The UK Public Accounts Committee says the Bank of England should “get a better handle” on Britain’s currency, after a report showed three-quarters of all UK banknotes in existence are not used in transactions or held as savings.
Chair of the Public Accounts Committee and Labour MP Meg Hillier criticised the Bank of England for failing to keep track of the money, declaring that it is “stashed somewhere, but the Bank of England doesn’t know where, who by or what for, and doesn’t seem very curious.”
The National Audit Office (NAO) published the report in September, and it investigates the changing nature of the production and distribution of cash, noting a dramatic decline in its use by the public, as banknotes were used in only three out of every 10 transactions in the country last year.
With only 20-24 percent of notes in circulation being used or held for transactions, the NAO has sought to find explanations for the location of the other funds, suggesting it could be held overseas, in savings that are not registered or used in the shadow economy, an underground system that includes illegal activity and unreported gains.
The concern among MPs is that the minimal oversight conducted by the Bank of England into the location of these banknotes allows individuals to use them for illicit purposes, as, unlike digital payments, it can change hands quickly and without leaving a trace.
In an attempt to rectify the situation, the NAO recommended that the UK Treasury and public bodies who are responsible for overseeing the cash system work together more effectively to safeguard access to cash, launching a coordinated effort to prevent vulnerable people who rely on cash from being excluded from financial society and reducing the risk of future notes going ‘missing.’
A Bank of England spokesperson disputed the description of the situation put forward by the committee and the report, stating that “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.”
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