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Business & Finance Series: Expert Comment

Where is the money? £50 billion of UK bank notes is ‘missing’

Lecturer in Banking discusses Committee findings into the volume of bank notes that are unaccounted for

by Hamish Armstrong (Senior Communications Officer)

Reports have emerged suggesting £50 billion in bank notes is ‘missing’, with the Public Accounts Committee concluding that the Bank of England needs to shoulder responsibility for this and take a more proactive role in tracking this down.

Dr Francesc Rodriguez Tous, Lecturer in Banking at the Business School (formerly Cass) believes the absence of these notes could be due to a number of factors that are not necessarily connected with illegal activity.

Dr Rodriguez Tous said:

“Unaccounted for can mean many things.

“Obviously, cash can be kept for illegal transactions, which would not be recorded. It could also be part of a tax evasion scheme whereby cash is shifted outside of the country and transferred to a haven.

“However, one might also keep cash at home as a precaution or to guard against a rainy day.

“Whether or not this is a big problem depends on the use of missing notes. If they are being used to cover illegal activity in the UK, then this is an important public policy problem because it has a knock-on effect on public finances.”

The problem of unaccountable bank notes is nothing new, but Dr Rodriguez Tous does not believe that the missing notes carry particularly severe implications for the UK economy.

“Even £50 billion is relatively small compared to the economy at around £2 trillion.

“You can also compare it with the supply of money of around £2.7 trillion.

“That said, in an ideal scenario these notes and currencies would show up and be spent, which would have a positive effect on consumption and GDP.”

So how can central banks mitigate this problem? Dr Rodriguez Tous says digitalisation could help track currency more effectively.

“A lot of recent debate within central banks has been around the viability of issuing central bank digital currencies (CBDC).

“If the advantages of holding this type of currency were higher than having bank deposits, then this could reduce the use of notes and coins, potentially also reducing those that are unaccounted for.”


All quotes can be attributed to Dr Francesc Rodriguez Tous, Lecturer in Banking at the Business School (formerly Cass).

Find out more about the Centre for Banking Research.

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