Hush money: Bank of England pressured to find ‘missing’ £50bn in cash
The Bank of England must launch an investigation to find £50bn of “missing” banknotes that have been “stashed” around the country, the government’s spending committee has warned.
In a rare exchange with Threadneedle Street, the Public Accounts Committee (PAC) today called on the Bank to “get a better handle on the national currency it controls”.
It speculated that the £50bn sum may be stashed away under mattresses as unreported household savings, taken abroad, or used in the shadow economy.
PAC chair Meg Hillier said: “£50bn of sterling notes — or about three-quarters of this precious and dwindling supply — is stashed somewhere but the Bank of England doesn’t know where, who by or what for — and doesn’t seem very curious.”
“Depending where it is and what it’s being used for, that amount of money could have material implications for public policy and the public purse,” she added.
Sarah John, the Bank’s chief cashier, told MPs in October that around a tenth of Britons are currently hoarding more cash at home because of the pandemic, despite a sharp slump in ATM withdrawals.
“When lockdown originally came in we saw people stockpiling cash, literally relying on cash as a contingency,” John said. “That is something we often see in periods of uncertainty in the economy.”
The rise of digital currencies has also seen coin use decline over recent years, with the production of new cash by the Royal Mint falling by around 65 per cent in the last decade.
However, the Bank refuted MPs’ claims that the money was “missing”, pointing out that banknotes by their very design are not traceable.
A spokesman for the Bank said: “It is the responsibility of the Bank of England to meet public demand for banknotes. The Bank has always met that demand and will continue to do so. Members of the public do not have to explain to the Bank why they wish to hold banknotes. This means that banknotes are not missing.”
Demand for cash has risen in other major economies, despite use steadily declining.
Both the dollar and the euro are equally untraceable, with only around 15 per cent of the current US currency supply accounted for — a significantly lower proportion than that of the UK.
Meanwhile, the European Central Bank in 2016 decided to cease production of the €500 note, over concerns that it helped facilitate criminal activity.