A British parliamentary committee reportedly claims 50 billion pounds ($67 billion) of paper money is “missing” from the country’s cash supply and that the Bank of England “seems to lack curiosity” about what has happened.
Of the more than 70 billion pounds worth of bills in circulation in Britain, the parliamentary report found that only about 25 percent was being spent by the public, but the majority of the currency bills — which by design are not traceable — unaccounted for, the New York Times said.
The 50 billion pounds in cash may be hidden away in unreported household savings, or is being used in underground transactions, Parliament’s Public Accounts Committee said in the report, calling on the Bank of England to investigate.
“50 billion pounds of sterling notes — or about three quarters of this precious and dwindling supply — is stashed somewhere but the Bank of England doesn’t know where, who by or what for — and doesn’t seem very curious,” Meg Hillier, the lawmaker for the Hackney South and Shoreditch areas of London and chair of the committee that produced the report, was cited by the Times as saying.
The Bank of England disputed the allegation that it wasn’t taking the case of missing cash seriously.
“It is the responsibility of the Bank of England to meet public demand for bank notes. The Bank has always met that demand and will continue to do so,” a spokeswoman from the central bank said in a statement Friday, the Times said.
“Members of the public do not have to explain to the Bank why they wish to hold bank notes. This means that bank notes are not missing,” the bank’s statement said.
Meanwhile, CNNBusiness explained that while there was a sharp decline in demand for notes and coins during the peak of coronavirus lockdowns this year, it has since recovered, "with people stockpiling even more cash at home as a result of the pandemic."
The number of notes in circulation in Britain reached a record high of 4.4 billion in July, with a total value of 76.5 billion pounds ($103 billion), according to a September report by the National Audit Office (NAO), which monitors government spending. This compares with 1.5 billion notes worth about 24 billion pounds ($32.3 billion) in 2000, CNN said.
Meanwhile, the Bank of England isn't alone in being at the center of a missing-cash mystery.
A record outflow from one of Vanguard Group’s biggest exchange-traded funds is stirring speculation over who was behind it and why.
More than $7 billion was pulled from the $172 billion Vanguard S&P 500 ETF (VOO) on a single day this week, according to data compiled by Bloomberg, about 4% of the fund’s assets. But trading volumes were below the one-year average and there were no obvious outsized transactions, while the U.S. equity benchmark rose on the day -- making a mass exodus less appealing.
It’s all leading to a theory that a major holder of the fund executed a large over-the-counter trade, Bloomberg reported.
“We think the redemption didn’t show up because it was an outsized primary market sale,” said Eric Balchunas, a Bloomberg Intelligence ETF analyst. Rather than shopping for a tie at a store, “this is like someone going straight to the tiemaker, and that’s rare since most ETF usage is smaller investors,” he said.
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