Source · Select Committees · Public Accounts Committee
Recommendation 5
5
The Bank of England’s stock of notes seems high and it is not clear to...
Conclusion
The Bank of England’s stock of notes seems high and it is not clear to us how the Bank decides upon what is an appropriate stock level. The Bank holds stocks of notes well above its own policies for minimum levels of stocks. For example, at the end of July 2020, it held contingency stocks with a value of £30.4 billion, against its minimum guidance levels of £15.6 billion. We recognise that the Bank would not wish to risk running out of notes. However, we do not understand the Bank’s rationale for holding such high levels of stocks. The Bank does accept that it needs to improve the transparency with which it takes decisions on printing notes. Recommendation: The Bank should ensure that it properly records and evidences the judgements it makes about printing notes and its stock levels so that it can be properly held to account for the decisions it makes.
Government Response
Not Addressed
HM Government
Not Addressed
5.1 The Bank of England agrees with the Committee’s recommendation. Target implementation date: December 2021 5.2 The Bank of England needs to hold sizable stocks of printed notes, ready to be issued, to ensure there are sufficient banknotes available to meet public demand, which can change suddenly and by large amounts. For example, demand for banknotes increased by 10% (£7.5 billion) in 2020 relative to the peak in 2019. Having insufficient notes to meet demand would risk significantly undermining the public trust in the currency. 5.3 The Bank of England has a robust process in place for making decisions about how many notes to print and believes its stock levels are appropriate. Decisions regarding stock levels do, however, involve judgement. The range of considerations includes forecasts of the demand for banknotes, the impact of events such as note launches, and the need to ensure value for money by having efficient print runs and making the best use of the Debden site’s print capacity. It is important that how these factors are balanced is clearly documented. Therefore, as recommended by the Committee, the Bank of England will review its documentation around stock decisions and contingency requirements and ensure that it clearly records the main factors contributing to final decisions on print volumes and stocks.