Paper currency recognition and verification systems have wide range of applications in many areas such as Automated Teller Machines (ATMs), Auto-Seller Machines, Money exchange agencies, Hotels, Shops, and other organizations that involve financial transactions. Hence, it is very important to have an automated currency reorganization and verification system to carry out successful business transactions. On the other hand due to advancement in digital imaging, color scanners, color printers and related technologies, it has been increasingly easier to produce counterfeit paper currency. Therefore, it is really a challenging task to develop an efficient and reliable system that could cope with all such problems. This emerging need for automatic currency recognition and verification systems has encouraged many researchers to develop robust and reliable techniques. There are two important factors to be considered for such systems, i.e. accuracy and performance. Of course, accuracy is more important than the performance.  The purpose of this research work is to develop and intelligent system for Pakistani paper currency, that could recognize correct class of the given banknote, and distinguish the genuine currency from the counterfeit.