The shrinking economy; Bank of England on durability of cash

The amount of cash circulating in the UK economy is twice the level of a decade ago, says the Bank of England in a Knowledge Bank primer on the introduction of new plastic banknotes.

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The shrinking economy; Bank of England on durability of cash

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

The central bank blog notes that growth in cashless payment methods, such as contactless cards and mobile P2P, are making little headway in reducing the amount of notes and coins in people's pockets. Today, there are over £60 billion pounds worth of notes in circulation, it says, twice as much as ten years ago, equating to an additional £1000 per person.

Reasons for the glut include its convenience, wide acceptance and ease of budget management. Other factors include hoarding and greasing the wheels of the shadow economy.

"Over the coming years, it is likely that alternative digital payment methods will become ever more widely accepted," says the Bank. "Even so, many people will continue to use cash in their daily lives. While the future demand for cash is not known for certain, it is not likely that cash will to die out any time soon."

The blog goes on to extol the virtues of the new generation of polymer bank notes, citing their durability, resistance to dirt and moisture and the fact that they are harder to counterfeit.

"Despite the new digital ways of paying, the popularity of cash will ensure there will always be a need to produce banknotes that are fit for purpose," the blog concludes.

The Bank's statement comes as a new meme pops up on social media, with people posting pictures of notes that have shrunk in the wash or shrivelled in the oven.




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Comments: (2)

A Finextra member 

I have read elsewhere that around 50% of the Cash-in-Circulation is unaccounted for. Presumably circulating in the Black Economy, and travelling the world in suitcases paying People Smugglers; for Illicit Arms; and Drugs. Is it not high time that the BoE took control of this, demonitised old and uncirculated notes and did some real damage to these reprehensible trades.

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

I have read elsewhere that around 50% of wire transfers are made by human trafficking mafia, illicit arms dealers and drug lords. It's high time regulators took heed of this, shut down wire transfers and slashed the size of these nefarious businesses to the maximum amount of currency notes they can carry in suitcases.

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