Banknote 'bugs' in your pocket

ELECTRONIC 'smart' tags could be embedded in £50 notes within ten years, allowing the state to invade people's financial privacy further, warns a leading academic. Some Japanese notes are already fitted with the devices and the European Central Bank is likely to follow suit next year.

America's Federal Reserve is also thought to be interested in tagging high denomination dollar bills.

'Britain will not be far behind,' said Professor Ian Angell, head of the information systems department at the London School of Economics. 'Within a decade, £50 notes, at least, are likely to be carrying these tags.'

The devices, which give off radio signals, are already being introduced into clothing by major chains and are being used around the world to keep track of pets and livestock.

But in a new paper for the LSE, Angell and PhD student Jan Kietzmann warn that the tags will be 'embedded' in banknotes, helping Government agencies to track private flows of money. 'The state will know exactly how much cash is being carried, who is carrying it and who has carried it previously,' according to Angell.

'A radio-frequency identification - RFID - tag can identify each note as it passes within range of a sensor.' RFID technology has already sparked controversy as civil liberties campaigners have protested at its inclusion in consumer items such as clothes, DIY products, toiletries and even meat.

The fear has been that major retail groups will use the information gathered from RFID tags as an allseeing giant version of supermarket loyalty cards.