“Possible explanations include holdings overseas for transactions or savings and possibly holdings in the UK of unreported domestic savings or for use in the shadow economy.” The Audit Office said the Bank of England and other institutions should improve their understanding of why demand for cash has increased. The Bank of England declined to comment.
“The Bank, working with other public authorities, should improve its understanding of both the factors that are driving the increase in demand for notes, and also who is holding the approximately £50 billion worth of notes,” it said.
“This work might help inform wider policy, for example on tax evasion,” it said.
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