Representatives said the Bank of England should investigate a mystery of about 50 billion pounds in “lost” banknotes.
The Public Accounts Committee (PAC) said it did not know the purpose of most of the banknotes it issued. Only about 20 to 24 percent of bonds issued are either used or held for cash transactions, according to the bank’s estimates.
This leaves around 50 billion pounds being used for other unknown purposes. The bank believes that they are hidden in the home for savings, for use abroad, or for illegal activity.
PAC said the bank “does not seem to have a convincing reason as to why demand for bonds continues to increase.” It was only three in 10 cash transactions last year, down from six in 10 a decade ago.
In September, the National Audit Office said the Treasury, Bank of England, Royal Mint, Financial Conduct Authority and Payment Systems Regulator needed to coordinate more effectively so that people could access cash.
The committee said that these authorities were slow to address the problems caused by the lack of automatic teller machines and bank branches and failed to understand the impact of vulnerable groups, especially people in rural areas.
In the two years ending in January 2020, the number of automated teller machines decreased by 12 percent, and the coronavirus pandemic has spurred the shift towards electronic transactions.
The committee said that there are repercussions on public policy and public finances if a material percentage of the large volume of banknotes whose whereabouts is unknown is used or used for illegal purposes.
Meg Hillier, chair of the Public Accounts Committee, said: “In many areas where you can use cash, you’ll be hard-pressed to find it, at least without paying ATM fees which would be a large percentage of small withdrawals – yet it could be frequent withdrawals Small is a major budgeting tool for those with low incomes, and the least able to afford these fees.
Conversely, 50 billion pounds of banknotes – or about three-quarters of this precious and diminishing supply – are hidden somewhere, but the Bank of England doesn’t know where, who, or for what purpose – and it doesn’t seem very curious.
You should be more concerned about the whereabouts of the lost 50 billion pounds.
“Depending on where it is located and what it is used for, that amount of money can have material effects on public policy and public money. The bank needs to deal better with the national currency that it controls.”
The committee recommended that by January 2021, the treasury and payment systems regulator must provide an assessment of cash that is only available from cash machines, or through post office withdrawals. They should also put in place steps to ensure adequate access to free ATM machines.
By the end of March at the latest, the Treasury should publish a clear business plan, including a bill to secure access to cash across the UK.
The committee said the plan should contain clear commitments, including clarification of what regulators expect to achieve.