Steady Progress by the Bank of England

The Bank of England has issued its Annual Report for 2022. The key themes relating to banknote issuance and management were the completion of the polymer series of banknotes with the issuance of the £50 banknote, actions to safeguard access to cash and deposit services and the environmental impact of banknote operations.

In June 2021 the final denomination was issued using polymer substrate, the £50 banknote featuring Alan Turing. As of 30 September 2022, the £20 and £50 paper banknotes will no longer be legal tender.

Access to cash

With the number of cash transactions falling, despite cash held as a store of value rising, the Bank is taking action to support access to cash and cash deposits.

It is working with UK banks and cash operators who fund or participate in the wholesale cash infrastructure to agree individual plans that support industry wide commitments to the resilience, cost efficiency and sustainability of cash. Her Majesty’s Treasury will provide powers to keep the wholesale cash infrastructure sustainable and resilient.

The Bank is also reviewing the rule book of the Note Circulation Scheme (NCS) to look at the regulations for the storage, sorting and distribution of cash. The aim is to identify changes that promote efficiency, reduce costs and encourage innovation in the wholesale cash system, while maintaining public confidence in cash. The Bank will consult with market participants on the results of the review.

Note issuance

Notes in circulation increased from £84.7 billion to £86.4 billion. The number of notes in circulation increased 15% between 2020 and 2021. This slowed to a 3% increase 2021 to 2022, with the £20 accounting for all of this increase. The £20 banknote volume increased by 13% and now represents 54% of the notes in circulation.

All other denominations saw volumes fall, with the £50 falling 17%. Presumably people were returning paper £50 notes ahead of the move to polymer. The number of notes in circulation excluding the £20 banknote is still higher than in previous years.

740 million notes were withdrawn as unfit, 90% of which were paper denominations. Paper notes are either composted or used as ‘energy from waste’. Polymer notes are recycled into new polymer products.

Environmental impact of cash

The Bank has continued its drive to meet its target of reducing its carbon emissions by 63% between 2016 and 2030. This target is in line with the aims of the Paris Agreement. While last year the Bank was able to reduce its emissions by 53% on the back of moving to renewable electricity and lower banknote production volumes, this year the reduction was a more modest 9%.

Banknote production volumes were down and this, along with the Bank’s continued use of renewable electricity, allowed the reduction in CO2e emissions achieved.

Gas usage increased slightly and CO2e emissions from travel increased from 18 tonnes in 2020/21 to 137 tonnes, still far behind the Bank’s pre-COVID level.

The Bank is looking at the sustainability scoring and weighting in tenders. It has decided to use subject matter experts to help set tender requirements.

The Bank won Gold Status in the Clean City Award Scheme in three categories – communications and engagement, plastics and the city and resources and the circular economy. The Bank has 4,683 employees generating 2.1 tonne CO2e per person.

Income and expenditure

Unusually, the Bank gives details of the seigniorage earned from banknote issue. Seigniorage was up from £62 million in 2020 to £93 million in 2021.

Its costs were lower due to lower production volumes – down from £78 million to £51 million. Costs of issue, custody and payment of banknotes were down from £30 million to £24 million.