£50b cash mystery puzzles Britain’s audit office

Pound Sterling notes and change are seen inside a cash register in a coffee shop in Manchester, Britain, September 21, 2018. — Reuters pic
Pound Sterling notes and change are seen inside a cash register in a coffee shop in Manchester, Britain, September 21, 2018. — Reuters pic

LONDON, Sept 18 — As cash declines in day-to-day transactions, Britain’s National Audit Office has uncovered a mystery: the number of pound notes in circulation has soared, so who is holding around £50 billion (RM267 billion) in cash?

In July 2020, the number of notes in circulation reached a record high of 4.4 billion, with a monetary value of £76.5 billion, up from £24 billion in 2000.

But the National Audit Office said the Bank of England in 2018 estimated only about 20–24 per cent of the value of notes in circulation were being used or held for cash transactions, with UK households holding a further five per cent as savings.

“Little is known about the remainder, worth approximately £50 billion,” The National Audit Office, Britain’s independent public spending watchdog, said in a report.

“Possible explanations include holdings overseas for transactions or savings and possibly holdings in the UK of unreported domestic savings or for use in the shadow economy.”

The Audit Office said the Bank of England and other institutions should improve their understanding of why demand for cash has increased. The Bank of England declined to comment.

“The Bank, working with other public authorities, should improve its understanding of both the factors that are driving the increase in demand for notes, and also who is holding the approximately £50 billion worth of notes,” it said.

“This work might help inform wider policy, for example on tax evasion,” it said. — Reuters

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