Recently, a Spanish couple, friends of mine, were with a group of people at a terrace bar, here in Madrid. They paid for the first round of drinks, the waiter brought the change on a plate and another order was made and brought. To pay for these, they offered the waiter a banknote from the same plate he had brought a couple of minutes before – and were astonished when he refused to accept it, on the grounds that it was false.

The counterfeit note, the one at the top, could be identified by: 1. The absence of a watermark here (a man's head and shoulders, not possible to make out in this scanned image). 2. The magnetic strip looks convincing but touch tells that it is not really there. 3. Along this edge, on the genuine note at the bottom, the words "Banco de España" can be read when looked at from a certain angle (again, not possible to make out in this scanned image). On the forged note, this is impossible.

In fact, this is typical. The recipient of a counterfeit note here would not normally think of calling the police or destroying the note. He or she is most likely to try to "largarlo," pass it on. Remember that the word "picaresque" comes from the Spanish picaresco and it represents that part of the national character which thinks authority or the authorities are there to be defied (the Spaniards have also given the English language the words "anarchism" and "guerrilla"). This does not really mean you need to be any more wary than anywhere else, though various cons, sometimes entertainingly imaginative ones, are worked on the unsuspecting. But because there is so much of it, visitors to Spain are quite likely to come across counterfeit money. 

At least, people, especially shopkeepers and bartenders, believe there is a lot of it. Even tiny establishments are quite likely to have some device for detecting forged banknotes, perhaps using ultra-violet light, though it may be so small and cheap as to have little more than deterrent value. In the absence of such a method, holding the note up to the light and peering at it suspiciously is common – do not be offended by this, there is nothing personal about it. 

Hard information about the real scale of the problem is difficult to get – the authorities do not seem to consider it important. Neither the Civil Guard nor the National Police say anything about it on their web sites. Nor do the Ministry of the Economy, the Inland Revenue or the Bank of Spain. Not even Interpol, specifically founded to combat the problem of counterfeit money, has any information.