Bank of England urged to investigate £ 50bn of ‘lost’ banknotes



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The Bank of England should investigate the mystery of around £ 50bn of “lost” banknotes, MPs have said.

The Public Accounts Committee (PAC) said it does not know what most of the notes it issued are used for. Only about 20 to 24 percent of the banknotes issued are used or held for cash transactions, according to the Bank’s estimate.

That leaves around £ 50bn that is being used for other unknown purposes. The Bank believes that they are kept in homes for savings, used abroad or for illegal activities.

The PAC said the Bank does not “appear to have a compelling reason why the demand for banknotes continues to increase.” Only three in 10 transactions were in cash last year, up from six in 10 a decade ago.

In September, the National Audit Office said the Treasury, the Bank of England, Royal Mint, the Financial Conduct Authority and the Payment Systems Regulator need to coordinate more effectively so that people have access to cash.

These authorities have been slow to address the problems caused by fewer ATMs and bank branches and have failed to understand the impact of vulnerable groups, particularly people in rural areas, the PAC said.

In the two years to January 2020, the number of ATMs fell 12 percent, and the coronavirus pandemic has further catalyzed the shift toward electronic transactions.

The committee said there are implications for public policy and the public purse if a significant proportion of the large volume of banknotes whose whereabouts or use is unknown is used for illegal purposes.

Meg Hillier, Chair of the Public Accounts Committee, said: “In many areas where you can use cash, it would be difficult to find it, at least without paying an ATM fee which can be a substantial percentage of a small withdrawal, but making small withdrawals and Frequent can be a key budgeting tool for those with low incomes and less able to afford those fees.

“By contrast, £ 50 billion in banknotes, or around three-quarters of this precious dwindling supply, is hidden somewhere, but the Bank of England doesn’t know where, by whom or for what, and it doesn’t seems very curious.

“You need to be more concerned with where the 50 billion pounds are missing.

“Depending on where it is and what it is being used for, that amount of money could have material implications for public policy and the public purse. The Bank needs to better manage the national currency it controls ”.

The committee recommended that by January 2021, the Treasury and the Payment Systems Regulator should assess whether cash is only available at paid ATMs or through withdrawals at the post office counter. They should also put in place measures to ensure adequate access to free ATMs.

By the end of March at the latest, the Treasury should publish a clear plan of action, including a bill to ensure access to cash across the UK.

The plan should include clear commitments, including detailing what regulators are expected to accomplish, the committee said.

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