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The value and number of banknotes in circulation has increased sharply since 2020, said the Bank of England as it marked the opening of a new exhibition on the future of money.
Counter to the view that cash is in terminal decline, the total value of notes in circulation has risen by nearly 16 per cent, while the total volume is up by nearly 17 per cent, according to the bank’s data.
The central bank said spikes in the popularity of cash can be attributed to the turmoil caused by the pandemic and the cost of living crisis. According to the Bank of England museum, one in five people say their preferred method of payment is still cash, and more people are using cash as a store of value for emergencies and to feel more in control of their money.
“For all that many people are using more digital payments, many people may be using cash as a means to manage their day-to-day spending — it’s much easier to keep track of your finances if you’re physically handing over cash in shops,” said curator Jennifer Adam. “People like to hold more money in times of uncertainty as well.”
Although both the value and volumes of cash have been rising steadily since 2014, pronounced spikes were visible between 2020 and 2021, when values and volumes in circulation rose by 14.1 per cent and 14.6 per cent respectively.
Representatives from the Bank of England museum have emphasised that cash is still “hugely relevant” to the day-to-day lives of people across the country, as it prepares to distribute new banknotes depicting King Charles III.
The new notes, which will enter circulation on June 5, are on display at its Future of Money exhibition, which opens on Wednesday and explores methods of payment now and in future, such as cash, cryptocurrencies and central bank digital currencies.
Adam said the bank will protect access to a range of payment choices, including cash “for as long as people need [it]”.
The long-run trend in cash payments over the past decade has been one of decline, according to UK Finance data. By 2032, it is projected that cash use will halve, with 7 per cent of payments expected to be made using cash.
However, in 2022 cash payments increased for the first time in a decade, rising by 7 per cent to 6.4bn payments.
According to Natalie Ceeney, chair of Cash Access UK, those who are increasingly using cash include digitally savvy people in their 20s and 30s and workers on zero-hour contracts who need to budget.
“Cash is not going to continue to decline at the rate we’ve seen in the past decade,” she said. “To see further declines in cash use we’d have to see fundamental changes in society, like better financial resilience and reductions in poverty levels.”
In the exhibition, the Bank of England also explained the ideas behind central bank digital currencies. A CBDC, dubbed “britcoin”, would allow spenders to hold money directly with the Bank of England. However, the central bank stressed that a potential CBDC would be offered alongside cash and other forms of digital payment, acknowledging popular opposition to CBDCs.
“It is crucial to have easy and convenient access to cash and certainty that it is accepted day-to-day across sectors,” said Martina Horakova, managing director of the International Mint Industry Association.
