Bank of England rejects major overhaul of cash system

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The Bank of England has told top banks to clarify by March, on how they will keep enough cash in circulation as COVID-19 accelerates its decline, saying it won’t create a new body for distributing notes and coins. Access to cash has become a politically sensitive issue as banks shut branches and more people use cards for payments, raising worries about people’s ability to store, send and receive money. Over 5 million adults still rely on cash in their day-to-day lives, many of whom have limited access to banking.

A report for the BoE last year suggested a “utility” or single entity responsible for distributing cash, which would be funded by banks. The BoE announced on Wednesday that there is no consensus for this due to doubts over how quickly it could be set up given the complex IT challenges involved.

The BoE set an end of March deadline for banks to submit individual plans on how they will back up the commitment, as the use of cash for payment transactions has slumped from just over half in 2010 to 17% in 2020, with the fall accelerating during the pandemic as some shops refused to handle notes and coins, requiring contact-less payments instead.

The Federation of Small Businesses said the new strategy will bring hope to communities which are losing bank branches and cash machines. “This plan of action marks a very important step forward. We now need government to deliver the access to cash legislation it promised many months ago to cement and build on the progress made today,” the FSB said.

– Reuters

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