25 February 2018
Visit www.capgemini.com/worldreports

Bank of England calls for more fivers in ATMs

07 December 2009  |  8709 views  |  1 Pound note Queen Close up

The Bank of England is urging financial institutions to stock up ATMs with £5 notes in a bid to increase their circulation. The call comes as evidence grows that Brits are hoarding cash because they do not have confidence in the banking system.

Although ATMs in the UK must be able to stock notes of all denominations, the vast majority only hold £10 and £20 notes. Over the past two years the total number of £5 notes in circulation has increased - from around £1 billion to £1.3 billion - but there are still far fewer than £10 and £20 denominations.

Andrew Bailey, executive director, banking services and chief cashier, BoE, says the fact that few ATMs dispense £5 notes combined with their scarcity means they tend to stay in circulation longer, and change hands more times before they return into the wholesale cash distribution system for fitness sorting.

In a bid to increase the number of fivers in circulation, the Bank asked HSBC to stock 100 UK cash machines with them for a trial period.

In a speech at the Banknote conference in Washington, Bailey revealed that the results to date of the pilot "suggest that the business case for stocking some ATMs with £5s is stronger than previously thought".

The Sainsbury's supermarket chain has also conducted a trial which involves supplying more £5s to many of its stores, again, with notable success, says Bailey.

Now, he says: "I hope and expect that we will take these examples to other financial institutions and major retailers to make the case for a change of policy towards issuing £5s...we need to see more £5s dispensed from ATMs and by retailers in change."

In his speech, Bailey also claimed low interest rates and a loss of faith in banks has led to Brits hoarding cash.

As a share of nominal GDP, the value of notes in circulation declined from six per cent in 1970 to a low point of 2.4% in the mid-1990s but has since stabilised and then increased, noticeably over the past two years.

There has been a particular rise in demand for £50 notes. Since the summer of 2007, the total value of £50 notes in circulation has risen from £7 billion to £9 billion.

"In the current recession, the demand for banknotes has risen, and it is likely that this reflects demand for central-bank money as a store of value," says Bailey.

He highlights the apparent 'paradox of banknotes' - the increasing value of notes in circulation alongside their gradually declining use as a means of payment. The use of cash has been gradually declining, to around 60% in volume terms and four per cent in value.

Read the speech here:» Download the document now 77.6 kb (PDF File)

Comments: (1)

Keith Richbell
Keith Richbell - eftpos Payments Australia Ltd. (ePAL) - Sydney | 10 December, 2009, 23:53

Whilst I applaud the Bank of Englands efforts to encourage more fivers in circulation, they could help themselves, and the banking industry, by changing the fiver to a polymer note. The added durability of these notes would go a long way to improving their machine handling qualities and help them stay in circulation longer. The Bank outsourced its note printing to De La Rue a few years ago and they don't produce polymer notes. Could this be the reason?

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

For German consumers, cash is still king

For German consumers, cash is still king

27 October 2009  |  9093 views  |  0 comments
HSBC stocks ATMs with £5 notes in BoE pilot

HSBC stocks ATMs with £5 notes in BoE pilot

21 August 2009  |  6462 views  |  0 comments
Plastic replacing cash in US - BAI Research

Plastic replacing cash in US - BAI Research

23 February 2009  |  8072 views  |  1 comments
Bank Machine rolls out £5-only ATM

Bank Machine rolls out £5-only ATM

11 August 2008  |  9322 views  |  0 comments
Downturn prompts dash for cash

Downturn prompts dash for cash

21 April 2008  |  6449 views  |  0 comments
Cash is no longer king - survey

Cash is no longer king - survey

31 March 2008  |  8749 views  |  0 comments
Death of cash would kill off one in ten related businesses - A&L

Death of cash would kill off one in ten related businesses - A&L

05 May 2005  |  6511 views  |  0 comments

Related company news

 
Visit https://www.capgemini.comVisit http://info.nice.comvisit www.ebaday.com

Top topics

Most viewed Most shared
Ripple makes new connections to emerging marketsRipple makes new connections to emerging m...
12672 views comments | 16 tweets | 10 linkedin
hands typing furiouslySome Interesting Applications Of The Inter...
10836 views 4 | 9 tweets | 1 linkedin
Basel Committee outlines disruptive fintech scenariosBasel Committee outlines disruptive fintec...
9337 views comments | 15 tweets | 26 linkedin
Investment Association sets up fintech accelerator for asset managersInvestment Association sets up fintech acc...
8721 views comments | 19 tweets | 10 linkedin
R3 creates Legal Centre of Excellence for blockchain technolgyR3 creates Legal Centre of Excellence for...
8638 views comments | 11 tweets | 14 linkedin

Featured job

Find your next job