of the Bank of England while simultaneously threatening to undermine it. Their notes were useful precisely because sterling was trusted. Foreign intermediaries and commercial counterparties accepted British currency because they believed the issuing institution stood behind it.
The Nazi operation attempted to borrow that credibility without possessing any legitimate right to it. At the same time, successful counterfeiting threatened to weaken the distinction between authentic and fraudulent money. That distinction depends on an entire financial system: secure production, reliable records, bank procedures, authentication methods and public confidence. Operation Bernhard reproduced much of the physical object but could not reproduce every part of the system.
The serial-number discrepancy discovered in 1943 exposed that limitation. The Bank of England’s defensive measures then showed that maintaining trust could require changing the currency itself. The most lasting lesson is therefore not that a printing press could overthrow a great economy. It is that money is both an object and a claim. The object can be copied. The claim must remain credible.
In the final accounting, Operation Bernhard produced millions of forged notes, financed secret wartime transactions and compelled Britain’s central bank to confront a serious counterfeiting threat.
It did not break the pound.
But it demonstrated how an enemy could turn confidence in a currency into a weapon against the institution that created it.
Theoretical & Balance-Sheet Transmission Mechanism
In the Kindleberger–Minsky taxonomy of financial instability (Kindleberger, 1978; Minsky, 1986) and Irving Fisher’s (1933) debt-deflation framework, speculative asset booms become systemic crises when credit expansion shifts balance sheets from hedge finance (cash flows covering principal and interest) to speculative and Ponzi finance (relying on rising asset prices and short-term margin roll-overs).
Once monetary tightening or an exogenous shock halts price appreciation, forced margin liquidations trigger Fisherian debt-deflation: fire-sale asset discounts erode bank collateral values, contracting credit supply across the real economy.
Sources & Further Reading
- 1. Alison Cook — “Operation Bernhard.” · Bank of England Museum, 26 January 2024. Institutional account of the operation’s development, forced production, banknote security features, discovery and aftermath. — https://www.bankofengland.co.uk/museum/online-collections/blog/operation-bernhard Central Bank / Monetary Authority
- 2. Bank of England — “History,” section “Wartime banknote forgeries.” · Bank of England, official institutional history. Provides the Bank’s production estimate, assessment of the counterfeiting threat and account of wartime banknote measures. — https://www.bankofengland.co.uk/about/history Central Bank / Monetary Authority
- 3. Sachsenhausen Memorial and Museum — “A Genuine Forgery.” · Brandenburg Memorials Foundation, Sachsenhausen Memorial and Museum, collection research article. Examines the origins of Operation Andreas, the Sachsenhausen counterfeiting unit, prisoner conditions, distribution and liberation. — https://www.sachsenhausen-sbg.de/en/collection-and-research/objects-in-focus/a-genuine-forgery Historical & Financial Reference
- 4. Smithsonian Institution, National Museum of American History — “Counterfeit British Pound Notes from the Second World War.” · National Numismatic Collection, undated museum exhibition article. Documents surviving counterfeit notes and reports the operation’s production figures. — https://www.americanhistory.si.edu/explore/exhibitions/value-money/online/new-acquisitions/counterfeit-british-pound-notes Peer-Reviewed / Academic Research
- 5. V. H. C. von Lengeling — “The Distribution of Fake British Pounds in the Biggest Money Counterfeiting Scheme in History.” · Journal of Intelligence History, Volume 22, Issue 2, pages 171–191. Published online 2022; journal issue 2023. Academic research on the operation’s European distribution network and the exchange of counterfeit money for resources and intelligence. — https://doi.org/10.1080/16161262.2022.2043039 Peer-Reviewed / Academic Research
- 6. Mauthausen Memorial — “Obituary for Adolf Burger.” · Mauthausen Memorial, 12 December 2016. Biographical account of a survivor of the counterfeiting operation, including his persecution, forced labour, liberation and subsequent testimony. — https://www.mauthausen-memorial.org/en/News/Obituary-for-Adolf-Burger Historical & Financial Reference
- 7. United States Holocaust Memorial Museum — “Counterfeit British Bank Note.” · Holocaust Encyclopedia, museum collection record. Documents a surviving counterfeit banknote and explains the Nazi programme’s original economic-warfare objective. — https://encyclopedia.ushmm.org/content/en/photo/counterfeit-british-bank-note Historical & Financial Reference
- 8. Bank of England Archive — “Committee of Treasury Files: Issue Department — Bank Note Forgeries.” · Archival reference G14/27, covering documents dated 10 January 1940 to 2 July 1969. Catalogue record identifying surviving institutional files concerning Nazi banknote forgeries. — https://www.bankofengland.co.uk/CalmView/Record.aspx?id=G14%2F27&src=CalmView.Catalog Central Bank / Monetary Authority
- 9. Bank of England Archive — “Customers’ Correspondence Papers: Forgery of £5 and Upwards, Type BB.” · Archival reference C5/191, covering 1949–1964. Catalogue record identifying correspondence concerning wartime forgeries, international investigations and material recovered from Lake Toplitz. — https://www.bankofengland.co.uk/CalmView/Record.aspx?id=C5%2F191&src=CalmView.Catalog Central Bank / Monetary Authority
- Irving Fisher — "The Debt-Deflation Theory of Great Depressions," Econometrica 1, no. 4 (FRASER Federal Reserve Archive, 1933): 337–357 Central Bank / Monetary Authority
- Charles P. Kindleberger & Robert Z. Aliber — Manias, Panics, and Crashes: A History of Financial Crises (Palgrave Macmillan) Peer-Reviewed / Academic Research
Cite This Historical Dossier (APA / Chicago)
APA (7th ed.): Ç., S. (Ed.). (2026). Operation Bernhard: The Nazi Plot to Break Britain's Currency. In Forgotten Fortunes Historical Monograph Series (Forgotten Fortunes Editorial Desk). https://forgottenfortunes.net/operation-bernhard-nazi-counterfeit-money/
MLA (9th ed.): Ç., Soner, ed. "Operation Bernhard: The Nazi Plot to Break Britain's Currency." Forgotten Fortunes: Financial & Monetary History Archive, 2026, https://forgottenfortunes.net/operation-bernhard-nazi-counterfeit-money/.
Chicago (17th ed.): Ç., Soner, ed. "Operation Bernhard: The Nazi Plot to Break Britain's Currency." Forgotten Fortunes Historical Monograph Series (Forgotten Fortunes Editorial Desk), August 19, 2026. https://forgottenfortunes.net/operation-bernhard-nazi-counterfeit-money/.
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