BoE battles for the fiver
(9 December 2009 – UK) The Bank of England has gone into battle for the £5 note at the Banknote conference in Washington, as circulation dwindles compared to larger notes.
Despite an increase in £5 notes in circulation from around £1 billion (A$1.8 billion) to £1.3 billion, there are still far less than the £10 and £20 denominations, urging the BoE to call on retailers and banks to increase their stock.
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.
Andrew Bailey, executive director, banking services and chief cashier, BoE, said in a speech at the conference that the fact that few ATM’s 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.
All ATM’s in the UK must be able to stock notes of all denominations; although the vast majority only commonly hold £10 and £20 notes.
The central bank requested, in a bid to increase the fivers circulation, for HSBC to stock the dwindling notes in 100 UK ATM’s for a trial period.
Mr Bailey revealed at the conference that the results to date of the pilot suggest that the business case for stocking some ATMs with £5s is stronger than the Central Bank previously thought.
Supermarket giant, Sainsbury’s also conducted a trial increasing £5 notes in its stores and had notable success, Mr Bailey said.
Mr Bailey added that he hopes and expects that the Central Bank will take these examples to other financial institutions and major retailers to make the case for a change of policy towards issuing £5 notes. There needs to be more £5s dispensed from ATMs and by retailers in change.
In his speech, Mr Bailey also claimed low interest rates and a loss of faith in banks has led to British consumers hoarding their cash.
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, Mr Bailey added.
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.
Andrew Bailey, executive director, banking services and chief cashier, BoE, said in a speech at the conference that the fact that few ATM’s 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.
All ATM’s in the UK must be able to stock notes of all denominations; although the vast majority only commonly hold £10 and £20 notes.
The central bank requested, in a bid to increase the fivers circulation, for HSBC to stock the dwindling notes in 100 UK ATM’s for a trial period.
Mr Bailey revealed at the conference that the results to date of the pilot suggest that the business case for stocking some ATMs with £5s is stronger than the Central Bank previously thought.
Supermarket giant, Sainsbury’s also conducted a trial increasing £5 notes in its stores and had notable success, Mr Bailey said.
Mr Bailey added that he hopes and expects that the Central Bank will take these examples to other financial institutions and major retailers to make the case for a change of policy towards issuing £5 notes. There needs to be more £5s dispensed from ATMs and by retailers in change.
In his speech, Mr Bailey also claimed low interest rates and a loss of faith in banks has led to British consumers hoarding their cash.
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, Mr Bailey added.
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