Charles might be on our money...but is cash still king?
Catch a glimpse of banknotes featuring the new monarch before they enter circulation in June
AMONG the highlights of The Future of Money exhibition, which opens today at the Bank of England Museum in London, are the King Charles polymer banknotes in £5, £10, £20 and £50 denominations before their release on June 5. The wide-ranging showcase reflects the transformation of money over many centuries; from a Roman gold bar to a tally stick from 1824 recording money owed, through to contactless payment innovations including wearable devices as well as digital currency such as Bitcoin.
Yet it also raises the question: how long is there left for cash?
There was a time, not so long ago, when you’d be given short shrift for trying to pay for anything less than a fiver with a credit card. These days, you might be refused service if you don’t use one.
Cash, in many shops, cafes, restaurants and businesses up and down the country has become distinctly persona non grata.
It is not illegal to refuse cash.
The Government line is that “businesses are able to choose the forms of payment they accept”. Two public petitions which recently tried to make it unlawful for retailers (except internet-based firms) to refuse cash payments were unsuccessful despite collecting nearly 60,000 signatures.
After being discussed by MPs in the House of Commons last March, the Government responded by saying it “does not plan to mandate cash acceptance”.
That might be fine for young, well-off and digitally savvy consumers who rarely leave home without their credit/debit card, or their mobile phone loaded with the right “electronic wallet” app.
But what of the older, lower income or less technologically minded members of society – or, indeed, the 1.1 million Britons without a bank account?
For now, at least, we still have our paper money. In fact, the King is only the second reigning British monarch to appear on a banknote since the Bank of England started producing them in 1694.
Happily notes with the Queen on them will remain legal tender, and will co-circulate alongside King Charles notes.
ORIGINALLY handwritten, bank notes were issued as receipts for loans made to the government which was raising money for a war against France. They are now made in a highly secure factory at Debden, Essex, in a process that takes up to six weeks.
The exhibition reveals that whilst the use of cash in Britain has gone down since Covid to about one in six transactions, the amount of banknotes in circulation has, paradoxically, increased by almost 15 per cent, to around £81billion.
One reason for this could be because, in times of emergency or panic, or when there is fear of a breakdown in the electronic banking system, people prefer to hold tangible assets which they can see and touch.
That could be why, stashed away in vaults under the museum’s floor, there is £250billion in gold bullion, most of which the Bank of England holds on behalf of wealthy clients and foreign governments.
Martin McTague, national chair of the Federation of Small Businesses, encourages the acceptance and use of cash by his members.
He says: “Cash is vital as a competitor to other forms of payment, and as a payment option when digital systems go down, or in areas with poor reception. Many vulnerable groups, from elderly people to those fleeing domestic violence, rely on being able to use cash, and it is also a key payment method for many visitors to the UK.”
The use of cash has been decreasing steadily since before the global pandemic, according to Link, the UK’s cash access and ATM network. Link head of strategy Graham Mott told the Express: “The high point for cash withdrawals was 2017
when £130billion was dispensed through cash machines. That compares with £81billion last year. So even though cash use has been in decline for several years, it still represents a significant amount of money. Our research shows that 70 per cent of people in the UK have used cash in the last two weeks.”
Graham says it’s not just Britain but “every country [that] is on a journey towards using less cash.
“Sweden is the leader, with only about six per cent of transactions being made in cash, but the UK is following close behind.” So could cash ever be phased out altogether? Indeed, the UK is currently considering introducing its own government-backed digital pound, which is not intended to replace cash, but might mean the demise of volatile, unregulated cryptocurrencies such as Bitcoin. Jennifer Adam, curator at the Bank of England Museum doesn’t think so. She believes that the new, more durable, polymer banknotes – the average expected lifespan for the new £20 note is in excess of 20 years – are “a sure sign of our commitment to keeping cash as part of the economy for the foreseeable future”.
RECENT legislation supports her optimism. Last year, building on powers granted to the Financial Conduct Authority through the Financial Services and Markets Act, the Government set out minimum standards for access to cash, especially for those living in rural areas, the elderly and those with disabilities.
These include protecting cash access without any fees for those who hold personal current accounts, as well as aiming to ensure that nobody in the country is further than three miles away from cash deposit and withdrawal facilities.
That should be welcome news to Caroline Abrahams, charity director at Age UK, who says: “Many older people view cash as the most reliable and straightforward way to pay for goods and services, as well as an effective means of managing their weekly budget when money is extremely tight. For others, having notes and coins in their purse or wallet helps them to stay independent and retain firm control of their finances.”
Luckily, visitors to the new Future of Money exhibition will need to carry neither cash, credit card nor mobile phone: entry to the Bank of England Museum, just off Threadneedle Street, is completely free of charge.