Paper currency recognition (PCR) is an important area of pattern recognition. A system for the recognition of paper currency is one kind of intelligent system which is a very important need of the current automation systems in the modern world of today. It has various potential applications including electronic banking, currency monitoring systems, money exchange machines, etc. This paper proposes an automatic paper currency recognition system for paper currency. A method of recognizing paper currencies has been introduced. This is based on interesting features and correlation between images. It uses Radial Basis Function Network for classification.