Bank of England: Bank of England response to HMT Call for Evidence on Cash and Digital Payments in the new economy

31 May 2018

Given recent forecasts suggest a continued decline in the transactional use of cash, and as the industry starts to plan beyond the currency modernisation initiatives, this is a timely point at which to consider the future role of cash in the economy and how the industry and the authorities will support it.

The Bank of England (the Bank) is neutral to methods of payment and therefore does not seek to promote any payment method above any other, but does believe that it is important that the public have choice. 

The Bank has a wide interest in digital payments, namely:

• Acting as settlement agent for all domestic wholesale and retail payment schemes;
• Operating the Real Time Gross Settlement service and CHAPS high-value payment system; and
• Supervising recognised payment systems. The supervision of recognised payment systems is central to the Bank’s objective of maintaining financial stability.

The Bank monitors developments and works with industry to ensure that the Bank can continue to support digital payments as they evolve.

The Bank highlights these key points:

• The usage of cash is evolving, but there is, and is likely to remain for the foreseeable future, a significant public demand for banknotes.
• Effective banknote denominational mix is important. The Bank believes that there is a strong case to keep the £50 banknote in order to effectively meet legitimate demand and to avoid increased dependence on the £20 banknote.
• Developing and maintaining an appropriate banknote distribution and authentication model remains an important priority for the cash industry and the Bank of England. 

Full response

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