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Britons are keeping £50 notes under the bed because they have 'lost confidence in banks' says UK's chief cashier | Mail Online
Britons are keeping £50 notes under the bed because they have 'lost confidence in banks' says UK's chief cashier :XX:
An increasing number of savers are hoarding cash at home because they have lost confidence in the banking system, it emerged yesterday.
The Bank of England said the total value of its notes in circulation has soared while their use in transactions is falling.
There are 40million more £50 notes alone in circulation than two years ago.
Bosses say this is evidence of a loss of faith in financial institutions and the greater 'comfort' many Britons feel from possessing their money in physical form.
With the majority of savings accounts offering interest rates as low as 0.05 per cent, the public also lose almost nothing by stuffing their nest egg under the mattress.
Andrew Bailey, executive director of banking and chief cashier at the Bank, last night said the trend was 'striking'.
Un link en el articulo para que la gente se concienci de que el dinero en el banco :XX:
Britons hiding cash under the mattress | This is Money
'Demand for banknotes has risen during this recession, and particularly for high denomination notes, reflecting loss of confidence in banks, and very low interest rates,' he told the Banknote Conference in Washington. 'The total value of Bank of England banknotes in circulation continues to rise, but their use in transactions is falling gradually.
'This strikes me as pretty good prima facie evidence that there has been an increase in demand for banknotes as a store of value.'
The demand for notes, particularly high denominations such as £50, has been replicated across Europe, he added.
Chief cashier Andrew Bailey spoke in America tonight
In the summer of 2007 just before the run on Northern Rock there was around £7billion worth of £50 notes in circulation.
But there are now £9billion worth of £50 notes at large. Further evidence of hoarding is that banknotes in circulation this year make up 3.2 per cent of the economic output of the UK compared with 2.4 per cent in the mid-1990s.
However, cash transactions have fallen rapidly and make up only 4 per cent of retail purchases.
Mr Bailey said that he believes people 'feel a degree of comfort' from cash 'even if it is as a back-up'.
The Bank of England, which handed out the money, decided that the situtation was so critical that it could not disclose the massive handout of taxpayers' money until last month.
Paul Tucker, the Bank's deputy Governor for financial stability, told the Treasury Select Committee that the banks were 'effectively bust' and described the situation as 'a dire emergency.'
In October, the amount of money in savings accounts at Britain's building societies dropped by nearly £930million.
Adrian Coles, director general, said: 'There is little incentive for people to increase savings while the bank rate remains at its current low level. Many people may opt to repay debt instead.'
Michelle Slade, a financial analyst from the financial information firm Moneyfacts, said: 'If you've got debts, many people are thinking: 'What's the point of saving at the moment?'
'It just doesn't make sense. '
On a separate note, Mr Bailey said the Bank is urgently trying to improve the quality of £5 notes which are available in Britain.
Many fivers are of extremely poor quality, which he said is largely to do with the fact that few cash machines give out £5 notes :XX:
He said the Bank has been running two pilot schemes, aimed at improving the availability - and therefore the quality - of the notes.
Getting old: More and more £5 notes are getting ripped and scruffy, which is partly blamed on the lack of £5 cash dispensers
The banking giant HSBC has been stocking a proportion of its cash machines with £5s, and the supermarket chain Sainsbury's has been using more fivers as change in some of its stores.
Mr Bailey said he hopes other companies will follow. 'Our evidence suggests that the public want more of them [£5] and of a better quality.
'To achieve that objective, we need to see more £5s dispensed from ATMs [automatic teller machines] and by retailers in change.'
Britons are keeping £50 notes under the bed because they have 'lost confidence in banks' says UK's chief cashier :XX:
An increasing number of savers are hoarding cash at home because they have lost confidence in the banking system, it emerged yesterday.
The Bank of England said the total value of its notes in circulation has soared while their use in transactions is falling.
There are 40million more £50 notes alone in circulation than two years ago.
Bosses say this is evidence of a loss of faith in financial institutions and the greater 'comfort' many Britons feel from possessing their money in physical form.
With the majority of savings accounts offering interest rates as low as 0.05 per cent, the public also lose almost nothing by stuffing their nest egg under the mattress.
Andrew Bailey, executive director of banking and chief cashier at the Bank, last night said the trend was 'striking'.
Un link en el articulo para que la gente se concienci de que el dinero en el banco :XX:
Britons hiding cash under the mattress | This is Money
'Demand for banknotes has risen during this recession, and particularly for high denomination notes, reflecting loss of confidence in banks, and very low interest rates,' he told the Banknote Conference in Washington. 'The total value of Bank of England banknotes in circulation continues to rise, but their use in transactions is falling gradually.
'This strikes me as pretty good prima facie evidence that there has been an increase in demand for banknotes as a store of value.'
The demand for notes, particularly high denominations such as £50, has been replicated across Europe, he added.
Chief cashier Andrew Bailey spoke in America tonight
In the summer of 2007 just before the run on Northern Rock there was around £7billion worth of £50 notes in circulation.
But there are now £9billion worth of £50 notes at large. Further evidence of hoarding is that banknotes in circulation this year make up 3.2 per cent of the economic output of the UK compared with 2.4 per cent in the mid-1990s.
However, cash transactions have fallen rapidly and make up only 4 per cent of retail purchases.
Mr Bailey said that he believes people 'feel a degree of comfort' from cash 'even if it is as a back-up'.
The Bank of England, which handed out the money, decided that the situtation was so critical that it could not disclose the massive handout of taxpayers' money until last month.
Paul Tucker, the Bank's deputy Governor for financial stability, told the Treasury Select Committee that the banks were 'effectively bust' and described the situation as 'a dire emergency.'
In October, the amount of money in savings accounts at Britain's building societies dropped by nearly £930million.
Adrian Coles, director general, said: 'There is little incentive for people to increase savings while the bank rate remains at its current low level. Many people may opt to repay debt instead.'
Michelle Slade, a financial analyst from the financial information firm Moneyfacts, said: 'If you've got debts, many people are thinking: 'What's the point of saving at the moment?'
'It just doesn't make sense. '
On a separate note, Mr Bailey said the Bank is urgently trying to improve the quality of £5 notes which are available in Britain.
Many fivers are of extremely poor quality, which he said is largely to do with the fact that few cash machines give out £5 notes :XX:
He said the Bank has been running two pilot schemes, aimed at improving the availability - and therefore the quality - of the notes.
Getting old: More and more £5 notes are getting ripped and scruffy, which is partly blamed on the lack of £5 cash dispensers
The banking giant HSBC has been stocking a proportion of its cash machines with £5s, and the supermarket chain Sainsbury's has been using more fivers as change in some of its stores.
Mr Bailey said he hopes other companies will follow. 'Our evidence suggests that the public want more of them [£5] and of a better quality.
'To achieve that objective, we need to see more £5s dispensed from ATMs [automatic teller machines] and by retailers in change.'