- 3rd May 2019
- Posted by: Suzy Hill
- Category: Business News
Treasury commits to keeping cash and coins
The Treasury has confirmed the government’s commitment to safeguarding cash as a method of payment, and is to launch a new group with regulators and the Bank of England to set strategy and co-ordinate work to ensure nationwide access continues
The Chancellor, Philip Hammond, is scheduled to make the official announcement later today during the Verdict of the Pyx ceremony in London, part of a longstanding coin-checking custom dating back to the 12th century.
Hammond will also stress that there will be no changes to current coins and notes, with all denominations – from the penny to the £50 note – staying in circulation.
Hammond, said: ‘Technology has transformed banking for millions of people, making it easier and quicker to carry out financial transactions and pay for services.
‘But it’s also clear that many people still rely on cash and I want the public to have choice over how they spend their money.
‘I’m also setting up a group which brings together the Treasury, Bank of England and the regulators to safeguard the future of cash and ensure its availability for years to come.’
The move comes as the Treasury publishes its response to the cash and digital payments call for evidence. The findings show that while the use of cash has declined in recent years, with a rise in digital payment methods, it remains a dominant form of paying for goods for many people across the country.
According to data published by UK Finance, non-cash payment methods represented 66% of all payments made in the UK in 2017, up from 39% in 2007.
It is estimated that around 2.2m people in the UK are still reliant on cash, with the elderly, vulnerable and those in rural communities likely to be hardest hit by a decline.
As well as establishing the new joint authorities cash strategy group (JACS) , the Treasury says it will support the Bank of England’s work to develop a new wholesale cash distribution system to ensure cash is being distributed as needed across the country.
The government has also asked the Royal Mint to work with cash processors, businesses and equipment manufacturers develop a new coin checking and validation framework to remove counterfeits from circulation. This will be accompanied by the introduction of a machine testing framework which will identify machines that can check coins to required standards, similar to that operated by the Bank of England, and will give retailers and other purchasers of coin handling equipment confidence that they could identify counterfeits.
The government says it would expect the machine testing framework to include, over time, machines that can check the high security feature of the £1 coin.
In its published outcome to the call for evidence, which was launched at the 2018 Spring Statement, the government also makes clear it is investigating ways to crack down on the amount of cash circulating in the so-called ‘black economy’, and therefore at risk of tax avoidance or evasion Possible options which the Treasury says will be considered further, include a limit on the size of cash transactions, as well as ‘nudge’ techniques to encourage businesses to offer a choice of payment methods for consumers including cashless alternatives.