Why we need less cash in the economy | Dave Birch
The chief cashier of the Bank of England says that only about a quarter of the cash they put into circulation is used to buy and sell things. The rest of it is either shipped overseas - which we will put to one side for the moment - kept outside of the banking system ie (hoarded), or used to support the shadow economy (iestashed). In other words, not in circulation at all but stuffed under mattresses.
If you look at the trend growth of that cash "in circulation" over the last few years, it has accelerated past GDP growth as well as past the amount of money being taken out of ATM machines. And we also know that the use of cash in retailing has continued to fall steadily. That means the "cash gap", between the small amount of cash that is used to support the needs of commerce and the large amounts of cash that are used for other purposes, has been growing. The interesting question is: why?
If hoarding cash is on the up, that would suggest people have lost confidence in formal financial services
Related: Half of UK banknotes used to fund shadow economy
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