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Bank of England tells banks to preserve access to cash


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Dec 15, 2021  •  12 minutes in the past  •  2 minute learn  • 

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LONDON — The Bank of England has instructed prime banks to spell out by March how they are going to preserve sufficient cash in circulation as COVID-19 accelerates its decline, saying it received’t create a brand new physique for distributing notes and cash.

Access to cash has develop into a politically delicate situation as banks shut branches and extra individuals use playing cards for funds, elevating worries about individuals’s capacity to retailer, ship and obtain cash. Over 5 million adults nonetheless depend on cash of their day-to-day lives, many of whom have restricted access to banking.

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A report for the Bank of England (BoE) final yr proposed a “utility” or single entity chargeable for distributing cash, which might be funded by banks.

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The BoE stated on Wednesday there was no consensus for this due to doubts over how shortly it might be arrange given the advanced IT challenges concerned.

Instead, it was choosing industry-wide commitments to keep enough resilience in cash distribution, enhance efficiencies to deal with declining volumes, and scale back the environmental hit from processing cash.

Industry physique UK Finance stated on Wednesday main retail banks similar to Lloyds, NatWest, Barclays and HSBC have agreed that if a group’s core cash service faces closure, cash machine community LINK could have the ability to fee new providers which the banks would fund.

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These may embrace enhanced Post Office providers, new free-to-use cash machines, and shared banking hubs.

“This is a great start, and I look forward to seeing the impact of industry’s announcements for new and improved cash facilities in local communities across the UK,” Britain’s monetary providers minister John Glen stated.

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The BoE set an finish of March deadline for banks to submit particular person plans on how they are going to again up their new commitments.

“To help support this, HM Treasury will provide the Bank of England with the powers that it needs to keep the wholesale infrastructure sustainable and resilient into the future,” the BoE stated in a press release.

The use of cash for cost transactions has slumped from simply over half in 2010 to 17% in 2020, with the autumn accelerating in the course of the pandemic as some retailers refused to deal with notes and cash, requiring contactless funds as an alternative.

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Since lockdowns had been lifted, cash withdrawals have regularly elevated however in August 2021 cash machine withdrawals had been 30-40% decrease than the identical interval in 2019, the BoE stated.

“Looking ahead, there is considerable uncertainty around the long term outlook for cash demand,” the BoE stated.

The Bank can also be wanting on the potential for a digital model of sterling, which may crimp cash utilization additional.

The Federation of Small Businesses stated the brand new technique would deliver hope to communities which might be shedding financial institution branches and cash machines.

“This strategy 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 stated. (Reporting by Huw Jones Editing by William Maclean and Mark Potter)

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