The chances of picking up a counterfeit bank note in the past year were just one in a million.
The Reserve Bank says that was down from three in a million in 2011.
Timaru police are urging firms to be vigilant after someone tried to pay a shop with $50 notes that appeared to be fake.
Sergeant Greg Sutherland said the shop did not accept the notes and they were not found when police later spoke to the suspect.
New Zealand Retailers Association advised early last month that counterfeit $50 notes were reportedly circulating in Auckland and Wellington.
A series of fake $50 and $100 notes turned up around the country in 2010, with a case of some fake $20 notes near Auckland early last year.
But while low, the rate of just one in a million is likely to be understated, as not all counterfeits are likely to be found or passed on to the central bank, the Reserve Bank says. About 136 million individual notes, from $5 to $100, are in circulation.
And counterfeiters may find their work even harder to pass off, with the Reserve Bank planning to upgrade security features in a new set of notes to be issued late next year.
New Zealand's banknotes were last upgraded in 1999 with polymer propylene replacing paper made from cotton.
However, the design, including portraits of New Zealanders Sir Edmund Hillary and Kate Sheppard, was fundamentally the same as that of the previous series, introduced in 1991 to 1992.
In a research paper, the central bank says the level of fake notes in New Zealand is low in comparison with international levels, which typically range from 50 to 100 notes per million.
Recent overseas studies show Britain has about 100 fake notes for every million in circulation, with a peak in the past decade of almost 300 per million.
In Australia, the counterfeit rate has averaged about 8 notes per million in the past decade.
The Reserve Bank finds fake notes in three ways: From note processing by cash in transit companies, from the Reserve Bank's own note processing, and from police.
The public hand in fake notes to police or fakes are found by police carrying out their own duties, the Reserve Bank says.
The easiest way to spot a fake, the bank says, is to check the embossed window in the note: If the note is real, the window shows the value of the note, and no edges can be felt at the border of the window.
The Reserve Bank tries to make sure bank notes are good quality so it is easier to spot forgeries. It uses a high-speed, note-processing machine that destroys low quality notes.
In the past year, 18 million notes were destroyed because they showed signs of ink wear, soiling, graffiti or tears and holes.
The current polymer plastic notes last much longer than the old paper notes but, even so, one in four $10 notes was destroyed last year.
Despite the increasing use of electronic payments such as internet banking, eftpos and credit cards, the amount of currency in circulation has continued to rise in recent years.
The total cash in circulation grew almost 5 per cent in the year to June 2012. Of the $4.4 billion in circulation, the public held about $3.8b and banks held $580 million.
Total currency in circulation has risen 30 per cent in the past five years, by about $1b.
The most common note, the $20 bill, makes up almost 44 per cent of all notes.
And the the value of all coins in pockets and down the back of couches is $320m. And in the past year, the Reserve Bank issued 52 million new coins.