Two days ago, I saw a short news report on the BBC. It stated that a finance committee had discovered that over £50 billion worth ($67 billion) of all banknotes issued in the UK had gone ‘missing’. They are not circulating in the economy, and nobody actually knows what has happened to them.
On top of that, the Royal Mint is to cease making any more 20p or £2 coins for the next ten years, claiming ‘lack of demand for coins and cash’ as the reason. Some reports suggested that this was yet another slide into a ‘cashless society’, but considering that £50 billion of all banknotes is a signifcantly high percentage of all the notes available, (75% no less) I for one think there should be some sort of serious investigation.
And for readers in Europe or the USA, it seems you have similar problems with the Euro and the Dollar. For anyone else who thinks this is very strange indeed, here are some of the details from that BBC report.
The Bank of England should be trying to track down £50bn of “missing” UK currency, a committee of MPs has said.
The figure amounts to about three-quarters of all UK banknotes in existence.
The cash is not used in transactions or held as savings, but may be overseas, tucked away in homes unreported or being used in the “shadow economy”.
The issue was first identified by the National Audit Office (NAO), which highlighted it in September.
Now the Public Accounts Committee has said the Bank should “get a better handle” on the currency.
The committee said there were “implications for public policy and the public purse” if a material proportion of that large volume of banknotes was being used for illegal purposes.
However, the UK is not the only country to face this problem – and other major global currencies could well be more seriously affected.
A Bank of England spokesperson 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.”
This rising demand is “a trend being seen with other major currencies”, as the committee itself admits.
It particularly affects the dollar and the euro, which are widely held as reserve currencies around the world.
In the case of the dollar, only about 15% of the US currency supply can be accounted for – a significantly lower proportion than for the UK.
Both those currencies are more attractive to criminals because they have higher-denomination notes which make it easier to smuggle or stash ill-gotten gains.
For instance, there are more $100 bills out there than any other denomination of the greenback, with 80% of them estimated to be held outside the US.
As for the euro, the European Central Bank in Frankfurt no longer issues the €500 note because of concerns it could facilitate illegal activities.
However, it remains legal tender, while €100 and €200 notes are still in production.
By contrast, the highest-value note issued by the Bank of England is £50.
Is this interesting to you, or not? You decide.