Ronald William Tighe, 56, appeared in the dock of Tamworth Local Court on Tuesday, where Aboriginal Legal Service solicitor Gemma Ridley made a bid for his release.

Magistrate Julie Soars denied the accused bail and noted it was a "somewhat unusual charge".

Police allege Tighe was found with $850 worth of counterfeit $50 notes when he was arrested near a South Tamworth supermarket on Monday.

The court heard this was the first offence of its kind for the accused, though prosecutors said he had a record of failing to front up to court.

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"The prosecution opposes bail, citing an unacceptable risk of failing to appear," police prosecutor Sergeant Rebecca Skivington said.

The court heard there was a "strong case" against the accused and the "serious offences" had been referred to the Commonwealth DPP.

Ms Ridley argued the referral to federal prosecutors could cause significant delays in the case, and asked for Tighe to be released on strict conditions.

She said Tighe could live at a Tamworth address with a family member; report to police daily; and he would not enter the Robert Street IGA, or Coles supermarket complex in South Tamworth.

She argued that even if Tighe was found guilty, a prison sentence was not on the cards, something Sergeant Skivington disagreed with.

The court heard Tighe was with another man when they went to the shops on Monday to buy cigarettes and alcohol.

Police claim a $50 note handed over had foreign writing on it and officers were alerted. Ms Ridley said Tighe had waited near the complex for 40 minutes so he could explain his situation to police.

He was taken to Tamworth Police Station and charged with utter counterfeit money knowing it to be counterfeit; and possess counterfeit money. He has not been required to enter pleas.

The court heard the maximum penalties for the alleged offences could be 12 years' imprisonment for one of the offences, and 10 years for the second, if found guilty.

Ms Soars denied Tighe's bid for bail, and said she came to that decision "against the background of his fail to appears in recent times for serious matters".

The case was adjourned to August, and a brief of evidence has been ordered.

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