FIVER SHORTAGE? FAR FROM IT, SO BE ROBUST
15:00 - 15 November 2007
Credit where credit is due or, rather, banknotes where banknotes are due.A little while ago, as habitual readers of this column will recall, I reported on my encounter with a group of residents in Puddletown in which I suddenly became aware of widespread concern about the current lack of £5 notes in circulation.
I wrote to the Chancellor the Exchequer but, since that time in mid-September, he has had one or two things on his plate, so I quite forgive him for taking a little while to respond to my letter.
Last week, a letter did indeed arrive from the Economic Secretary to the Treasury. I have to admit that I had expected to receive some epistle concocted by officials which would tell me little or nothing, but I was pleasantly surprised to discover that my pessimism was unfounded.
The letter from the Treasury begins with a clear assertion: "The Treasury is aware of the shortage of £5 notes in circulation." It continues, in equally robust fashion, to state that "the quality and quantity of £5 notes in circulation are the most difficult problems that the Bank of England faces in managing its note issue".
At this point, the letter moves from frank admissions to a positively interesting and illuminating explanation. Did you know that the poor old Bank of England has a huge pile of new £5 notes ready to enter circulation if only the commercial banks and the Post Office were willing to take them instead of demanding £10 and £20 notes? Apparently, when the banks cash Treasury bills or take loans from the Bank of England and receive banknotes, what they want to put in their cash machines are £10 and £20 notes, and that is why we cannot get hold of £5 notes.
There is, apparently, around £1B of £5 notes in circulation but, since this is 2.5 per cent of the total note circulation of around £40B, it is not difficult to see why fivers are few and far between.
So, is anyone doing anything about this situation? Amazingly, the answer appears to be yes. The Bank of England seems to be thinking about providing incentives for commercial banks and the Post Office to take £5 notes off their hands. I gather it is also working on improving durability of £5 notes, so stand by for the plastic, leather or even the titanium fiver.
The most surprising news of all is contained in the last paragraph of the letter from the Economic Secretary. Instead of the usual waffle, suggesting that everyone is very sorry but that nothing immediate can be done, the letter ends by telling us: "There is no reason why any high-street bank should not be able to supply £5 notes to its customers, and your constituents should be robust in reminding their banks that all denominations of bank notes should be available on demand and of a good quality."
So there you have it. If you have not got enough £5 notes to suit your spending pattern, march into your bank with a chequebook or credit card or £10 notes and "be robust" in reminding staff that they are meant to be able to give you £5 notes.
If they look quizzical, tell them that this is a message direct from the Economic Secretary to the Treasury.
Credit where credit is due or, rather, banknotes where banknotes are due.A little while ago, as habitual readers of this column will recall, I reported on my encounter with a group of residents in Puddletown in which I suddenly became aware of widespread concern about the current lack of £5 notes in circulation.
I wrote to the Chancellor the Exchequer but, since that time in mid-September, he has had one or two things on his plate, so I quite forgive him for taking a little while to respond to my letter.
Last week, a letter did indeed arrive from the Economic Secretary to the Treasury. I have to admit that I had expected to receive some epistle concocted by officials which would tell me little or nothing, but I was pleasantly surprised to discover that my pessimism was unfounded.
The letter from the Treasury begins with a clear assertion: "The Treasury is aware of the shortage of £5 notes in circulation." It continues, in equally robust fashion, to state that "the quality and quantity of £5 notes in circulation are the most difficult problems that the Bank of England faces in managing its note issue".
At this point, the letter moves from frank admissions to a positively interesting and illuminating explanation. Did you know that the poor old Bank of England has a huge pile of new £5 notes ready to enter circulation if only the commercial banks and the Post Office were willing to take them instead of demanding £10 and £20 notes? Apparently, when the banks cash Treasury bills or take loans from the Bank of England and receive banknotes, what they want to put in their cash machines are £10 and £20 notes, and that is why we cannot get hold of £5 notes.
There is, apparently, around £1B of £5 notes in circulation but, since this is 2.5 per cent of the total note circulation of around £40B, it is not difficult to see why fivers are few and far between.
So, is anyone doing anything about this situation? Amazingly, the answer appears to be yes. The Bank of England seems to be thinking about providing incentives for commercial banks and the Post Office to take £5 notes off their hands. I gather it is also working on improving durability of £5 notes, so stand by for the plastic, leather or even the titanium fiver.
The most surprising news of all is contained in the last paragraph of the letter from the Economic Secretary. Instead of the usual waffle, suggesting that everyone is very sorry but that nothing immediate can be done, the letter ends by telling us: "There is no reason why any high-street bank should not be able to supply £5 notes to its customers, and your constituents should be robust in reminding their banks that all denominations of bank notes should be available on demand and of a good quality."
So there you have it. If you have not got enough £5 notes to suit your spending pattern, march into your bank with a chequebook or credit card or £10 notes and "be robust" in reminding staff that they are meant to be able to give you £5 notes.
If they look quizzical, tell them that this is a message direct from the Economic Secretary to the Treasury.
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