At a launch event during October, Bank of England Governor Mark Carney revealed the latest in the Bank’s new series of polymer banknotes, a £20 featuring the artist JMW Turner.
Cash no longer king
The polymer notes are certainly more resilient and secure than their paper predecessors, but isn’t the cashless society gathering pace and poised to push the banknote to near extinction? According to trade body UK Finance, debit card payment numbers caught up with cash transactions in 2017 and along with other contactless methods these are racing ahead as cash use declines4.
But hold on. Aren’t reports of the death of cash, being greatly exaggerated? Maybe. Even the UK Finance projections suggest that 2027 will see around six billion cash transactions. That would be well down on the 2007 figure of some 22 billion, but you’d still need plenty of banknotes (and Royal Mint coins) in circulation to cover six billion payments, plus those under people’s mattresses.
Bank of England figures show there are over 3.8 billion banknotes out there, the £20 accounting for around half of them5. The most-used banknote is also the most-forged; last year 88% of the 228,000 forgeries found were twenties. Forgery was once a capital offence; the last hanging for faking a financial instrument was in 1829. Penalties are less harsh nowadays, so when the new £20 comes out in February its security features need to be effective.
Wisely, you don’t keep cash under your mattress, but funds in the bank at low rates are being eroded. Yes, everyone needs a cushion of ready money, but long-term savings deserve the opportunity to grow in a way that suits your risk profile. We can help identify a strategy that suits.
4UK Finance, 2018
5Bank of England, Oct 2019
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