BoE Official: Britons Hoarding Cash

Looks like the British have had enough with the banking system:

BoE Official: Britons Hoarding Cash

(RTTNews) - More people in the UK resorted to hoarding cash over the past two years due to a very low interest rate and weak public confidence in the banking system, a central bank official said. Bank of England’s chief cashier Andrew Bailey said the total value of banknotes in circulation continues to rise, but their use in transactions is falling gradually.

In a speech to the Banknote Conference 2009 in Washington DC on Sunday, Bailey said, “From a macroeconomic perspective, sustained low inflation has increased confidence in the real value of the currency, while more recently demand for banknotes has risen during this recession, and particularly for high denomination notes, reflecting loss of confidence in banks, and very low interest rates.”

Total value of notes in circulation was around GBP 15 billion in the mid 1990s, while today it is around GBP 45 billion said Bailey, who is also the Executive Director for Banking Services. He noted that the value of notes declined to a low point of 2.4% of nominal GDP in the mid-1990s from 6% in 1970. But, it has since stabilized and then increased, noticeably over the past two years, he added.

According to Bailey, the pattern of the note issue as a percentage of nominal GDP reveals that something quite noticeable has happened over the last two years. He said two features of the current situation are lower levels of public confidence in the banking system and very low interest rates, which reduce the opportunity cost of holding banknotes.

The BoE official assessed that demand for GBP 50 notes picked up during the recession. The total value of GBP 50 notes in circulation has increased to GBP 9 billion from GBP 7 billion since the summer of 2007. He added that total number of GBP 5 notes in circulation has increased over the last few years but there is more to be done. “We need to see more dispensed so that they are less scarce and therefore they return to cash centres for sorting more often.”

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When I told my dentist last week that UK was getting rid of personal checks soon, his astute response was "They'll go after cash next."
ending personal checks

Do you think Americans are hoarding cash that way too? It doesn't seem people are quite as scared about banks as they once were.

Most of the people scared enough to hoard cash are also smart enough to convert it to PMs for the long haul. Though I know that in Appalachia there are many people that do not even have bank accounts.

I hoard Bank Accounts.. I just don't keep any cash in them.

I actually know a woman at work who does not have a bank account; she said she doesn't trust banks. Then she told me she keeps her money under her mattress.....totally serious

I personally don't see any reason to have any money in banks other than for liquidity of paying bills. Why put my money somewhere else for 0.1-0.5% interest and risk of fees. It is ridiculous. PMs are the way to go for sure.