The whereabouts of £50 billion in UK bank notes is not known

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bank notes
Latest £20 polymer bank note Credit: Bank of England

THE National Audit Office (NAO) in the UK is responsible for reviewing all areas of Government expenditure and to publish its findings without reference to political opinion.

Its latest review concerned the question of cash in society and how it is managed as there are no less than five different organisations who each have their own role but it appears that there is no single controlling voice.

The Treasury, the Bank of England, the Royal Mint, the Financial Conduct Authority (FCA) and the Payments Systems Regulator (PSR) are all involved and it should be recognised that different public bodies may well have different needs and expectations.

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The Royal Mint is owned by the Government and reports to the Treasury but is required to turn a profit overall which apart from its production for overseas governments and sale of collector coins also sees income from production of UK circulating coinage.

This report suggests that it holds sufficient stocks of the 2p coin (which like the 1p costs more to produce than it is worth) and £2 coins (which are unpopular) that it will not need to produce any more for the next 10 years although that is not quite correct as it will run both every year to allow for the sale of year dated circulating packs.

As far as bank notes are concerned, these are produced by a public company De La Rue under contract to the Bank of England and this business is a commercial activity with agreed rates for production of the notes, the quantities being set by the Bank with input from the Treasury.


Currently the NAO believes that there are a bank notes valued at £50 billion (€55 billion) which are in circulation but are not being used for any form of transaction and no-one knows for sure where this money has gone.

Much will have gone abroad for use in exchange deals, some will be held as savings due to low rates of interest being paid by banks but a significant amount may well have disappeared into the ‘dark economy’ having been generated by illegal activity and money laundering.

Over £100 billion is spent in shops using coins and notes every year and until 2017 cash was the most frequently used payment method in the UK.


The use of cash in transactions is, however, in decline: 10 years ago, cash was used in six out of 10 transactions, and last year it was less than three in 10 with forecasts suggesting that this might fall to one in 10 by 2028.

A recent drop in the use of cash during the COVID-19 pandemic may accelerate that trend.

In 2019-20, the Bank incurred note production and distribution expenses of £119million (€130 million) and HM Treasury incurred UK coin production expenses of £23.6 million (€26 million).

Research commissioned by the finance sector has estimated that the UK’s entire cash infrastructure (including cash processing and distribution for private businesses) costs around £5 billion (€5.5 billion) a year.

This figure doesn’t take into account the cost of adjusting coin operated machines or cash dispensers with the introduction of new coins (e.g. £1 coin) or new size bank notes.

Married to Ophelia in Gibraltar in 1978, John has spent much of his life travelling on security print and minting business and visited every continent except Antarctica.

Having retired several years ago, the couple moved to their house in Estepona and John became a regular news writer for the EWN Media Group taking particular interest in Finance, Gibraltar and Costa del Sol Social Scene.

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