£50 billion note “unknown for the end”, British MP: “Check!”
U.S. media said that people’s use of cash in the United Kingdom has declined year after year, but the demand for paper money is soaring. A group of British parliamentarians said on the 4th that as many as 50 billion pounds of paper money were “unending”, and they urged the Bank of England to investigate.
According to CNN’s website on December 4, Meg Hillier, chairman of the House of Commons Government Accounts Committee of the British Parliament, issued a statement that the money “hidden somewhere, but the Bank of England does not know where, in whose hands or what it is used, and does not seem to care about it”.
She also said: “It [the Bank of England] needs to pay more attention to where the unknown £50 billion is.”
The responsibility of the committee is to supervise the government’s finances.
A spokesman for the Bank of England issued a statement in response: “The public does not need to explain to the bank why they want to hold paper money. This means that paper money is not endless.” He added that the central bank will continue to meet the public’s demand for paper money.
Despite the increase in digital payments, demand for cash has been rising in most developed economies since the global financial crisis, according to a report released by the Bank for International Settlements in 2018. The report said that this is partly affected by low interest rates, which lower the return on bank savings.
“We’ve found that people are increasingly using cash as a means of preserving value rather than for trading purposes,” Sarah John, the cashier general of the Bank of England, said in October, testifying before the Government Accounts Committee of the House of Commons of Parliament. She also said that since the 2008 financial crisis, concerns about the strength of financial institutions have also contributed to this phenomenon.
The report said that during the lockdown at the peak of this year’s coronavirus epidemic, although demand for paper money and coins fell sharply, it recovered later, because the epidemic caused people to hoard more cash at home.
According to the September report of the National Audit Office, which oversees government spending, the number of banknotes circulating in the UK reached a record 4.4 billion in July, with a total value of £76.5 billion.
In comparison, in 2000, the number of banknotes circulating in the UK was 1.5 billion, worth about 24 billion pounds.
At the same time, cash payments have declined, and this trend is likely to accelerate under the impact of the epidemic. Ten years ago, six of ten transactions used cash, compared with less than three last year.
According to the Bank of England estimates, 20% to 24% of the banknotes in circulation are used for cash transactions, and 5% are held by British households for savings.
“We know little about the remaining paper money worth about £50 billion, but possible explanations include holdings for trading or saving purposes overseas, possible unreported savings in the UK, or for the shadow economy,” the National Audit Office said in the report.
The report pointed out that the agency suggested that the Bank of England cooperate with other public institutions to better understand the reasons that drove the growth in demand for paper money and who was in the hands of the 50 billion pounds.
“This work may help inform the development of broader policies, such as policies against tax evasion,” it said.